Thursday, September 29, 2011

Cosmic Solution

Cosmic inflation is purported to solve many ills that beset big bang cosmology.

C. Fred Bergsten, an assistant Treasury secretary from 1977 to 1981, and director of the Peterson Institute for International Economics, says its Earthly namesake can have similar benificent effects down here below.

BY virtually ignoring trade, President Obama and Congressional Republicans are missing a major opportunity to create jobs. The United States runs an annual trade deficit of about $600 billion, or 4 percent of our entire economy. Eliminating that imbalance would create three million to four million jobs, according to Commerce Department estimates, at no cost to the budget.
First, the United States must, in effect, weaken the dollar by 10 to 20 percent. This step alone would produce one million to three million jobs. It’s been done before: In 1971, President Richard M. Nixon ended the dollar’s convertibility in gold, and in 1985, Treasury Secretary James A. Baker III reached an agreement with foreign countries to devalue the dollar relative to the yen and the Deutsche mark.

Paul Krugman has argued similarly. Obviously, such a strategy is hardly costless. It's a tax on savers, and will immediately raise our borrowing costs as well as the prices of everything we buy from abroad - like oil and Ipad parts. It would also be another stick in the eye for Europe, which is already reeling. China, the principal target, would no doubt be livid.

There is also the fact that the resulting trade wars would help feed an incipient World depression.

On the other hand, we cannot afford to keep running a huge trade deficit. It's a great employment program for China, but it's killing us.