Is a Strong U.S. Dollar good or bad?

Well, it depends upon which side of the fence you stand. For U.S. exporters, a strong U.S. dollar means their exported goods leaving the United States to be sold abroad, will be more expensive for the importing countries to buy. Why is that?  The U.S. dollar is considered a “reserve currency”, see my posting What is a Reserve Currency?

When the U.S. dollar is weak or weaker, then U.S. exports are cheaper to export to other countries. Why is that? A “reserve currency” is used by many countries to pay for imported goods.

The New York Times article (dated January 5, 2015):  What a Stronger Dollar Means for the Economy discusses the pros and cons of a strong U.S. Dollar.

I mentioned in my posting What… devalue a current! They can do that?  that currencies are traded between buyers and sellers.

The Globalist website offers a brief  summary of “anchor currencies”:  A Brief History of Global Anchor Currencies .

The United States stopped pegging the value of the Dollar to gold, e.g. left the “gold standard” in 1972. President Nixon revoked the U.S. Dollar’s peg to gold. Foreign countries could no longer exchange their U.S. Dollars for gold. Read more at the Federal Reserve’s website:
Nixon Ends Convertibility of U.S. Dollars to Gold and Announces Wage/Price Controls.

So to answer my own question, is a strong US dollar good or bad? It all depends on if you are buying or selling goods or services into or out of the United Stated. Domestically, if we buy imported goods, they are cheaper; if we export US goods they are more expensive to the importer.

Author Addendum October 6, 2015:  Here is a quote and essay from the Federal Reserve Bank of St. Louis:

All words have connotations; they suggest certain meanings. For example, “strong” and “weak” are usually considered opposites, so one might think that it’s always better to be strong than to be weak. However, in referring to the value of a country’s currency, it’s not that easy. “Strong” is not always better, and “weak” is not always worse.

Source: Federal Reserve Bank of St. Louis

Scott A. Wolla, “Is a Strong Dollar Better than a Weak Dollar?,” Page One Economics, March 2015

Here’s an Addendum that I added to this topic in another blog: Strong Dollar

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