Silly Economics

Perhaps the dumbest suggestion I've read about curing the current financial crisis was published by Forbes on their Web site. It's by one Frank Beck and advocates a 30% devaluation. Not just by the USA, but by every other country in the world as well. There are a lot of comments attached and I haven't read them all in detail, but scanning through I only found two that raised the question, what does this mean? Neither suggested an explanation.

Since we're not on the gold standard, we can't devalue the currency relative to gold. If every country "devalues," then they aren't devaluing relative to each other. It's mathematically impossible to devalue the dollar relative to the dollar.

Mr. Beck seems to be confusing the fact that a rising CPI "devalues" the purchasing power of the dollar, but this has nothing at all to do with "currency devaluation," which he seems to advocate in some puzzling form.

And for historical accuracy, FDR eliminated convertibility between gold and the dollar, but not the peg. Nixon took us off the gold standard. And the economy did not recover much after 1934 before crashing again in 1937.

This is a good example of why the blogosphere will not ultimately replace serious reporting. Almost all of the 50-odd comments presented a strongly felt opinion -- ranging from support to denunciation as Keynesian and communistic. Nobody observed that "good" and "bad" cannot be applied to a concept that is self-contradictory. If you want to read about economics, check out Robert Samuelson, who has qualifications and is paid to write. Amateurs writing blogs are usually idiots. Present company excepted, of course.

Mr. Beck evidently earns a living giving investment advice. Caveat emptor.