Economics In One Big Easy Lesson

Oregon Guy has a nice look at the panic in the financial markets these days.

His take is: look at the value of the kissers. Sally vs Nancy. I like Sally. An almost not work safe picture of Sally can be found at the above link.

Well any way I like Sally. Oh yeah. Where was I. Economics.

Oregon Guy says the only way American currency inflating vs the rest of the world hurts the USA is if inflation starts driving up prices in the USA. If American prices don't go up (say due to increased efficiency) then a lowering of the value of the dollar only hurts our competitors. As long as the dollars match the available goods inflation will not be a problem. And besides I like Sally.

What will be a problem is other countries whose output increases more slowly. The costs of their goods declines more slowly. Thus their currency holds its value relative to the dollar at the expense of lowered output.

Of course as one of my e-mail correspondents points out, our friends in government could be cooking the books. When in which case I still like Sally.

HT linearthinker via email

Cross Posted at Classical Values