- Cafe Hayek - https://cafehayek.com -

Washington Times Letter on Deficient Thinking about Trade

Tweet [1]

In this January 18th, 2005, letter in the Washington Times I countered some claims made by Alan Tonelson about trade deficits [2]. (FYI, sometime this July in DC, under the auspices of The Fund for American Studies [3], I will debate Mr. Tonelson on trade. I’ll post details as I learn them.)

Alan Tonelson is confused about the trade deficit (“Behind the falling dollar,” Commentary, Monday). First, he assumes that a trade deficit is synonymous with indebtedness. It is not. Second, he accuses the high U.S. trade deficit of prompting the dollar’s fall and, thereby, threatening the dollar’s status as an international currency. He forgets that demand for dollars as an international currency itself is a large factor contributing to the U.S. trade deficit. Third, he worries that our trade is imbalanced. It isn’t, for our current-account deficit is matched by our capital-account surplus.

DONALD J. BOUDREAUX
Chairman, Department of Economics
George Mason University
Fairfax

Comments