1. Trump will spend, reduce taxes, increase debt, and therefore US interest rates will have to go up.
(This happens whenever a government promises to spend a lot on infrastructure improvements.)
2. Foreign investors anticipate this and are buying US dollars. This makes the dollar stronger w.r.t. other currencies.
I think a strong currency is usually a good thing in a scarce market environment. It means that your country can buy a lot of the world's natural resources easier than others. This should usually be a good thing (for the US).
But there is a problem:
The US doesn't actually do anything with natural resources anymore, we don't make things like steel or plastic etc anymore, or rather, we don't "add value" to natural resources. Instead, with a strong dollar, we let others add the value and (import) buy their finished goods. The few things that we do make become more expensive to others, so our exports decrease. Domestically, there are fewer "manufacturing" jobs.
Trump will try to stop this and the only tool he has is to increase import tariffs. This article seems to equate that with global financial ruin, and it is the point of contention that I want to raise.
These two facts: raising import tariffs and a strong US dollar may help cancel out the effects. Instead of destroying foreign markets, it may simply "transfer" who gets the surplus generated by the strong dollar from the foreign markets to our tax base.
This seems true for most modern, western economies: they are migrating from a producing economy to a service & knowledge economy. Logistics is big (moving stuff) and services are big (consultancy, lawfirms, etc), but the actual factories are gone. And that makes sense: with higher education levels you can make more complex things than the "regular" factories do. Stuff that requires trained staff - brains.
Oh - and btw: the US likely not only refines most oil, it also consumes it: the US have grown to a country based on consumption, spending and borrowing, but not on producing anything. So if goods only come in and money only goes out, there comes a time where the money is gone. And that is when the trouble starts...
That's just not accurate. The US produces and exports a wide variety of petroleum based products and lots of oil as well. We import a lot of heavier oil, because we have the capacity to refine it (unlike most nations) and export a lot of the easier to refine stuff.
Yeah around 2007, but this was relatively short lived.
At the end of the day the perception that economic output is dropping (slope) is valid if you consider it on a per capita basis. Now I'd you consider that the jobs and profits aren'disturbed equally, you can see why Trump won.
> "the US have grown to a country based on consumption, spending and borrowing, but not on producing anything."
Eh, not really. Services and other tertiary industries are just as much "production" as a factory or a mine is. The US government, and US citizens, are not much more indebted than average. You don't "run out of money" by buying foreign goods.
With the drop in oil prices from the past years, getting oil out of the ground in the US became too expensive. A lot of newly installed sites were closed because they could only operate efficiently with an oil price near $80 a barrel. I am quite sure the US imports a lot of oil...
> The US doesn't actually do anything with natural resources anymore
Per capita, the US manufactures far more goods then it did 40 years ago. It's second only to China.
What that manufacturing does not do is create jobs. Most of it is automated. This is what most people who voted for Trump's economic promises have failed to realize.
> The US doesn't actually do anything with natural resources anymore, we don't make things like steel or plastic etc anymore, or rather, we don't "add value" to natural resources. Instead, with a strong dollar, we let others add the value and (import) buy their finished goods. The few things that we do make become more expensive to others, so our exports decrease. Domestically, there are fewer "manufacturing" jobs.
> The US doesn't actually do anything with natural resources anymore
Sure it does, though sometimes in ways that most people don't recognize as doing that, because it doesn't look like 19th century factory production. E.g., Silicon Valley indirectly processes a variety of less-processed materials (e.g., the direct inputs the electricity generation process, among others) into valuable software (and software-enabled) products and services.
Sure, though that looks a bit more like classical industrial production, and is less likely to be discounted on thearth basis of unfamiliarity, I'd think.
raising import tariffs and a strong US dollar may help cancel out the effects
This ignores the reciprocal actions of our trade partners. You can bet that if we raise tariffs on goods from other countries, those countries are going to do likewise to our goods (populism is all the rage everywhere these days). Along with the strong dollar, US goods will be doubly uncompetitive. Export sectors of the US economy will crash.
As with any war, trade wars are "won" to the extent that the ends sought are attained, usually by the political capitulation of the opposing party to end the war, rather than directly by the actions used to fight the war.
Also as with traditional armed conflict, it's rather often the case that neither side achieves a clear and unequivocal realization of its aims and that both claim a vindication unsupported by the concrete outcomes, with serious questions as to whether either achieved anything worth the cost suffered.
It's true that you might win by forcing demands. Trade isn't a zero sum game and requires cooperation so achieving a favorable result via "war" is unlikely. I guess I didn't state it well but even if we "win" we are unlikely to be any better off.
"1. Trump will spend, reduce taxes, increase debt, and therefore US interest rates will have to go up.
(This happens whenever a government promises to spend a lot on infrastructure improvements.)"
Yes - all else being equal ...
However, consider that if Europe goes over the brink and China has a serious property (or other) bust the flight to safety could push US interest rates even lower than they have been.
> I wonder if that first chart is inflation adjusted. I suspect it's not.
That chart (and subsequent text) quite clearly says "current US dollars," which is presumably 2012 dollars given the date of publication. So yes, it is inflation adjusted.
Shows flattening of growth from 2012 to 2016. This chart shows "real" output.
I could be misiterpreting but is it that that "current" dollars adjusts for currency inflation, while "real" dollars adjusts for price-of-goods inflation. Or are they basically the same type of adjustment?
This happens whenever a government promises to spend a lot on infrastructure improvements.
People keep assuming because Trump said he'd spend on infrastructure that it will happen. Congress is the only entity that can authorize spending, and those in Congress with the power said it is very low on their priority list.
Sure, maybe Trump will make a deal with the House or Senate majority leader, but it seems to me unless something unusual happens, there won't be significant increase in spending on infrastructure.
3. Move towards market protection "Japanese Auto Manufacturer Style" by providing tax and other incentives to corporations in exchange for not outsourcing the jobs - this already happened with Carrier. Potentially harsher measures like tariffs will be implemented as well to some extent.
They already did that for several years with QE. They de facto reduced the outstanding US debt by several trillion. You could argue for more monetary stimulus but it's hard to get away with it now that they are very close to reaching their inflation target. Obviously the US and other advanced economies have suffered through a very long period of low inflation so they are in a unique position in history where they could print quite a bit of money and not end up like Zimbabwe or Venezuela.
It started lightly, but became appalling during the first Bush administration (into Clinton, second Bush and Obama and soon Trump). It just got called QE when it became a tool to buffer against the inevitable failing industries. The report that was published detailing, the reserve's manipulation, stopped being issued in the 90's. I can't seem to find out if that information is now published somewhere else. I assume so.
The negative effects of low inflation are well documented. You can see Japan as an example. Low inflation has perverse incentives that hamper employment and econmic growth. Essentially low inflation is good for the consumer until they lose their job.
They buy the bonds and the money goes where? Somewhere that then spends it. Thereby raising inflation. If you're proposing they print the money and then do nothing with it, I'm curious what the point of that would be.
Isn't that exactly what happened for the most part, the Fed printed a whole bunch of money and gave it to the banks to lend, the banks just sat on it and collected interest? (Not exactly what happened but reasonably correct from what I've read).
Ok the economist is a rag.
1) Interest rates are endogenous. If we don't want them to go up, the fed can decide not to raise them.
2) A strong dollar improves our real terms of trade meaning we can actually have more stuff for the same unit. We get a higher real standard of living.
We don't get a higher standard of living. We're able to buy more stuff per unit, that's true. But, our trading partners buy less stuff per unit. This is very important given that we live in a global economy, and that's not going to change. So we're selling less stuff, meaning that companies make less money. Companies making less money produce less stuff or send jobs overseas to try and bring costs down. That means they're employing fewer US workers.
This effect is compounded by the fact that our companies are competing against companies from other nations, whose goods are now cheaper to buy, making them more attractive than US goods.
Nobody seems to mention the interesting issue that goes to the heart of Trump's and Bannon's economic nationalism.
Decades of supposedly "allowing" China and Mexico to steal US jobs has a different side not often discussed. It was one way to deal with the Triffin dilemma.
With great power comes great responsibility. As long as the US has the privilege to print the world's reserve currency, it has the responsibility to keep the planet flooded with sufficient dollars.
Therefore, I'm (genuinely!) not sure for how long they will be able to combine a strong dollar, run deficits, manage the debt, boost US exports at the expense of others, help those other countries with any dollar shortages and keep the global monetary order friendly and stable -- all at once.
I do know that when the world meets with the Triffin paradox in one variety or another, big changes have occurred. Right now the pundits are comparing Trump to Reagan. Maybe in a few years they will end up comparing him to 1971's Nixon.
Maybe this is true, maybe not but sometimes, it's ok for things to be bad for the economy. The economy isn't supposed to always go up and when we meddle in an attempt to iron out the bumps, we only serve to make the future bumps much worse. I wish our leaders and economists would both believe this and succinctly explain it to the public.
Leaders who try to explain this to the public inevitably get voted out of office, because the opposition will explain the exact opposite and the public can't tell the difference.
I agree that we should tamper with natural economic forces as little as possible, we should remember that even economic nature can be a cruel, cruel bitch. Read the following for why we should sometimes risk economic meddling, despite the costs and risks.
Totally agree. I would have far preferred the bailout in 2008 to be put into an infrastructure program that put those classes of people to work instead of enriching the Wall Street crowd. But, no one asked me. Government should protect the unprotected and let everyone else fend for themselves. Instead it does the opposite these days, at least in America.
There is nothing natural about the economy except in the unhelpful sense that everything is natural. All economies are regulated to a greater or lesser extent for the benefit of someone. The question is always: who is that someone.
My contention (and history supports me since no economy has always gone up) is that there is no way to manage an economy correctly. It is too complex of a system and therefore cannot be directed without alternate, often unpleasant side effects.
Well I think it's hypothetically possible for an economy to always improve, but nobody understands what policies to enforce to allow that. Even if you have good policies, nobody knows how to completely mitigate stock bubbles, housing bubbles, bond market bubbles, etc. So I mostly agree with you.
Contrary to the article, I thought that it was the $2.6T tax holiday (significant even to the currency market) which Trump promised that caused the currency speculation and rapid rise in the dollar. It may be true that most of the money is held by big corps offshore as $ denominated securities... but it still seems like a transfer out (and directly spending those untaxed $ in the US) would necessitate someone else (foreign?) buying those securities with other currency (and those offshore banks maintaining $ reserves). That should cause a medium term (years) rise in the $ relative to those currencies.
Necessitated by artificially low interest rates in the US, and a flight to relative safety as compared to Asian and European currencies. The reckoning has been deferred for too long and an orderly adjustment will be impossible if there is more delay.
To me it became clear that current global finaces are completely unhinged from reality at least 5 years ago, if not 10. I also am becoming more and more sure it was all fucking Thatcher and fucking Reagan who are at the heart of it all
Not to make a massive dissertation: just look at the debts everywhere, how nicely exponential they are...
So I'mm sitting here, waiting for the inevitable collapse, hoping it comes sooner than later (so there might be a slight chance that SOMETHING survives)
Personally I suspect it was from earlier than that. I think you can trace it back to Nixon at least who fully severed the dollar from gold and thus removed the last bit of restraint that countries had against the US from inflating too much or too quickly.
But if you go back further why did that happen? All the great society programs of the 60s are what ran up the debt. The notion that we're so rich we can just government program ourselves out of very thorny problems by giving people money. I'm not necessarily saying that doesn't work or isn't good. But it does cost a lot.
Why did we think we could do that? The new deal maybe? I don't know. It didn't bankrupt the country and it did give people jobs.
You could probably keep going back further if you wanted. Presuming that you know the exact date and time that the fall was precipitated is fun but not intellectually honest. Everything tends to build off of things that came before until it all falls apart.
Personally I suspect it was from earlier than that. I think you can trace it back to Nixon at least who fully severed the dollar from gold and thus removed the last bit of restraint that countries had against the US from inflating too much or too quickly.
This was a huge hit that helped to spark runaway debts and inflation, to be sure.
But I'd go further back and say The Fed. It did more than anyone to give us the roaring 20's and the great depression.
What runaway inflation? This is the US we're talking about, not Argentina.
More to the point, what's the actual evidence that the debt is a problem, and more of a disadvantage than the advantages of funding the various programmes and tax breaks that have arisen as a result?
> What runaway inflation? This is the US we're talking about, not Argentina.
We were starting into it. Inflation was increasing, and hit 21%/year. It might have continued increasing, except for Volker. It cost a double-dip recession to reign it in.
When you say 21%, are you talking about the increase in inflation rate (so a derivative), or the actual inflation rate? Because the actual inflation rate was 1.64% as of last year Oct-Oct: https://www.wolframalpha.com/input/?i=US+yearly+inflation+ra...
I'd love to read some historical data that correlates this, I'll raise you Frederick Lewis Allen, check out any of his books really. They'll open your eyes.
I don't particularly like the hypocritical (fiscally irresponsible deficit nags) borrow and spend financing that those two pioneered based on the misapplication of the Laugher Curve, tax policy, and Trickle Down. However, it seems like the real problem the world faces is not inflation (as rates have fallen for 35 years), but deflation. Perhaps this has been caused by dramatic technological productivity improvements and falling global birth rates?
The problem with trying to inflate your way out by adding debt is that profitable debt (eg when it is repaid!) is always longterm deflationary. Ultimately, the debts are either defaulted on, the rates reduced below average inflation, or $ are printed to pay them off.
People who hold lots of money hate inflation! They (banks) like deflation and increasing debt. A functional economy (due to human nature and our monetary system) seems to require a bit of inflation so everyone else would probably be happy with a bit of printing. If nothing else, it's the cheapest way to tax the population of $ holders that you'll every find.
Upvote. Well stated. Think of it this way: All money is printed we just have to optimize the correct amount and preferably get it in the hands of those willing to spend it. Micro-economic thinking is the enemy of Macro Economics. Saving money is the enemy. If everyone saves what they make and doesn't borrow, we have no economy(we could barter though). Problem is to much money is sitting in accounts of the wealthy and not spend, we need to focus on increasing income to the masses. Best way is lower taxes and infrastructure spending. Forget about taxing the rich its irrelevant and politically unpalatable.
It was neither Thatcher nor Reagan. The answer has a lot to do with post WWII demographics, Asia's rise, and the ways in which liquidity and debt were added to the global economy without much thought given to how that liquidity and debt would be distributed and relieved. We will look back and marvel at the myopia of the global "boomers".
It was baked into the cake with the creation of the Federal Reserve. The government act that created it was passed right at Christmas time when public attention was low. 1913.
Not surprisingly, the same year that income tax was added to the Constitution. That was when economics transformed into the system that we consider normal today: perpetual slavery to a debt that can never be paid off.
All of the events that came after (the boom/bust cycle, abolition of the gold standard) were a natural result of that decision.
Good point. In all cases I am aware of, introduction of a fiat currency requires income taxes, in order to "prime the pump" to create demand for the fiat.
The problem that is supposed to come with low central bank rates is a debased currency, not a stronger currency.
People are buying dollars in spite of the low rates in the US.
Or are you saying that the low interest rates have precipitated a global economic collapse and that US dollars are the most likely to be worth something later?
Bullshit. We could have 10X the national debt and nothing would happen if its all sitting in the accounts of rich people who don't spend it. Thats the real problem. Also, the natural rate of interest is 0 in government finance because there is no solvency risk.
Solvency risk is not the only reason for a positive interest rate.
Let's say that US Government borrows $10 000 from you, for 1 year. This means that you cant spend this 10k next year by investing them into some new cool company or just by eating lot of pizzas and drinking margaritas.
So, you say you don't want to be compensated for this, and you will happily lend 10K with 0% interest rate?
Maybe the dollar is only going "up" because the other economies are scared shitless of Trump as a president, and their currencies are going down as a result of the uncertainty.
If other economies are more scared of Trump than the American economy is, and if both are right to react so, that would imply the markets believe Trump's promises of benefiting the American economy at the expense of others. Unlike some common rhetoric that says Trump's proposed changes would harm the American economy.
Disclaimer which seems necessary even on HN these days: I'm just pointing out implications, not stating my own beliefs or preferences.
They're at all time highs with Obama on the outs, and Trump coming in. You could say that means people are into Trump coming in, pushing them up. However...
The parent comments are prognosticating. The way the world looks today is not a good data point when the future includes, what many believe to be, a wildcard President coming in.
And let's not forget the establishment party with a hard on for regressive policy control all three branches of US government. Their entire MO of the last few decades is "no compromises". They've destroyed their reputation as a group (Congressional approval ratings), but don't care because individually they're fine. They've shown no desire to improve their image.
So a wildcard President, and a group of stubborn old assholes is in control. Stick to the guns or spray and pray at the wrong time, and the all time highs could crater.
If it makes you feel any better, last week's issue of the economist was about how the future is bright for clean energy and the fight against climate change, even with Trump in the white house.
On green energy, I'm getting the impression that some threshold is finally being passed where clean energy is picking up momentum, and won't be so easily stopped anymore. Trump may have promised coal to the former coal miners, but coal is getting too expensive, so that's unlikely to happen. On oil, with some luck, he may want to make the US less dependent on Saudi oil.
So despite his denialism, he might turn out to be okay here. Of course you can never be sure with him.
This reminds me of something that Dijkstra used to do and was criticised for. He used to use [sic] a lot to point out tiny errors that others used to make, implying that the other person wasn't competent. In the words of John Backus, "this guy's arrogance takes your breath away" [1]. In Dijkstra's defense, he might have been arrogant but he had much to be arrogant about.
Perhaps when your bona fides aren't so well established as Edsger Dijkstra, randomguy23, you would refrain from doing the same. We all understood what that person meant. Discuss it and move on without resorting to pettiness.
I'm curious what course of action they would suggest. Should we stop trying to have a better economy for the sake of global concerns? I'm genuinely asking because I have zero knowledge of currency market. What is the right move to strengthen our economy with the least amount of global impact?
The dollar is going up because of the prospect of a lower corporate tax rate and increased infrastructure spending. The first means companies will have more motivation to bring profits into the United States and the second is believed to lead to investment (though China is an example that shows this can be taken too far). As to whether this will improve the economy, I have serious doubts that US presidents have much ability to impact the economy barring very extreme measures, and those measures generally do damage, not good.
I completely understand people's over-estimating the power of President. They do have an ever widening ability to declare war without Congress, but they don't control everything.
Republicans will control the presidency and both houses of congress for at least two years. They can potentially push a lot through in that time, especially if democrats don't want to take on the mantle of "the party of no" and filibuster endlessly in the Senate.
I have my doubts as to what can be accomplished with only 51 Senators. Just like with the Democrats in 2008, the Republicans are not as monolithic as they would like you to believe. They face reelection as much as anyone and if they start massive tax cuts for corporations and the wealthy, but obviously won't be able to bring back a manufacturing economy, then I think they'll be facing a tough situation in 2018.
That's not why economics is called the dismal science.
Economics is called the "dismal science" because of it's "find[ing] the secret of this Universe in 'supply and demand,' and reducing the duty of human governors to that of letting men alone".
Carlyle took a different view, feeling that the "idle Black man in the West Indies" should be "compelled to work as he was fit, and to do the Maker's will who had constructed him".
Mencius Moldbug also has an interesting take on Carlyle, suggesting that his views on slavery and hierarchy were significantly more nuanced than what my pithy summary above describes. I have not managed to read enough Carlyle to form my own opinion (maybe on my next 24 hour flight).
The term is more a criticism of the reductionist view of Economics, ignoring human value and ethical considerations.
But the problem with economics is that it is often viewed or presented/used (by governments) as a hard science, while it is much closer to some humanities: a game of deducing, abstracting, and guessing.
Economies are hugely complex and intertwined systems, which are hard to understand and harder to predict, because they depend on so many variables.
Economic models often only work when everything is going well or down an established path, and not when you would actually need them.
Math is closer to the humanities than economics is. Math is not empirical, with its expanding knowledge driven more by philosophical thinking than empirical deduction.
Economics is not a hard science, and shouldn't be treated as such, but to claim it is more like the humanities is disingenuous. It is a social science. That is to say that it is still ultimately empirical, just that the empirical implications of working with humans makes the job a lot harder and ocassionally less repeatable (are we measuring innate human nature, or a fluid and ever changing culture?).
We're measuring human behavior. The problem is that, as the circumstances change, humans change their behavior. That means that economic models only work as long as the economy keeps doing what it has been, so that the humans keep doing what they have been, which leads to an economy that continues to do what it has been...
In short, a strong dollar is bad for business, but good for the consumer.
Also, considering how bad the US economy has been, having a strong dollar means there's a whole bunch of other places that are doing worse then we are, which is pretty eye opening.
Seems the global economy as a whole is incredibly weak right now.
Perhaps you may want to clarify that a strong dollar is bad for US businesses and good for the US consumer. It would be the reverse for non-US entities. i.e. it would be bad for non-US consumers and good for non-US businesses.
Sounds like an excellent opportunity to print more dollars, create some inflation, increase liquidity in emerging markets, and pay off some of the national debt.
From a selfish perspective, I'm British and I work for an American company that pays me in dollars. A strong dollar coupled with the pound going down the toilet after the brexit vote means I'm quite a bit better off than this time last year.
Serious echoes of the Asian Financial Crisis of 97/98. A lot of Dollar denominated debt being issued outside of the United States with prospects that the Federal Reserve is going to raise rates.
Although it's a little different, this time, as there are not as many Dollar pegs left in the world. That was one of the things in the late 90s version; countries that pegged local currency to the dollar effectively mimicked US monetary policy, so when the Fed started to raise rates around 1994, they also had to start raising rates, which meant higher debt servicing costs as it became more expensive to service US debt in local currency.
With the Dollar as strong as ever against every other currency in the world, and China taking action to prop up the Yuan, I'm guessing Trump will shelve efforts to get China labelled a currency manipulator for deliberately weakening their currency. Right? Or is that not how that works.
> With the Dollar as strong as ever against every other currency in the world, and China taking action to prop up the Yuan, I'm guessing Trump will shelve efforts to get China labelled a currency manipulator for deliberately weakening their currency. Right? Or is that not how that works.
That is actually the opposite of how that works. China manipulates its currency to make the yuan weaker against the dollar because it makes Chinese products cheaper in the US and US products more expensive in China, causing manufacturers to move to China so they can pay wages in yuan and sell products for dollars instead of the other way around.
Which is why it was bizarre to read TFA claiming China was taking steps to shore up its currency against the dollar...?
> The yuan has fallen to its lowest level against the dollar since 2008; anxious Chinese officials are said to be pondering tighter restrictions on foreign takeovers by domestic firms to stem the downward pressure.
> It's a balancing act. Too weak of a yuan undermines their efforts to shift towards basing more of their economy on internal consumption.
It is a balancing act but that's not why. A weak yuan promotes internal consumption in China for the same reasons it promotes US consumption of Chinese goods.
But once the yuan is weak enough that manufacturing does move to China, making it even weaker is only throwing money away. It's like selling below cost to drive competitors out of business -- if you can drive them out of business by selling for $1 below cost then there is no reason to sell for $2 below cost. Otherwise they would just print a trillion yuan every day.
Also, prohibiting foreign takeovers doesn't increase the value of the yuan, it only solves the "problem" of a weak yuan encouraging foreign takeovers. If Chinese companies can no longer be bought and they're traded in yuan then that will only reduce demand for the yuan.
Are there better terms to use than "strong" and "weak" when it comes to this stuff? One of the problems with using those is the emotional impact of those words. A Strong currency makes your goods more expensive for people around the world, so you'd want to Weaken it. But nobody wants to say, "I want to weaken our currency." People want a Strong currency. It sounds good. "We're strong."
Exactly. See also: "trade deficit/surplus" and "value". Economists use all sorts of jargon that really does not convey to the layman what it actually means.
This author doesn't understand basic economics. He is negating all sorts of feedback loops that keep things in check. He is also completely ignoring root causes or attempting to address this issue at large.
Is there an app that makes me aware of articles I'm reading by authors I've flagged as incompetent? Seriously.
The dollar is only temporarily strong, because people think Trump will improve the economy. When that fails to happen it'll just drop again. Problem solved.
(This happens whenever a government promises to spend a lot on infrastructure improvements.)
2. Foreign investors anticipate this and are buying US dollars. This makes the dollar stronger w.r.t. other currencies.
I think a strong currency is usually a good thing in a scarce market environment. It means that your country can buy a lot of the world's natural resources easier than others. This should usually be a good thing (for the US).
But there is a problem:
The US doesn't actually do anything with natural resources anymore, we don't make things like steel or plastic etc anymore, or rather, we don't "add value" to natural resources. Instead, with a strong dollar, we let others add the value and (import) buy their finished goods. The few things that we do make become more expensive to others, so our exports decrease. Domestically, there are fewer "manufacturing" jobs.
Trump will try to stop this and the only tool he has is to increase import tariffs. This article seems to equate that with global financial ruin, and it is the point of contention that I want to raise.
These two facts: raising import tariffs and a strong US dollar may help cancel out the effects. Instead of destroying foreign markets, it may simply "transfer" who gets the surplus generated by the strong dollar from the foreign markets to our tax base.