Currency Policy: A Matter of Life or Death
Terry Miller /
The execution last week of a senior economics official in the North Korean government over a botched currency reform reminds us of that no parody of repressive government can fully capture the backwardness and evil of the North Korean regime. If any good can come of such a perversion of morality, it might be in a reminder to economists that their policy prescriptions can be matters of life or death, if not for themselves then most assuredly for the citizens of their countries.
Recent calls by Paul Krugman and others to clamp down on Chinese currency manipulation are vivid examples of politically-motivated and ideologically driven policy prescriptions that would, if implemented, make a significant, if not life and death, difference for some Americans, reducing the prosperity of most while pampering a few politically-connected special interests.
We need to step back and consider the actual impacts of China’s policy to maintain the value of its currency at an artificially low level. The main ones are: