Saturday, October 24, 2009

Paul Krugman, and the Middle-Class Champion Myth

Good stuff from John Tamny, showing yet again how easy it is to debunk Paul Krugman. In this article, he explains why debasing the dollar in an attempt to export more is a loser's game and hurts the poorest Americans the most.

Money quote:

The Obama Treasury can do as the Bush Treasury did and talk down the dollar, but eventually all prices must adjust. So while a weak dollar might in the near-term make U.S. goods attractive, the globalization of production means that the costs of the myriad imported inputs that go into the creation of U.S. goods will eventually have to rise. Inflation steals the benefits of devaluation, and ultimately renders the notion of "money illusion" moot.

Paul Krugman, and the Middle-Class Champion Myth

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