My Two - Make That Three -- Cents
13 November 2007
Editor, USA Today
To the Editor:
DeWayne Wickham's analysis of the dollar's declining value is flawed ("Weakening dollar reflects USA's fading world status," November 13). First, prosperity isn't created by a nation having "economic dominance" (whatever that means); it is created by open markets unburdened by excessive regulations and taxes. Second, the size of the trade deficit is no part of the explanation for the dollar's fall. What must be explained is why investors until recently were keen on the dollar (and thus caused the trade deficit to rise) and why they are less keen on it now. I have my hunches for this change in investors' sentiments - namely, Congress's increasing hostility to free trade and its mounting enthusiasm for raising taxes, and the Fed's acceleration of the growth of the supply of dollars.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Editor, USA Today
To the Editor:
DeWayne Wickham's analysis of the dollar's declining value is flawed ("Weakening dollar reflects USA's fading world status," November 13). First, prosperity isn't created by a nation having "economic dominance" (whatever that means); it is created by open markets unburdened by excessive regulations and taxes. Second, the size of the trade deficit is no part of the explanation for the dollar's fall. What must be explained is why investors until recently were keen on the dollar (and thus caused the trade deficit to rise) and why they are less keen on it now. I have my hunches for this change in investors' sentiments - namely, Congress's increasing hostility to free trade and its mounting enthusiasm for raising taxes, and the Fed's acceleration of the growth of the supply of dollars.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Saturday May 3, 2008 at 10:27am
Yes, some people are especially fixated on this premise right now and this perception alters everything they see. Possibly part of the problem is in addition to what you have stated is that the press in this country right now has this same fanciful notion that somehow we have already faded as the world superpower and this premise alters everything they report.