It seems that no one is prepared to point out the obvious - devaluation of the dollar is a cut in American living standards.
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Contrary to what xkcd or NYT might tell you, actual economic institutions like the IMF and the World Bank are coigzant of the issues caused by the status quo and largely view the Trumpian diagnosis, if not the horrid execution, as correct.
No central bankers in the world ever said that including Powell. That’s Trump policy and Trump only.
https://www.federalreserve.gov/boarddocs/speeches/2005/20050...
They have actually, the debate about persistent imbalances have been going on since the 2000s and Bessnet's arguments are simply the extension of Bernanke's prior hypotheses and ultimately Keynes diagnosis on global macroeconomics stability.
The first one throws an intentionally vague imbalance and aims squarely at Chine state aids distortion. It also goes at length about how tariffs are seen as terrible by everyone and how it’s all about a level playing field and not about rebalancing trade balances.
The second is strictly about the US and explains that trade inbalance has more to do with capital flows that actual trade of goods and how the extreme situation in the US might need moderation. Its conclusion is that the trade balance will fix itself if the US both fixes its budget issues and help foreign countries to actually use their excess savings locally. That’s pretty far from thinking the balance of trade needs to be rebalanced.
They are all talking about the same thing. The large imbalances in trade are precisely due to the distortionary domestic policies that surplus nations bring, of which China is commonly perceived as the biggest violator. A world without any protectionist policies is one where trade balances are temporary or close to 0 due to FX effects.
>The second is strictly about the US and explains that trade inbalance has more to do with capital flows that actual trade of goods and how the extreme situation in the US might need moderation.
You clearly then need to review your definitions because we are talking about the same concepts here. Current Account + Financial & Capital Account = 0. The capital flows are the direct inverse of the current account and flow of trade. In the same way, Current Account = Savings - Investment. When he talks about using excess savings locally, that is precisely about moving savings into consumtpion and thus reducing trade surpluses.
That is very much what economists or Bessnet are still saying today in reducing excessive surpluses in turn and thus trade imbalances. Clearly after 20 years, trade imbalances aren't self-balancing like FX effects would imply, due to very explicit policies pursed by said surplus nations in doubling down on manufacturing rather than increasing consumption.
Mind you, the greater implication of what Bernanke was suggesting is that the excess savings and associated large capital inflows (and thus deficit) is what fueled the housing bubble and credit expansion in the 2000s that led to the GFC. The greater argument being that these distortionary policies that being pursued domestically in surplus countries over manufacturing is leading to an associated distortion in the US economy towards overfinancialization.
Mind you, I'm not saying whether trying to rebalance is smart or dumb. I'm just saying that the imbalance causes us problems too.
https://www.brookings.edu/articles/rebalancing-the-world-eco...
It's better to say that rebalancing is a painful affair. But account balances should be naturally self-balancing in the first place, the imbalance today is the result of policies that the surplus nations, China foremost, is unwilling to abandon easily. If they all opened up their capital markets, currency controls and removed subsidies and tariffs, if they seriously committed themselves to free trade the problem would solve itself in time. And most economists would agree with me on that.
But if they are unwilling to do that, and the last 20 years of negotiation have been fruitless, then unfortunately America may need to resort to unilateral actions to resolve it themselves. And if you run the simulations, America will win that fight for escalation. It will hurt for us all, but inflation is nothing compared to the mass unemployment surplus nations will suffer.
I don't paticularly agree with Trump's methods or his flip-flop execution in attempting to resolve the problem, but it is a problem that many would agree needs to be resolved. China, Europe all themselves have agreed now that they need to raise consumption instead of doubling down on manufacturing, and that's very much convergent with what the Administration seeks to achieve overall.