----- Original Message ----- From: "Eugene Vilensky" <evilensky at gmail.com>
Well said, and maybe it's that I'm unclear on many fundamental economic concepts, so the situation is confusing, i.e. America is running unsustainable policy but a change in Americans' consuming habits would be detrimental for the whole world so everyone will do what is in their power to maintain the current system? All this talk of inflating the way the debt seems to be a real pocketbook issue. Rising inflation and stagnating wages and employment doesn't sound appealing.
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For an interesting perspective see the paper by Thomas Palley at the bottom of the following link:
http://archives.econ.utah.edu/archives/pkt/2004m01/msg00008.htm
Dear Colleagues,
Please find attached a policy discussion paper titled:
"Beyond the Over-valued Dollar: A New Agenda to avoid Future Dollar Misalignments."
The dollar's valuation roller-coaster has imposed large costs, especially on manufacturing.
Whereas the euro and the yen have adjusted significantly, the Chinese yuan has not. This means China is exporting deflation, and revaluation of its currency represents a major piece of unfinished business.
In addition, policymakers should implement a system of exchange rates that avoids future major currency misalignments. Such misalignments impose large welfare costs. With the world economy showing signs of shaking off the recent economic slowdown, now is the time to implement a new system that avoids these costs.
Tom Palley