Tuesday, August 18, 2015

Donald Trump Really Doesn't Understand The Economics Of Currency Markets

By Tim Worstall

Then again, I’m not all that sure that Donald Trump understands the economics of anything much other than real estate development. Which isn’t, when you come to think of it, all that much of a recommendation for someone who would become the chief executive of the nation. Specifically, here, Trump is getting awfully confused about the economics of currency rates and relative values. He thinks that a declining currency makes a nation richer: not so, entirely the other way around. He also seems to think that changes in currency rates change the number of jobs in a country. Again, not so, they can change the type of jobs but not the number. And all of this is pretty much first year economics so we really would rather like a putative chief executive to get this.

Read the rest here.


  1. “The third way that this all goes wrong is the idea that currency rates and trade are going to change the number of jobs in the economy. This just isn’t so: the number of jobs in the economy is a function of the aggregate demand in that economy. Thus trade doesn’t really affect it at all. What does change is the type of jobs that there are available: of course buying all our auto tools from China means there will be fewer jobs making auto tools in the US. But we’re obviously exporting something or other to pay for those auto tools (even if it’s just selling houses in California to Chinese people) and so employment in total isn’t affected.”

    Didn’t this article go off the rails in this paragraph?

  2. In my opinion, Trump deserves to be President simply.on his wanting to do away with birth right citizenship. Maybe other candidates think it ... maybe ... but he's the only one with the cajones to say it. As said elsewhere, if the mass immigration issue isn't addressed, none of the other policy issues matter.