The bankruptcy of economic policy was on display with the U.S. Treasury’s recent release of its “watch list” of potential currency manipulators. Conspicuously absent was the biggest manipulator of the 21st century: Uncle Sam himself. Washington’s decision in the early part of the last decade to “gradually” weaken the dollar to stimulate the economy and boost exports led to the economic disaster of 2007–09, which, in turn, led to the disastrous election of Barack Obama.
Countries that are fooling around with their money are only following our dreadful example.
Volatile money hurts investment, the key to a higher standard of living. Like a computer virus, currency instability corrupts the information that marketplace prices are supposed to convey. The surge in oil prices from around $20 to $25 a barrel to well over $100 led people to believe we must be running out of the stuff. As happened in the 1970s, when we last debauched the dollar, prodigious amounts of capital were directed into the energy sector. When the dollar strengthened, oil crashed, and considerable anguish ensued.
Currency manipulation never leads to long-term economic strength. Ask Brazil, Argentina and Zimbabwe. 254 West 23rd St. (Tel.: 212-352-0075) Eventi Hotel, 849 Avenue of the Americas, at 30th St. (Tel.: 212-201-4065) 1586 Second Ave., at 82nd St. (Tel.: 212-988-1112)