The Bitcoin Standard: The Decentralized Alternative to Central Banking

by Saifedean Ammous

in the mind of Keynesians, that anything that boosts exports is good. Because a devalued currency makes exports cheaper, any country facing an economic slowdown can boost its GDP and employment by devaluing its currency and increasing its exports. There are many things wrong with this worldview. Reducing the value of the currency does nothing to increase the competitiveness of the industries in real terms. Instead, it only creates a one-time discount on their outputs, thus offering them to foreigners at a lower price than locals, impoverishing locals and subsidizing foreigners. It also makes all the country's assets cheaper for foreigners, allowing them to come in and purchase land, capital, and resources in the country at a discount. In a liberal economic order, there is nothing wrong with foreigners buying local assets, but in a Keynesian economic order, foreigners are actively subsidized to come buy the country at a discount. Further, economic history shows that the most successful economies of the postwar era, such as Germany, Japan, and Switzerland, grew their exports significantly as their currency continued to appreciate. They did not need constant devaluation to make their exports grow; they developed a competitive advantage that made their products demanded globally, which in turn caused their currencies to appreciate compared to their trade partners, increasing the wealth of their population. It is counterproductive for the countries importing from them to think ...