At Forbes Nathan Lewis makes a very good point. Trade works a lot more as David Ricardo said it did with a hard currency.
How can the present situation, which is damaging not just U. S. workers but economies all over the world due to the mercantilist policies of Germany and China, be moderated if not remediated? I think that one way would be to ban the sales of Treasuries to foreign governments or entities (like banks) owned by foreign governments but I’m open to other suggestions.
It also works more like Ricardo said when the changes happen more slowly. So much of our major economy theory comes from people who wrote over 100 years ago when change was slower and global effects not as strong.
Steve
With a hard currency trade would work more in accord with theory regardless of velocity or scale.
Note that I’m not arguing in favor of a hard currency. I would argue against claiming the benefits of free trade under circumstances in which those benefits can’t be realized.