Wednesday, January 18, 2017

Sorry, Mr. President-Elect, The Dollar Is NOT Too Strong

EVEN SOME OF Donald Trump's biggest critics have bought into the weird narrative about how his rhetoric represents the feelings of the "forgotten" and "dispossessed." That's kind of odd stuff in a country as rich as the U.S., and it's especially strange when Trump's talking the very tariffs and currency devaluations most inimical to the economic prospects of those with the least.  Mercantilists and witless economists talk up the falsehood that devaluation stimulates exports, but even if true, it would still defeat the sole purpose of work: to import from across the street and around the world.  To import is why we get up each day, and devaluation by definition shrinks our ability to do just that.

---John Tamny,  RealClearMarkets.  

This is a good piece by John Tamny on Trump's false economics of devaluing the dollar to improve the economy.  I agree that this is a silly idea.  To wit:
Do the average people (that Trump wants to help) realize that Trump wants to devalue the dollars they work for each day? Where’s the media coverage of this? Trump, the alleged populist, is out to devalue the dollars earned by common people who frequently lack the hedging knowledge to mitigate government’s theft of their earnings.  Some would call it a scandal.
While the president-elect talks a good game about the importance of economic growth, talking down the dollar measure amounts to fakery.  To believe it works is as silly as a real estate developer believing he can command more for his properties by devaluing the square foot.  This is not the stuff of a serious country.
I confess,  I have to agree with Tamny on this: Trump is commiting a big boo boo to talk down the dollar and it hurts the middle class worker he purports to help because they're paid in dollars.   Why, praytell would he want to devalue their paycheck so it will buy less, rather than more?

Hopefully, Trump will come to his senses about this soon.

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