Chrysler Corp. is planning a two-week shutdown in July, to create "efficiency across organizational lines and boost productivity." The automaker has been in restructuring mode for more than a year, so that explanation is a bit unsatisfying. The fact that Chrysler’s vehicle sales totals are down more than 12% for the first two months of 2008 is more revealing of what this means: the company cannot move enough cars and trucks, so it is planning to slow production.

Vehicle sales are down for various reasons – but the overriding fact is that consumers aren’t buying or leasing new cars and trucks. They don’t feel confident about new purchases, and they’re feeling poorer as fuel and food prices rises, too.

Since last September there has been an open question about the importance of U.S. currency values: the ongoing policy of the Federal Reserve Bank is to lower the prime interest rate (the rate at which banks borrow money from the Fed), in a strategy of making it cheaper for banks to lend to borrowers. Their goal is to keep money circulating in the economy, in the expectation that this will hold down inflation.

But, the policy has made U.S. dollars less valuable. This was greeted as good news last fall by U.S. manufacturers who saw it as an opening for them to gain more international customers. There is much disagreement about the validity of that expectation.

There is no debate about one effect of devalued currency: it makes everything more expensive for consumers, individuals and businesses alike. Rising costs for basic purchases like food and fuel feed near-term and long-term economic uncertainty. Thus, a devalued currency inhibits individuals and businesses from buying things, and that’s not good in any way.

Chrysler’s decision to go idle will impact all of its suppliers, and it may encourage similar slow-downs at Ford and GM, too. There will be ripple effects, up and down the automotive supply chain.

The weak-dollar experiment has been tried, and it’s not working. The Fed should stop trying to pour money into the economy, and the U.S. Treasury Dept. should be working to support the currency, and encouraging our trading partners to do so, too.