Wednesday, May 25, 2005

Walter Willimas on the Trade Deficit

I am not as sanguine as Walter Williams is about our trade deficit. Prof. Williams thinks that foreigners will not stop dumping our debt because they will take a great hit on any investments they have made in American interests. In other words, they can't sell without causing a market run, which will lose them a lot of money. Unfortunately, this assumes that foreigners are not at the point where they have decided that things will only get worse and they better stop digging. Eventually, they are going to decide that it is better to takethe loss now than take a bigger loss in the future, unless hte US gets its fiscal house in order.

But having said that, I think that the problems of our trade deficit come less from free trade than from the pernicious effects of our fiat money economy. I doubt that further government intervention to reduce imports will help the situation. And on that, I suspect Prof. Williams and I are on the exact same page (as we are on so many other issues).

It should be pointed out that Ron Liebermann thinks that our currency problems might have something to do with why we went into Iraq. (That's Ron Liebermann, not to be confused with Ron Leibman, who played a district attorney on a few episodes of Law & Order: SVU.

That is all.

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