Issue 609 If Business Come Back June 10, 2015

I was watching the news one day and they said something interesting.  That if all the overseas businesses came back, that it may cause hyperinflation and thus crash the economy.  Here is a summary as to why they said this.

If they return:  At current, the United States has high inflation with its money.  This means we are printing more money and thus the value of the dollar itself has decreased.  This is due to the same supply and demand principles but this time in relation to money.  Businesses overseas do not bring money back to the United States so as to avoid taxation.  As such, that money is removed from the United States economy and thus does not contribute to inflation of our dollar.  Basically, country borders add a degree of separation and thus keep our dollar’s value up artificially.  However, people want these businesses brought home so that we in the country can benefit from the jobs that will be created.  As such, the businesses will bring all that money they stored overseas back with them, and this will flood the United States with massive amounts of currency.  The problem there is that all that money coming back.  It will result in hyperinflation as so much money will be returning to within U.S. borders and its economy that the value of the dollar will plummet due to the large supply and thus a loaf of bread could be worth $100 or more.  In short, we may be burning money just to stay worm like in the great depression.

Conclusion:  In truth, we only want businesses to come back if the businesses can make a profit.  Right now they profit because it is cheaper to make goods overseas.  But the real issue is inflation and the policies that contribute to that.  As such, the Federal Reserve would have to set up a method of raising the dollar’s value on a one to one scale as each business comes back one by one.  In short, a long and lengthy process will need to occur to avoid an economic depression.  This problem can be avoided, but it will cause economic issues and thus harm businesses already here in the United States.  So businesses coming back from overseas may not be worth it after all.