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Don’t count on currency revaluation
Posted: March 09, 2011 8:37 pm Eastern
By Ian Fletcher
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In any case, the killer argument against balancing our trade by just letting the dollar fall comes down to a single word: oil. If the dollar has to fall by half to do this, this means that the price of oil must double in dollar terms. Even if oil remains denominated in dollars (it is already de facto partly priced in euros) a declining dollar will drive its price up. The U.S., with its entrenched suburban land use patterns and two generations of underinvestment in mass transit, is exceptionally ill-equipped to adapt, compared to our competitors.
Fundamentally, allowing the dollar to crumble is a way of restoring our trade balance andinternationalcompetitiveness by becoming poorer. That’s not what Americans want, or should want. A tariff is a much better solution.
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Perhaps, some one might care to opinion on this piece of bad advice. A hint of a tariff leads to the Great Depression repeat. Allowing currency to inflate takes us the way of all fiat currencies. If we don’t change course, we emulate the Titanic. Argh! OK, what is the “right answer”.
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In the absence of any good ideas, why not take small steps: reduce Gooferment spending to pre-Clinton levels, repeal “legal tender” laws, and transition away from the FED.
“We don need no stinkin … …” bureaucrats or Wall Street fat cats.
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Reinke Faces Life 