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This is some usefully clear thinking from Robert Solow:
Then--this is a book about bad money, after all--Phillips turns to the dollar, and a certain amount of confusion descends. Some of it rests on the almost universal bad habit of treating the high exchange value of the dollar--a "strong" dollar--as a matter of national pride. "Defending" the dollar sounds a lot like defending Old Glory. Too many secretaries of the treasury, some of whom must have known better, have adopted that mantra, though they have usually refrained from acting on it.A "strong dollar" simply means that the dollar is worth a lot compared to other currencies. This means it's cheap to buy things from other countries, and expensive for other countries to buy things from us." Oddly, a "strong" dollar is actually exceedingly unpatriotic: It makes buying American much less likely. Meanwhile a "weak" dollar means just the opposite: Cheap for other countries to buy from us, expensive for a hedge fund manager to buy gifts for his secretary in Paris. It's good for folks exporting American goods and bad for folks importing foreign goods. There are various reasons why you'd want a strong dollar at some times and a weak dollar at others, but these tend to be overwhelmed in a political conversation where no one wants to say "weak dollar." The workaround has been to bash Chinese "currency manipulation," because it's their effort to buy up all available dollars that has kept ours currency at an artificially high value. But it would be better if we could talk about our currency in ways that didn't imbue one sterile policy choice with an arbitrary rhetorical punch against the other sterile policy choice..
