Monday, January 24, 2005

Dollar's Steep Slide Adding to Tensions U.S. Faces Abroad

The The NYT comments on the political economy of exchange rate determination.

It is an important lesson of the 1920's and 1930's that failure to coordinate international economic policies during times when great adjustments need to be made in the relative consumption power of different nations can lead to great political friction.

I hope global policymakers remember this lesson from history. The last time, the consequences were quite nasty.


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