TRADE, INFLATION, AND THE DOLLAR by Thibaut de Saint Phalle


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As a director of the Export-Import Bank, Saint Phalle can't help but see the world economy, and the American place therein, through the eyes of a banker. So it's no surprise that this review of international trade and inflation follows a familiar route to familiar conclusions. After documenting the decline of US trading power, Saint Phalle concludes that this decline can be reversed if the US removes price ceilings on energy (to promote energy efficiency and the development of new energy sources) and, simultaneously, expands its markets in Canada and Mexico while pressuring Japan to open its market to us--as well as by threatening reciprocal restrictions for those now in place against our products. Apropos of international finance and inflation, Saint Phalle argues that budget deficits don't cause inflation, easy monetary policies to make up the deficits do. He therefore launches into yet another diatribe against the Federal Reserve Board for not sufficiently restricting the volume of money. The rest of our problems are, predictably, laid at the door of government regulation and taxation. Saint Phalle argues for a free trade policy for all goods to any trading partner, with only minimal interference on national security grounds; this will help make our economy competitive and modernize our technology. And this new economic freedom will revive the now moribund work ethic, too. Altogether, we should be increasing exports and also capital flows into the US, and holding down inflation with monetarist policies. And if that means a suspension of wealth redistribution, so be it. Familiar recommendations from a slightly different direction.

Pub Date: Oct. 1st, 1981
Publisher: Oxford Univ. Press