The Weak-Dollar Threat to World Order

“When the U.S. turns a blind eye to the consequences of diluting the value (of the dollar) its monetary unit, when we abuse the privelege  of supplying the global reserve currency by resorting to sleight-of-hand monetary policy to address our own economic problems-inflating our away out of the housing crisis, pushing taxpayers into higher brackets through stealth-it sends a disturbing messatge to the world.

Why would  the nation that espouses Adam Smith and the wisdom of the invisible hand permit its currency to confound the validity of price signals in the global marketplace?  How can  Americans champion the cause of free trade and exhort other nations to rid themselves of protectionist measures such as tarriffs and subsidies-and then smugly claim that U.S. exports are becoming “more competitive” as the dollar sinks?

Imagine how Americans would feel if we suddenly realized that our most trusted trade partners have been slowly  but inexorably imposing  a tariff against U.S. goods since 2002-a tariff now in excess of 50%. . .How disillusioning to discover that the leading proponents (the U.S.) of open global trade-the ones who insist on a ‘level playing field’-think nothing of adopting policies that render our products overly expensive for their consumers, even as they profer their goods around the world at inordinately discounted prices.”

 

Judy Shelton, “The Weak-Dollar Threat to World Order,” Wall Street Journal, June 9, 2008, p A17