The Wrong Way to Double Exports

Beware of President Obama's call for a doubling of U.S. exports over the next five years as a way to reduce the unemployment rate. The obvious quick route to export success for any nation is to depreciate its currency. Dollar depreciation is already being pushed by the Obama administration as the key solution for resolving our massive trade deficit with China.

Meanwhile, the president is tapping into widespread concern over our nation's future role as a global leader to justify even more spending by government. It hardly matters that proposed new outlays are cleverly branded as "investments" in training, research or infrastructure; it still amounts to increased government spending that can only worsen our perilous fiscal condition.

For the Obama administration, it all works conveniently together. The government will continue to run a large budget deficit, which must be financed by issuing more government debt. The debt is monetized when the Federal Reserve purchases it from the public. The effect is to increase the money supply. Inflationary monetary policy goes hand-in-hand with a falling dollar in foreign-exchange markets.

If you think the government makes better decisions on where to invest, how to innovate, or who to train, you may perhaps accept the consequences of inflation that inevitably result when the money supply is expanded to accommodate excessive government spending. But if you trust the private sector's ability to better discern the most promising avenues of research leading to productive future gains, it merely adds insult to injury to have your own purchasing power reduced as the dollar is diluted.

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Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

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Professor Jacques Rueff

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