Why Oh Why… : Dollar Decline Edition

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Dean Baker laments the uselessness of the WaPo‘s reporting on the dollar’s decline:

For example it tells us about a Kenyan coffee grower who is being hit because he sells his coffee for dollars that are rapidly losing their value. Well, coffee is priced on a world market. Its price fluctuates by the hour. If the dollar lost 90 percent of its value, then coffee would simply sell for ten times as much, measured in dollars, unless coffee was also declining in value. If coffee is declining in value, then the farmer’s problem is the decline in the value of coffee, not the decline in the value of the dollar. The story would be different if the coffee grower was locked into a longterm contract denominated in dollars. This may be the case, but the article doesn’t say anything about longterm contracts…

The sharp fall in the dollar over the last five years is a big deal for people in the United States and the rest of world. However, when the Post devotes a front page story to the topic it should at least make sure that it conveys some real information. This one doesn’t.

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