Curiosity Over Pride
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Forgive me as I am still learning. Are we not better off having a "weak" dollar to a certain degree on a chronic basis as this promotes exports and consumption of the goods we produce ourselves? I realize there are many other factors to consider but in general it would not seem there are lots of advantages to a strongly valued currency on an international level? Maybe if you want foreign investment? What am I missing.I assume you are drawing a parallel with current attempts to prop up the Euro and that you don't see it working? Will people take their cue from all this and devalue it anyway?
Re: "Are we not better off having a "weak" dollar to a certain degree on a chronic basis as this promotes exports and consumption of the goods we produce ourselves?"Zero-sum issueFrom what perspective do you want to look at this from?Add them all up and they equal zeroThe problem with the idea of asking a question like this from a "we" perspective is the problem of psychiatry in a nutshellWhich "we" perspective are "we" talking aboutHaving said this, "yes" from some perspectives "we" are better off only there is always an externality created.Think about my piece on non-zero sum and how non-zero sum still become zero sum when you change boundary conditions.
Perhaps the most obvious response to why a weaker dollar does not necessarily make us better off is: "Wouldn't Zimbabwe have one of the strongest economies in the world if this were true?"... I know you said "to a certain degree" but I'll assume you get my point.If I subsidize you long term, are you better off?"Yes" (you have more money and your life is easier) and "no" (you might become dependent on it and therefore vulnerable and or it could make you lazy, etc... therefore making it harder for you to compete on your own if you do, etc...)
ok. I get that. Thanks
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