Don Boudreaux replies to an inane column in USA Today:

13 November 2007

Editor, USA Today

To the Editor:

DeWayne Wickham’s analysis of the dollar’s declining value is flawed (“Weakening
dollar reflects USA’s fading world status,” November 13). First, prosperity
isn’t created by a nation having “economic dominance” (whatever that means); it
is created by open markets unburdened by excessive regulations and taxes.
Second, the size of the trade deficit is no part of the explanation for the
dollar’s fall. What must be explained is why investors until recently were keen
on the dollar (and thus increasing the trade deficit) and why they are less keen
on it now. I have my hunches for this change in investors’ sentiments – namely,
Congress’s increasing hostility to free trade and its mounting enthusiasm for
raising taxes, and the Fed’s acceleration of the growth of the supply of
dollars.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University