“To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US. The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create. What needs to be discussed is the terms of the world’s surrender: the needed changes in nominal exchange rates and domestic policies around the world.”
Martin Wolf, Financial Times, 12 Oct 2010
Oh, so the rest of the world thought it could have export jobs in perpetuity?
Under any balance of trade agreements the rest of the world will lose those jobs anyway.
I have a suggestion for Mr. Wolf. How about the rest of the world eliminate value added taxes from US manufactured goods? That would allow people to purchase more at a lower price and strengthen the dollar.
Of course, Wolf is a Keynesian and that implies less government on the other end. Too simple a solution for a dummy like Wolf.