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Magic Checkbooks and Demonic Checkbooks

Suppose that you invent a magic checkbook.  With this Magic Checkbook you can write checks as payment in full to anyone in exchange for each and every good or service that you buy from others.  But these others – these sellers – upon receiving your checks as payment for the valuable goods and services that they sell to you, are enticed by the magic of your checks to stash each check away into a mattress.  None of the checks that you write will ever be cashed.

Does the magic of your checkbook make make you richer than or poorer than (or leave you the same as) you would be were your checkbook of the mere ordinary kind that supplies checks that are cashed by those to whom they are written?

I for one would love to have such a Magic Checkbook!  I’m quite sure that it would make me richer than I am with my plain old ordinary checkbook.  But if many commenters on trade are to be believed, not only should I not wish not for a Magic Checkbook, I should instead positively drool for a Demonic Checkbook – that is, a checkbook that not only allows, but forces, those to whom the checks are written to quickly multiply their claims on the real wealth of the check writer.

For example, a $100 check written from the Demonic Checkbook would allow the person to whom it is written to legally claim $200 worth of the check-writer’s property.  Users of Demonic Checkbooks would find themselves exporting from their households a multiple of – say, twice – the value of each check they write.  Were my checkbook demonic, the $100 check that I wrote to buy groceries would compel my grocer to take from my home $200 worth of my stuff.


In reality, the best possible scenario for the people of country A who trade internationally is for their trading partners never, ever to lay claim to anything of value from country A.  The best possible scenario for the people of country A would be for their trading partners to treat country A’s currency (or whatever it is the people of country A use as media of exchange in international transactions) much like the Magic Checks above: received by foreigners as payment for goods and services sold to the people of country A, but never returned by foreigners to country A to claim anything of value from country A.

Of course, also in reality, foreigners are not stupid: they sell to the people of country A only to acquire the means to buy – either today or tomorrow – from country A.  Foreigners aren’t interested in impoverishing themselves and enriching the people of country A by supplying free lunches to the people of country A.  Nevertheless, if foreigners treated the U.S. dollar as checks drawn on a Magic Checkbook, the result would be unambiguous material betterment  for Americans and not – as supposed by Trump and other protectionists – material impoverishment.

Trump and other protectionists believe that Americans would be better off the more demonic are our checkbooks: the greater the amount of our stuff that foreigners receive in exchange for whatever goods and services we receive from foreigners.

In the minds of these mercantilists, the ideal situation is one in which foreigners buy our goods and services using Magic Checkbooks (meaning that we never redeem the checks that we receive as payments from foreigners) and that we pay for all of our imports using only Demonic Checkbooks (meaning that each check written as payment by an American to a foreigner entitles that foreigner to an amount of real goods and services from Americans that is a multiple of the amount that each demonic check is written for).  It’s nutty, but it’s the predominant view of international trade.