Well, you're not the smartest reader I've had.
Posted on 01/18/2017 5:19:10 AM PST by expat_panama
Imagine a short person spending his days cursing the “strong” inch for it “robbing” him of impressive height? Better yet, please contemplate a compulsive eater who blames his substantial weight on a pound that is too “weak.”
Wise minds would mock the unhinged individuals who would rage at the foot ruler, inch, pound, and scale for revealing reality. Such people would logically be the object of our ridicule and scorn, or maybe just pity. Scales, rulers, inches and pounds are measures. Nothing else. They don’t weaken or strengthen us. They just are.
What’s important about them is that if the inch were “weakened” as it were to half its original length, and the pound were “strengthened” to double its present weight, neither would alter reality. The person of diminutive stature would still be small even if a newly defined inch rendered this person 10 feet tall. Just the same, a “strong” pound won’t suddenly loosen clothes that used to be tight.
So while we would properly laugh at people inclined to curse reality, economists and politicians who blame economic performance on a “strong” dollar are viewed as wise. Who cares that the economically prosperous U.S. had a strong, stable dollar for almost all of its first 200 years of existence; to believe the President-elect and most economists, devaluation is the sale-inducing path to prosperity according to modern thinkers operating free of reason. Our new president says the dollar is “too strong,” that “Our companies can’t compete” because “our currency is too strong.” See above and laugh. Or cry.
Back to reality, the obvious problem with the much-beloved devaluation scenario is that when we individuals trade, it’s products for products. That’s the sole reason we produce in the first place; to get what we don’t have. To import. Money just facilitates our getting. Nothing else. Yet to our new president and countless economists, prosperity is all about “exporting” things. No, prosperity is all about importing things.
Think about it. Do any of you readers get up and go to work each day just for dollars? Is your sole purpose to “export” your labor? Not by a mile. You export so that you can import. That’s the only reason you work. Some of you might save the proceeds of your work for a later date, or to pass on to husbands, wives, children and grandchildren, but even then it remains the truth that you’re saving so that someone else can import, or get. It’s all so basic, right?
Not to our incoming president, and all manner of economists on the left and right. They cheer on dollar devaluation because it supposedly renders the goods and services we produce cheaper; thus easier to export. Ok, but we earn dollars. If the dollar is devalued as Trump et al desire, and we get back cheaper dollars in return for our toil, then the sole purpose of our work is taken from us. It’s taxed away by devaluation. We get cheapened dollars that buy less in return for our work. Devaluation robs us.
Yet Trump thinks the dollar is “too strong.” Ok, but if it’s cheapened we have a reduced incentive to produce in the first place. Why work for dollars that don’t buy very much? Also, if we’re not buying from others, how can they buy from us? These minor little details are never asked by a political class so intent on devaluing the money we earn.
Of course, that’s only part of the story. There are other realities to consider.
It’s said that companies with an eye on exporting (meaning, they have an eye on importing) benefit from a weak currency. But a weak dollar can’t alter reality any more than can a shrunken inch or expanded pound change what’s true. “Money is a veil,” to quote the late, great Robert Bartley, longtime editorial page editor of the Wall Street Journal.
This is important because when companies produce goods for sale, they “import” inputs from across the street and around the world. This matters simply because a devalued dollar logically drives up the price of everything necessary to produce marketable goods. Indeed, does any mildly sentient being believe that Treasury can shrink the purchasing power of the dollar without those who produce for dollars asking for more of them in return for what they’re selling? Only to economists and politicians untouched by reality does devaluation cheapen exports! What a laugh.
What about shipping? Trump and his crowd are made giddy by the word “export,” export of goods “manufactured” in the states really makes them giddy despite the reality that rich countries generally design goods while enlisting poorer countries in the low-value work of manufacture. But shipping costs a lot of money. And it becomes quite a bit more expensive in dollars when the dollar is being weakened. Figure that in the 70s and 00s the dollar was severely devalued, and the prices of oil, airplane fuel and all other transportation commodities soared.
And then there’s labor. Trump and his protectionist friends love labor-intensive industry, they in particular get frisky when the labor is based in the United States, but last this writer checked these workers earn dollars in return for their toil. And if Trump is to be believed, these dollar-earning everymen were his base of support in the most recent election. Do these average people realize that Trump wants to devalue the dollars they work for each day? Where’s the media coverage of this? Trump, the alleged populist, is out to devalue the dollars earned by common people who frequently lack the hedging knowledge to mitigate government’s theft of their earnings. Some would call it a scandal.
While the president-elect talks a good game about the importance of economic growth, talking down the dollar measure amounts to fakery. To believe it works is as silly as a real estate developer believing he can command more for his properties by devaluing the square foot. This is not the stuff of a serious country.
John Tamny is editor of RealClearMarkets, Political Economy editor at Forbes, a Senior Fellow in Economics at Reason Foundation, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). He's the author of Who Needs the Fed?: What Taylor Swift, Uber and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank (Encounter Books, 2016), along with Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You About Economics (Regnery, 2015).
...you seem to believe you’re in control...
Absolutely not, you chose to make the big talk about money so you're the one stuck making the choice that comes next: show me the money or drop it.
This little game show rap you’ve got going is just goofy. Show you the money? What? You’re the fool who keeps claiming that exchange rates have “no effect” upon trade. My goodness, I guess the Brexiteers have no reason to fear, and neither do we. Our good offshore trading friends have nothing but our best interests at heart and there is no advantage whatsoever with their currency being perpetually lower than the US dollar. Nope, none at all. Strong dollar goooood. Tariff stupid. Strong dollar good. Tariff stupid. Keep on repeating that mantra, it’s worked for going on three decades. Something tells me it’s about to stop working, though. You might want to find a new schtick.
Trump has watched this for years, and he’s about to put the smack down.
Hello...wake up and smell the coffee...
Carrier, Ford, GM, Alibaba, Apple, and many others have already announced they will invest in American manufacturing over Mexico or other cheap labor countries.
And Trump is not even inaugurated yet. Nothing personal
at all against you, but Trump has probably done million times bigger deals with foreign countries than most of us here, so I prefer to believe him over naysayers.
Learn to read.
I asked a polite question.
Thank you for your answer.
Thank you for your insult.
Much appreciated.
Learn not to post like a raving lunatic capitalizing every other word. I bet your real voice is annoying as hell as you emphasize every other word. No one can tell what is important when you do that.
“The last thing we need is a weak dollar and more imports...””
—you
http://www.freerepublic.com/focus/news/3515161/posts?page=100#100
If that doesn’t mean “weak doller” = “more imports”... well, actually, it does mean that.
Maybe you mistyped but that is what you typed.
Well, you're not the smartest reader I've had.
As opposed to you, I actually worked for 23 years in a corporation which designed and manufactured automation machinery for others.
Yes, our machines eliminate simple assembly jobs, and simple machining jobs, but to design, build and maintain that automation machines, we employed highly skilled engineers, highly skilled machinists to operate computer controlled lathes and milling machines, welders, flame cutters, computer programmers, robot programmers, etc etc.
So it is basically transformation from low skilled jobs to highly specialized skill jobs.
“The last thing we need is a weak dollar and more imports...”
—you
http://www.freerepublic.com/focus/news/3515161/posts?page=100#100
In reality, a weak dollar buys fewer imports.
I agree, that income taxes generally punish hard work and success.
I also believe that a worker producing products which are useful and have a demand in marketplace should be taxed lower than very short term capital gains. Long term capital gains should be indexed to inflation.
I have personal/professional knowledge of one of those deals you've mentioned, and it's really a lot of B.S. at the end of the day. The company will be investing in a new plant and hiring X new people, while shutting down other locations that will result in the loss of 2X jobs. It's a restructuring more than anything else.
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