After all, an overvalued dollar gives us the ability to buy foreign goods at lower prices. And the existing volume of exports brings more yen and euros than they would if the dollar were more competitive.

After all, an overvalued dollar gives us the ability to buy foreign goods at lower prices. And the existing volume of exports brings more yen and euros than they would if the dollar were more competitive.

The more competitive value of the dollar turned around the trade deficit.

First, I think the science of monetary economics has clearly gotten better.

Inflation is lower and more stable and the real business cycle fluctuations are more modest.

To finance this trade deficit, the U.S. has to borrow from the rest of the world or sell American assets like stocks, businesses, and real estate to the rest of the world.

A second reason why science cannot replace judgement is the behavior of financial markets.