[Alberta's Child]

One such update is that fixed-exchange-rate countries are unfair. Fixed exchange rates, it is being argued, are protectionist. But this is an old-school mercantilist view, even though it’s sadly bipartisan — both Senator Kerry and at least Treasury Secretary Snow share this view.

Both Kerry and Snow are absolutely wrong about this, though I suspect Snow only "believes" it insofar as he must give it some lip service for political reasons.

Fixed exchange rates like we see between the Chinese yuan and the U.S. dollar only work when one nation (China) is exporting heavily to the other (the U.S.) without needing large quantities of resources from other nations. Otherwise, what happens is that the "export" nation (China) gets really screwed when the currency of the "import" (the U.S.) fluctuates dramatically on the world market. In recent months, for example, the Chinese yuan has declined in value against the Euro not for any reason related to these two currencies, but because the yuan is linked to the U.S. dollar and the dollar has declined against the Euro. As a result, the price of a commodity supplied by a third-party nation (oil, for example) rises dramatically in China simply as a result of U.S. dollar weakness -- even if there is no change in the demand for oil in China.

[GOP_1900AD]

But wasn't a factor in movement from our trade deficit position of most of the 19th century, to our trade surplus position of the early 20th, a direct result of the GOP policies during that same time? Particular policies of note were limited focussed use of tarrifs against countries who do not engage in good faith currency and trade practices, the reduction / elimination of domestic corporate taxes, backing our currency explicitly with precious metals held in reserve, an anti globalist - pro bilateralist foreign policy and trade negotiation paradigm, a national defense build up and strong focus on the defense industry without fear of any sort of military-industrial complex faux bogeyman, and a generally energetic nationalism. Why don't modernists, progressives, 3rd way idiots and other libertines want to openly discuss these truths?

[GOPcapitalist]

Get ready for flames from the neomercantilist crowd. They despise economic analysis that proves their position is fraudulent even more than they despise imports.