Wednesday, January 25, 2006


I don't know how I feel about explicit inflation targets ...

but, this criticism of Bernanke (who seems to be one of Bush & CO's better appointments -- along with Wolfowitz at -- is it the IMF or World Bank -- although he was awful in DoD, he actually has some good ideas about international finance -- and, surprisingly, Rice at state -- although she does show signs of shilling for the admin, she seems to be more competant than she has been in other contexts) seems a bit bizarre: how, from the perspective of a central banker looking at the long term, is keeping down inflation, a domestic devaluation of the dollar, much different than minimizing the devaluation of the dollar on the world's currency markets. Indeed, some inflation is merely what happens when, following global devaluation of a currency, people pour money into an economy 'cause its goods and services are cheaper for them than they are at home.

But then again, not being an economist, I guess I don't really understand these sorts of things ...

Also -- couldn't the dollar stand to be devalued a bit? It would certainly help our balance of trade ... unless the idea is that some people like our trade deficit. Hmmm ... now why would a free trader like us to have a trade deficit? In order to maintain some sort of status quo of "comparative advantage" in which the rich coutries stay rich and the poor ones stay poor to provide resources/cheap goods for the rich? If the poor countries' currency can go further on the world market, that kinda eliminates the sort of inequalities which allow poor countries to produce goods cheaply for rich ones, doesn't it?

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