<<So do you get why China pegged its currency below the dollar to ensure that it would not rise in value against the dollar for years?>>
No, I'm not all that familiar with China's economy and its needs, but China's situation is very different from America's and what's good for China is not necessarily good for the U.S.A. There are so many differences between China's economy and that of the U.S. that this question can get us both sucked into discussions of the Chinese economy which, at least on my part, and I suspect yours as well, will be rendered pretty useless due to my and perhaps your basic ignorance of the subject.
<<The currency being very strong made exports expensive to furreners now less so. The balance of trade will be directly affected . This is like all of us takeing a pay cut to produce a few extra jobs in exports.>>
Well, yes, except that the hardship experienced by the vast majority of the population in the form of increased prices for energy vastly outweighs the economic benefits to the export sector. This in fact is the "belt-tightening" scenario that I depicted in my post - - there will be horrible domestic effects, lost jobs and businesses due to sky-rocketing fuel costs, freezing homes in winter, cuts to all services and entitlements, ballooning crime rates - - and at the same time an increase in export volume IF the rising costs of imported energy and transportation don't nullify any increased sales due to a weaker dollar.
<<It is bad I don't deny , but it is not all bad and you can't insist on having it both ways . . . >>
But I didn't. I conceded the possibility of some parts of the export sector benefitting from the weaker dollar.
<< . . . the trade deficit is a consequence of a strong dollar , mostly ....>>
Absolutely not. A weak dollar is a response to a negative balance of trade. A positive balance of trade means more foreigners bidding for U.S. dollars in the world currency markets, which drives up the price of the dollar against the currency of any country whose people are bidding for dollars. Conversely, weak U.S. exports weaken the demand for U.S. dollars and drive the dollar down.
<<So Exporting industrys will benefit , imports will decline the "balance" of trade will look better.>>
Sure the balance of trade will "look better." But the standard of living will look a lot worse. That is always the case with countries requiring drastic currency readjustment. "Imports will decline" will make the balance of trade "look better" but in real life that means less petroleum for business and recreational transport, less power for home heating and less raw materials for manufacturing. Less petroleum (or, same thing, more expensive petroleum, therefore available to fewer people) means that businesses dependent on transportation adjust to the higher cost of fuel by laying off workers, raising prices and/or slashing the paycheques of the workers and/or owners and managers. These folks now have less money to pay for higher-priced food. Don't confuse a "better looking" balance of trade with a higher standard of living. When the basic cause of both is a falling dollar due to profligate spending and declining exports (a fatal combination IMHO) then the good-looking balance of trade (really just a piece of paper, a means of score-keeping) is a very poor compensation for the real-life misery caused by inflation and declining living standards.
<<All in all I prefer the imbalance that a strong currency gave us ,but the full employment a weak dollar is likely to cause will be nice too.>>
For the reasons outlined above, of course, your weak dollar will likely not be able to produce full employment and there will be nothing nice about the sharp decline in the standard of living, which will never be off-set by the relatively minor increases, if any, in the export markets.
