Oh yeah, now I remember. IMHO the big problem in those days was good ol' Nixon screwing things up-- not only with devaluing the currency but ham fisted price controls even. Nixon had no choice on the currency matter. Foreign governments realized we were turning them into bag holders (basically stealing from them) and they didn't like it. Who can blame them? The price controls were done out of panic once the currency system failed, and made the problem much worse. The ultimate in idiocy was Carter (big surprise). He weakened the currency when he didn't have to, and then he also did price controls.
But if someone is going to claim the dollar is overvalued, looking before 1973 is a must to see it isn't so. I once had a chart of the estimated CRB index for the past 250 years. The value always returned to normal, even after the hyperinflation of the Revolutionary War. We never have returned to normal after the inflation of the 1970's. My guess is it will happen at some point. I'd rather have it happen gradually rather than all at once. GWB is heading us in the wrong direction. There will be hell to pay at some point. TANSTAAFL.
"But if someone is going to claim the dollar is overvalued, looking before 1973 is a must to see it isn't so."
Nonsense. The *only* place to look to see if a currency is properly valued is the current balance of trade.
If you import more than you export, then your currency is overvalued. If you export more than you import, then your currency is undervalued.
That's it. That's the test. That's what the "free market" examines when valuing currencies.
Of course, the "free market" can be manipulated by foreign government intervention...creating temporary distortions, but in the end the Market always prevails.
"We never have returned to normal after the inflation of the 1970's. My guess is it will happen at some point. I'd rather have it happen gradually rather than all at once. GWB is heading us in the wrong direction."
That's just so very, very wrong. GWB isn't *doing* anything.
Here's a little test: tell this forum *what* GWB is physically doing to the Dollar (you can't name it, by the way).
It's not like he has some magic wand pointed at the greenback, after all!
No, it's what GWB *isn't* doing that has got people like you so flustered: he isn't encouraging the Fed to intervene to buy Dollars.
In the past, the U.S. would aid our nominal "allies" in keeping the Dollar artificially propped up. We did this by purchasing Dollars (via the Fed) on the open Market, thereby creating an artificial demand for Dollars.
But those interventions in the Market had the effect of subsidizing foreign exports to the U.S. by enabling the Dollar to buy more foreign goods than would be natural in a purely free, non-intervened Market.
What has changed under GWB is that the U.S. is no longer propping up the Dollar alongside our "allies."
Instead, we're allowing the free market to take its course.
...And the free Market sees that there is an enormous trade deficit on one hand and an overvalued Dollar on the other.
The Market, if not sufficiently intervened, will therefor adjust both the Dollar and the trade deficit down.
That's how free markets work. That's capitalism.
It's not GWB. He's not "Taking" us anywhere so much as he is simply letting the free market correctly re-price Dollars and international trade.
By so doing, or really, not doing, GWB is thereby protecting the U.S. economy from losing more jobs to artificially low-cost countries.