After the American Century
Times are bad, so it is time to use all the resources that consumers have at their fingertips. According to a Danish news story, the average home here has about $250 in foreign currency lying around. Rather than exchange euros, dollars, and other money back into Danish kroner, people just hang on to it until they travel again. In good times, this might not seem important. But imagine the economic effect if all this money were spent right now?
Assume that the c. 100 million American homes have just $50 each in foreign currency in their desks and piggy banks. If they could be convinced to spend it all, this would suddenly pump 5 billion dollars into the economy. The government could encourage this to happen. Exhortation might not be enough, but what if banks were given an incentive to reduce their profit-making on exchange rates (into dollars, not out of dollars to other currencies) for a period of just one month. Through that window of opportunity, billions of dollars could pour into the economy.
This idea would strengthen the dollar, at least for a short while, and it would stimulate the economy. After that, we can have a worldwide search for money forgotten in old clothing or under the sofa cushions.
