Sunday, November 25, 2012

The difference between Dumping and Currency Manipulation

I wrote this a year and a half ago in response to a Scott Sumner post. Never had time to blog it but I figured even the outline would be interesting to memorialize, cuz I don't hear people talking in these terms, still.

The difference between dumping and currency manipulation

Currency manipulation trades future consumption for present consumption, while dumping trades off local production and local consumption

Long run, fostering labor infrastructure and competitive, innovative industries indicates balance. Consumption Bubbles with accompanying supply shortage reduce quality concerns and thus disincentivizes innovation, and consumption collapse w oversupply leads to reduced investment. That's why intentional temporal distortions via currency manipulation are different to low cost labor via globalization or even more   Sustainable trade intervention via internally financed industry subsidy ("dumping")