Recently, President Obama claimed that a strong renminbi or yuan was good for China and that a weak dollar was good for America. Coming from the President, who would question such a statement? The facts however, demand that you question this nonsense. Monetary policy is not so difficult especially when you ignore everything that Keynesian economists will tell. I was trained as a Keynesian economist over 4 years at one of Canada's leading business schools and I can tell you from 20 years of post post-secondary self education that it is all bunk. Real monetary wealth can be understood very simply by examining the extremes.
On the ultra weak end of this sliding scale is any country/currency that has been hit by hyperinflation. The country is impoverished, its people are impoverished and the only way out is to start producing things that exploit the natural resources of the region.
On the ultra strong is a country that produces most of the world's goods and and its people and businesses own a significant amount of the world's physical resources, especially natural resources and other commodities.
As I said, this is a sliding scale from ultra weak to ultra strong and people become better and better off as you move from the weak end to the strong end.
So, when President Obama said a strong currency is good for China he was making a statement that some people like to call a no-brainer, but when he said a weak dollar was good for America, it was as though he had no brain.
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