Blog entry Jan 26, 2017
Funny thing about money, for the vast majority of us, managing the total amount of dollars we have coming into our households on a daily, weekly and monthly basis is challenging. And, for the vast majority of us, we do a better job of managing our money than the U.S. government does. Pat yourself on your back for that.
When it becomes a question of us vs. the government, what’s most important to the vast majority of us is how far our dollars go in the keeping of a roof over our heads, our ability to buy stuff and in the covering the costs of our all-around living expenses.
All of which makes the U.S. dollar really valuable to us. So, when the value of the dollar falls it can make a difference in our lives. Here are two instances:
•For those lucky enough to be international travelers, if the dollar is considered weak when measured against other currencies—as it is now—traveling abroad becomes more expensive and a buck doesn’t buy as much as it does when the dollar is strong. In other words, if you’re a value player and enjoy getting the biggest spending bang for your buck, that happened three years ago when the dollar was much stronger. Now that’s not the case and you’ll need more money to enjoy the same pleasures you did back then.
•For the most of us, however, international travel isn’t a part of our every day, every month or every year lives. But having to put gas in our cars is. And if you haven’t noticed, the price of a gallon of gas has been going up lately.
I’ve noticed a spike of between 20-30 cents a gallon over the past few months alone.
That means, if the gas tank in your vehicle holds 15 gallons of gas that increase translates to paying about $4.50 more a fill-up than it did months ago. Need to fill-up four times a month and odds are that that 18 bucks will eat up most, if not all, of the whoop-tee-do tax savings you’re expected to see in your paycheck coming in a month or so thanks to the new tax law.
From Oregon Business News story published online Jan.2, 2018 comes this: “Gas prices in particular are incredibly relevant to most American households,” Wells Fargo’s Erik Nelson said. “As the dollar depreciates more consistently and more significantly, I think you’ll see commodity prices, in dollar terms, tend to rise.”
But wait, there’s more: A weak dollar makes life more expensive on a host of other everyday living costs. Costs the likes of Sallie, Sam or Grandma Sue aren’t going to be able to cover thanks to their stock investments because many ordinary folk don’t own equities…. they are far more familiar with the realities of debt.
So don’t believe brand new are-you-kidding-me Treasury Secretary Mnuchin when he says that a weak dollar is good. It isn’t.
Below are two Bloomberg charts from a January 25, 2018 story, “A Doomsayer’s Guide to the Dollar and Why It Could Keep Plunging”. That piece begins, “The dollar’s worst start to a year since 1987 may get a lot worse.”