The Buck Stops Where?

Brad DeLong notices that Simon Johnson is writing about the Dollar.

The U.S. dollar has depreciated in real effective terms about 20% since its most recent peak in 2002. It has also depreciated since the financial turmoil of the summer -- about 3% since the beginning of August. And at today's exchange rate, we still regard the dollar as overvalued relative to its medium-term equilibrium value -- just remember this is NOT a statement about what the dollar will do today or any time soon!!

With regard to addressing the issue of "global imbalances," which is the term used to describe the large current account deficits and surpluses around the world, we think that exchange rate adjustment -- changes in the value of the dollar and other currencies -- can play a role. But exchange rates are not the only issue; it's also about appropriately adjusting the balance of savings and investment around the world. The strategy for doing this was laid out most recently in a set of mutually consistent policy plans known as the Multilateral Consultation. This framework provides the best way to ensure that adjustment around the world will be orderly and symmetric, i.e., everyone does their part and global growth is sustained.


Brad thinks Simon is being a bit too polite here:

And there Simon stops, demonstrating a true mastery of IMF-speak. If he weren't working for an organization loathe to criticize its governmental masters in public, he would say that China needs to (a) boost domestic consumption, and (b) let its exchange rate appreciate more rapidly, while the United States needs to (a) boost private savings, and (b) raise taxes.

For seven years Americans have listened to Republicans saying that we could spend and spend and never have to pay. They lied. Kevin Drum points out that it's not just a national problem. The Governator's own pass the buck scam is coming undone.

Americans show little sign of realizing that the time to pay for the party is coming, even if almost all the benefit of the party went to a few super rich people.

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