Weakening the dollar is a good idea
The Dollar Is Too Strong for America’s Own Good
Richard Koo chief economist of Nomura Research Institute in Japan.
Koo argues that the dollar is chronically overvalued to the detriment of the U.S. economy, especially the manufacturing sector.
He says the damage to manufacturers — and factory jobs — caused by the dollar’s strength helps account for the backlash against free trade in the United States.
His proposed solution is a new international accord to lower the dollar’s value, similar to the Plaza Accord of 1985 that was struck in New York’s Plaza Hotel by the United States, Japan, West Germany, Britain and France.
He’s famous, at least among economists, for coining the term “balance sheet recession” to describe Japan’s prolonged slump after its real estate boom busted in 1990.
He sees China following the same pattern now.
Balance sheet recession
https://en.wikipedia.org/wiki/Balance_sheet_recession
https://www.princeton.edu/~pkrugman/debt_deleveraging_ge_pk.pdf
Peter Coy I’d say the reason the dollar isn’t sinking is that there is strong demand by the rest of the world to invest in the United States, including through American stocks, bonds, companies and real estate, and dollars are needed to do that.
The United States, for all its problems, is perceived as a safe haven.
There is another way to look at the same set of facts, which is that Americans have no one to blame but themselves for the trade deficit because they’re under-saving.
Trump is correct that big, chronic trade deficits are a problem, Koo said, “but his tariffs are not the solutions we like to see.”
Peter Coy New York Times 4 October 2024
https://www.nytimes.com/2024/10/04/opinion/dollar-exchange-richard-koo.html
Plaza Accord
https://englundmacro.blogspot.com/2024/06/the-dollar-is-at-its-strongest-since.html
U.S. trade deficit in August $94 billion
11.300 miljarder SEK på årsbasis
https://englundmacro.blogspot.com/2024/09/us-trade-deficit-in-goods-narrows-to-94.html
Tillbaka till Wall Street och Stockholm 5-6 oktober 2024
https://englundmacro.blogspot.com/2024/10/wall-street-och-stockholm-5-6-oktober.html
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