Good weather, good harvest, good prices

Thanks to a spectacularly dry fall, farmers in Iowa are bringing in the harvest much faster than usual.  Given the plentiful rain this summer they are getting a very high yield on their corn and soybeans.  And - this is the best part - the prices are high.  Farmers can lock in $4.50+/bushel on corn and $10+/bushel on beans.  (Trust me, those are good prices.)

Part of the good news is because of really bad news in Russia:  A drought and high temps there have destroyed crops.  The other part is that the dollar has lost 15% value vs. Euro.  That makes buying American corn and beans much cheaper.  Yippee!

Err, wait a minute.

I live in a country where the currency is tied to the dollar. The dollar goes up, the dirham goes up.  The dollar goes down, the dirham goes down. From 2001 - 2008 the dollar went down pretty much every year.  We didn't notice it as much in the US, but here they buy almost everything from Europe and Japan and the dollar/dirham going down meant most everything they buy in the stores cost more.

During the financial crisis the dollar shot up.  Hence, for the past two years there has been pretty much no inflation here.  Yippee!  (Real, this time.)

But in the last couple of months the dollar has continued on its downward trajectory.  When I came here in 2008 it took $1.60 to buy one euro.  Six months ago it was $1.19.  Now it's back to $1.37.

Stop yawning!

My students ask why the US would do this (under the assumption that the US is all-powerful and could stop it if we wanted).  My reply:  "The central bank of the US hopes you will buy American.  As the dollar looses value it makes a BMW from Germany and a Toyota from Japan more expensive.  We hope you'll choose to buy a GM product.  So, please, do buy American and give a job to the unemployed people in my country."