Obama sees Bush behind weak dollar

Barack Obama, speaking at a gathering in Gary, Indiana, made some very accurate comments about the dollar’s weakness and its causes (see Reuters story).

“We are spending all our money, spending overseas and spending dollars and nobody is buying things from us,” Obama told a town hall event in Gary, Indiana, in response to a question.

“What happens is Saudi Arabia’s got a lot of dollars because they’re selling a lot of oil. In China, they have a lot of dollars because they’re selling us all the things all the stuff we used to make right here in Gary,” Obama said.

“And at a certain point, they say you know, we have enough dollars,” he said. “Our banks are full of them right now.”

In addition, he correctly blamed the fiscal irresponsibility and profligate spending of the Bush administration for part of the problem.

“We’ve been borrowing money like nobody’s business from China. We’re like that cousin who always comes over and never seems to have job. You know that guy who always has new rims on his car,” Obama, who is vying to be the Democratic nominee against Republican Sen. John McCain in the November election.

Obama said that the national debt has gone up sharply because of the Iraq war, which by the time it is over “will cost us over $1 trillion.”

At the same, Bush has given “tax cuts to some of the wealthiest Americans who didn’t need it and weren’t even asking for it.”

Most heartening, however, was his understanding of its remedy: investment in infrastructure – both in human and in physical terms. He is very astute in understanding that America cannot spend its way to prosperity. The U.S. must save and invest for the future in order to make gains that hold over the long-term.

“The point is, the way to strengthen the dollar is to strengthen the economy and the way to strengthen the economy is to invest in our infrastructure, invest in our information systems, roll back those Bush tax cuts, end this war, get our budget in balance,” Obama said.

“If we do those things then over time, the dollar will actually get stronger,” he said.

While his populist take on free trade makes me suspicious about some of his economic policies, comments like these demonstrate he has much more savvy about the economy than either McCain or Clinton.