Despite the fact that the U.S. has lost some prestige in recent years (think about the Bush unpopularity and financial disaster), the world can’t survive without an intact and healthily United States.

America serves two very important functions; it’s a huge consumer of global products and its capital markets are irreplaceable. No nation or area stands ready at this time to step into the void that would be created if the U.S. wasn’t able to function.

An important key to economic growth in the U.S. is the strength of its giant multinational corporations such as Exxon-Mobil, General Electric and Boeing (to name but a few) and these giants of industry have one thing in common; they earn more money as the dollar depreciates because their products become more competitive. In fact, some economists are now saying that the engine of growth in the U.S. over the next several years is likely to be the export sector.

Simply put, a lower dollar is desirable because it would help America achieve the right kind of recovery. By itself, the US economy is unlikely to recover because households, banks and businesses will be deleveraging over the next several years as they repair their over-burdened balance sheets, a situation which likely means there will be a fall in potential growth (a lower GDP). And because the chances of seeing something like another housing bubble or large boost in consumer spending are basically nil, an export-led recovery is the best (and easiest to implement) growth strategy the US could employ.

We’re already seeing the positive effects in the August Trade Balance numbers as oil imports plunged and exports grew for the fourth consecutive month. Still, imports from China and Mexico were the highest since November and those from Canada were the highest since December. And because the dollar has weakened even further since then, expect to see this trend continue as both imports and exports grow (although exports will grow at a faster rate).

The facts are that government stimulus programs are reviving demand for American products from Asia to Europe, something which will help correct the trade imbalances which to a large degree fueled the credit crisis to begin with.

The reason this happens is because nations (think China) who maintain huge surpluses in trade have to have  somewhere to park their dollars, and the place they do that is in the most liquid (and safest) market on earth-the market for U.S. Treasury obligations. The enormous influx into Treasuries which began as the 2001 recession ended kept borrowing costs too low despite the Fed’s best efforts to raise them starting in 2004. And all that available credit found a place-the housing market-which ultimately created a disaster for everyone once the bubble burst.

So, the world truly needs a weaker U.S. dollar at this time. The Fed certainly is doing everything in its power to depreciate it, and that’s helped the S&P to advance. And while nothing ever moves in a straight line, expect to see this trend continue well into 2010.