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My understanding is that would create a tragedy of the commons sort of situation where, even if it was in the overall greater good, any country that cannot mani
by harimau777 7y ago
My understanding is that would create a tragedy of the commons sort of situation where, even if it was in the overall greater good, any country that cannot manipulate their currency would be at a disadvantage to those who can. Particularly in extraordinary situations such as during a war.
Does the Austrian school have a solution or counter point to that argument?
- logicchains 7y agoDevaluing the currency to increase exports makes everybody in the country poorer (reduces their purchasing power for all imported goods). It also can't necessarily reduce the price of exports that depend on imports (e.g. importing iron, exporting steel) because the price of the imported components rises, causing an increase in the price of the finished good. Switzerland is an example of a country with a strong currency and citizens with very high purchasing power because of this.