Real World Economics: How economic fallacies lead to bad policies – St. Paul Pioneer Press

by | Oct 2, 2022 | Financial

Ed LottermanA New York Times headline, “The Dollar Is Strong. That Is Good for the U.S. but Bad for the World,” was a kick in the gut to economics teachers.
Teach college econ for 35 years and you feel like Sisyphus, the mythic Greek who was condemned to push a rock up a mountain only to see it roll to the bottom every time.
And this mistaken nonsense comes at a particularly bad time.
Econ profs know and teach that currency exchange rates are prices. Whether a higher price is good or bad depends on if you are buying or selling. You never see the N.Y. Times declaring, “High toilet paper prices are good for the United States.”
Forget the notions of “strong” and “weak” where it applies to currency. A high-priced dollar relative to other currencies is good for consumers. Imports such as European and Asian cars, electronics, steel, wine, cheese, ham, etc. are cheaper. And this pressures competing U.S. producers to not raise prices. It helps curb inflation. Low-priced British pounds and EU euros make vacations in Europe cheap. Great for our consumers, and maybe “bad for the world.” But also bad for Minnesota iron miners, farmers and med-tech workers and anyone who proclaims “Made in USA.”
The pricey dollar, or cheap pound and euro, means that giant local employers like 3M, Medtronic, Boston Sc …

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