To say that "the root of the problem is currency" is a little myopic. Trying to strengthen your economy by devaluing the dollar is like saying I'm going to my company bigger by laying off employees. Devaluation is much different than inflation/deflation.
Right. I need to be careful with terminology. Deflation does not = devaluation. It's conceivable to have devaluation of the dollar, and an inflation in the nominal value of goods and services. The trick, of course, is to devalue the dollar while also guarding against inflation. Not easy. But that's why those people have PHds in economics and that's why we pay them to run the currency.
Anyone whose been following business news for the last few decades is well aware that not only has the dollar been gently falling, but the Fed is forever vigilant against the boogeyman of inflation. There could be many reasons for that. One reason could be to keep Social Security payouts in check, which are tied to inflation. Inflation alone could crash the Social Security safety net. Another reason could be what we are discussing here...to devalue the US dollar in order to spark long term economic activity on the mainland, but do so without prices running amok.
The good news is that a lot [if not most] of the value of a dollar is set through the so called open market operations of the fed. In short, they set the price of a dollar via bond sales. So the Federal Reserve has many tricks up their sleeve. They have many tools a their disposal.
