Stop the Presses: Treasury Secretary Mnuchin Believes in Economics, High Dollar Hurts Exports

January 25, 2018

The level of ignorance among people who report on economic issues can really be astounding sometimes. Steven Mnuchin made a statement about trade that is almost definitionally true. He said a weaker dollar would improve the trade balance.

This is associated with the idea that a low price increases demand. When the US dollar falls, our exports are cheaper to people living in other countries. Fans of economics believe this will cause them to buy more US exports.

On the other side, imports are more expensive for people in the United States. This will mean that we will buy fewer imports and instead purchase more domestically produced items.

Somehow, the fact that Mnuchin accepts this simple economics is deemed major economic news. Of course, it does follow from this that a lower valued dollar would reduce the trade deficit. Mnuchin did not go so far as to argue for a lower valued dollar, unlike some prior Treasury Secretaries, but if the Trump administration actually cared about the trade deficit, this would be the logical way to go.


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