On a national scale, the fact that we can send ?money? (which has no intrinsic value other than an implied promise of redemption for ?something of equivalent value? when repatriated to the issuer) for real stuff, which has whatever value people assign to it, that obviously benefits the country issuing the money. At least it benefits us temporarily. It also benefits the seller of goods, to the extent that the dollars retain most of their perceived value over time, can be accumulated and repatriated for other valuables (whether goods or title to real property) that can be judged on the basis of a relatively stable medium of exchange ? the dollar.
When we welsh on the promise to redeem the money as it is repatriated to us, at a more or less equal value with which it was sent overseas, then the shit will hit the fan.
For example, you give me $1, and I give you an apple, which we both agree is worth a dollar, given the relative values we place on ?dollars? and ?apples? today. If I attempt to spend the dollar tomorrow and find that I can only buy half an apple, or not even that much, then your dollar is on a fast track to worthlessness, and you won?t be able to buy much of anything with it, no matter how many you have. This is the current problem in Zimbabwe, and in my lifetime has been the problem in Romania, Brazil and Argentina, to name a few places you might have heard of.
?What is best?, in my own opinion, is when there are no ?intervention? measures to ?rescue? or ?devalue? the dollar (and likewise with the currencies of foreign countries, such as Japan, which has recently been devaluing the ? (yen) in order to make their goods cheaper to export ? and make imports much more expensive for Japanese consumers). This would also require that politicians not create vast new oceans of debt by printing currency that has no backing (which is what the US has been doing, not just for the past four years, but for most of the past hundred years).
The way the system is supposed to work, and nominally has worked for a long time, is that a lending nation, such as China is presently, would accumulate stores of US currency from our ?imbalance? of trade with them, and would repatriate that money to the US by purchasing assets such as real estate, factories? and capital goods? to enable the further expansion of their economy. (At the same time that they were accumulating capital, their own workers? wages would be rising and they would presumably be spending their income on higher-quality consumer goods and food than they?ve been used to, leisure activities and vacations, homes and furnishings, medical devices and ?general health care?, etc. And these would be ways to repatriate their dollar holdings.
@josie has a better response, I think. The question does present a false alternative. This isn?t an ?either-or? situation.
Source: http://www.fluther.com/156062/in-your-opinion-what-is-better-for-the-economy-cheap-consumer/
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