Devaluation also serves to reduce confidence in the money and makes economic calculation more difficult and thus less efficient, acting as a drag on the devaluing/inflating economy.Make sense, but then why is it that the biggest recent devaluations were '85 - '88, and 2002 -'04 (look at the value of dollar, again), and both times the economy soared.
The two events are unconnected. If the economy is booming a devaluation will not abort it. If the other main economies are also inflating then they cancel each other but overall efficiency does suffer. On the other hand devaluation as a tool to jumpstart a floundering economy brings us "Malaise" and Carterification. When W devalues, the economy was in a very shallow recession, a mere hiccup, as it were, in a continuing boom that dates from the Reagan tax cuts. Keynesians, like the liberals most of them are, believe that nothing happens in this world unless a committee of Ivy League experts decrees that it happen or adjusts and twiddles economic knobs to make it happen. The market works in spite of Keynesians and such though their machinations tend to exacerbate business cycles and keep the economy from performing at optimum.
W is a professed Keynesian, albeit a "conservative" one. That just means that he desires outcomes that conservatives desire but he has a wholly inapropriate toolkit.
