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Does US purposely keep giving stimulus package on purpose, aim to depreciate their dollar value?

so that they will return less of the real value to their creditors. esp China, and other countries who are holding huge amount of US dollars.

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  • 1 decade ago
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    I'm not sure what you're asking but:

    (1) The U.S. federal government has only one stimulus package and it wasn't all that big.

    (a) Many economists thought it was much too small:

    http://krugman.blogs.nytimes.com/2009/01/06/stimul...

    (b) As a percentage of GDP, it was smaller than China's stimulus

    (c) State and local government spending went down because of the recession so if you look at total government spending (federal plus state and local) there was essentially no stimulus spending.

    (2) Many economists think the U.S needs another big package, but don't believe the government is going to do it:

    http://delong.typepad.com/sdj/2010/06/we-need-bigg...

    http://epi.3cdn.net/bed00f137bb9e31134_pjm6b5apq.p...

    (3) The purpose of the stimulus is to increase demand; any impact on the value of the dollar is incidental. (Yes, the U.S. would like to export more, but exports are a small part of the U.S. economy.)

    In fact, there was a period after the stimulus package when the dollar was still gaining in strength. And, if the economy does manage to recover, there is every reason to believe the dolar will become stronger, though it will become weaker in the meantime.

    (4) Foreign governments hold abut $4.2 trillion in U.S. government debt:

    http://www.ustreas.gov/tic/mfh.txt

    Total U.S. government debt held by the private sector in the U.S. is about $4.8 trillion, with another $4.6 trillion held by the government itself.

    http://www.treasurydirect.gov/NP/BPDLogin?applicat...

    So if the government were fiddling the dollar in order to pay back less to its foreign creditors, it would be doing even more harm to its own citizens and to itself.

    This isn't to say the government wouldn't do that, just that there is no need to go looking for conspiracies when simpler explanations fit the data.

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