The most confusing thing about this article is that the author explains dollar fluctuation by using different indicators: GDP in the U.S., cost of living in Germany, and the industrial production in Japan. First, he should use the same indicators in these three competing countries. Second, the GDP may lead to dollar appreciation, since the increase of the net exports increases GDP and the dollar as well. Nevertheless, comparison between dollar and expected export demand would be better since the increase in government expenditure may increase GDP. This spending most probably will not cause the dollar appreciation especially when the unemployment is low and country operates at its full capacity. According to modern American economists an exchange rate has a positive relationship with domestic interest rate, and negative with the foreign rate in the short run. In the long run domestic price level, as well as the expectation on tariffs, quotas, import demand, export demand, and productivity. I suggest investigating these data in the U.S.A., Germany, and Japan. Prediction could be not clear as wanted since human expectation can change rapidly. As Mr. Keynes wrote in the “ The General Theory of Employment, Interest, and Money “ the mass psycology of a large number of ignorang individuals is liable to change violently as a result of sudden fluctiation of opinion due to factors which do not really make much difference in the prospective yield.” Therefore few rich investors can successfully speculate the market by manipulating a lot of small investors or just selling a lot of stocks when economy is in good shape, which contradict to the economic theory.

Imports become cheaper as a direct result of dollar appreciation, and therefore foreign companies benefit by increasing its share on the American market and by increasing price. since for the same good the foreigners receive more foreigne currency. American consumers and retail industry which buy imports benefit as well.American producers especially which export goods will be hurt and therefore, they will try to lobby the government for the contractianary monetary policy which will lead to the increase of increase of domestic interest rates. These producers will try to convince that balance trade is the ultimate goal of the economy, and that they represent interests of common American workers.