Paul Krugman recently did a post mocking those Europeans who complain about the Fed actually trying to do its job. He quoted a European policymaker whining that monetary stimulus in the US would depreciate the dollar and thus hurt Europe. Here’s Krugman’s response:
In other words, how dare you act to protect your economy from deflation and double-digit unemployment? By doing so, you make our inappropriate tight-money policy even more destructive!
I love it. But at the same time it’s important to recall Bryan Caplan’s admonition that we Americans are much too quick to perceive harm inflicted by others, and reluctant to recognize when we are the villains. So I tried to re-work the quotation, so that we could see how our complaints might appear to someone living in China:
In other words, how dare you Chinese act to protect your economy from deflation and double-digit unemployment by refusing to revalue the yuan? By doing so, you make our inappropriate tight-money policy even more destructive!
I look forward to future Krugman posts that point out how America’s China-bashers overlook the fact that the Federal Reserve System has the power to do much more, but simply refuses to use that power. And how do I know this? By reading a Paul Krugman post written just one day earlier.