Here’s a letter that I sent today to the New York Times:
Paul Krugman writes that “It’s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro. But that would be a good thing for the United States, since it would make our goods more competitive” (“Taking On China,” March 15).
In other words, Prof. Krugman believes that it would be a good thing if Americans’ purchasing power falls along with the value of what we receive in return for what we sell.
To prove to skeptics the brilliance of his economics, Prof. Krugman can personally demonstrate why his plan is so splendid. He can petition Uncle Sam to do two things: (1) replace half of Prof. Krugman’s portfolio with Monopoly money, and (2) force Prof. Krugman to reduce his salary and his speaking, writing, and consulting fees by 90 percent.
Prof. Krugman’s purchasing power would, of course, fall, what with merchants not being very keen on accepting Monopoly money. But no worries, because Prof. Krugman’s “goods” – his lectures, his consulting skills, his books, and the like – would all become more “competitive.” Universities, newspapers, and other institutions that cannot now afford to purchase Mr. Krugman’s pricey services will, under this plan for his betterment, be better able to do so.
How much wealthier he will be!
Donald J. Boudreaux