[lbo-talk] Prospects and consequences of a devalued USD

[James Heartfield]

A few years ago I was asked by the University of Delaware's London program to give a talk on the dollar, to explain to the visiting students why their dollars were not buying very many goods in over-priced London. I hoped to catch their attention at the start of the talk, by tearing up a dollar bill .... I have never lost an audience so quickly or completely.

Isn't the standard account of the course of the dollar that Americans bought too many foreign goods with their artificially high dollar, suffering because the Chinese Renminbi was artificially pegged to the dollar? I seem to remember that there was a big outcry when G.W. Bush decided to let it slide.

Presumably the dollar, if allowed to find its own level would slide relative to the Renminbi, (but not necessarily relative to the Euro) so that Americans would lose some purchasing power, while U.S. producers for foreign and domestic markets would be more competitive: net transfer of wealth from wage-earners to manufacturers.