At the Institute for New Economic Thinking conference in
Berlin, economist Joe Stiglitz delivered a presentation titled Is Mercantilism
Doomed to Fail? China, Germany, and Japan and the Exhaustion of Debtor
Countries.
The basic idea is: A few powerhouses like China, Germany,
and Japan, plus some commodity based economies, have thrived in a system where
they do all the exporting, and a few countries like the US run massive trade
deficits.
But that system is coming to an end, as countries realize
that their trade deficits are unsustainable, and seek to become trade surplus
countries at the same time. Of course, not everyone can run surpluses, so this
becomes a game of hot potato, with everyone pushing the deficit to someone
else, via currency devaluation and other aggressive trade moves….
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