Mr. Donald J. Trump
Mr. Trump:
Speaking yesterday in Wisconsin you complained that some countries might soon stop using the dollar as a global reserve currency. You also repeated your frequent grievance that America consistently runs trade deficits.
Your unawareness of the gross contradiction in your twin gripes is alarming. A major contributor to American trade deficits is foreigners’ use of the dollar as a global reserve currency. Every dollar that foreigners hold as reserves or use to conduct commerce with each other is a dollar that foreigners do not spend on American exports; it’s thereby a dollar added to America’s trade deficit.
Despite your long-standing belief, these trade deficits are an economic boon to Americans. But if, contrary to fact, these trade deficits were a bane to Americans, you should encourage foreigners to choose some currency other than the dollar to use for global reserves. That you instead threaten foreigners for their suspected desire to abandon the dollar as a reserve currency reveals only that you are frighteningly clueless about international commerce.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
