Open Letter to Jeremy Warner

Mr Jeremy Warner

London Daily Telegraph

Dear Mr Warner:

Your criticisms of Paul Krugman's recent embrace of protectionism are eloquent ("Paul Krugman, the Nobel prize winner who threatens the world," March 19).

But I pick one nit: you write as if the alleged trade imbalances between the U.S. and China are real.  They are not.  The Chinese sell Americans goods; we pay with dollars; the Chinese then use many of these dollars to buy IOUs issued by Uncle Sam.  Although the result is a measured U.S. ...