McCain's Strong Dollar Stupidity

If this presidential election is to be decided on the question of which candidate will be a better steward of the economy, it is increasingly Barack Obama's race to lose.

John McCain continues to demonstrate his ignorance on economic issues and willingness to parrot free-market dogma. He had this to say to the Green Bay Chamber of Commerce today:
"A strong dollar will reduce energy and food prices. It will stimulate sustainable economic growth and get this economy moving again."
The strong dollar nonsense is the same argument that the Wall Street Journal's Stephen Moore made earlier this week on Larry King Live. You may recall, Stephen Moore is former president of the Club for Growth, a senior fellow at the Cato Institute and contributing editor of National Review, so there is no question about where his loyalties and (free-market, supply-side) philosophical underpinnings lie.

Good thing Paul Krugman was also there with Moore to inject some wisdom into the discussion. Here is what Krugman had to say about Moore's strong dollar argument after the show:
Moore offered an argument I hadn’t heard before. The reason I hadn’t heard it that it’s really, really stupid. Our financial problems, he said, are caused by the falling dollar, which has reduced the value of American assets. It’s hard even to know where to start on that. But, um, we’re talking about balance sheets here; by and large the United States has liabilities in dollars (e.g., Chinese holdings of agency debt), while we have many assets that are, effectively, in foreign currency (Ford Germany is worth more when the euro rises against the dollar). So America’s balance sheet improves when the dollar falls, which is actually a major issue in international macro modeling.

Plus, the weak dollar is good for exports, which are about the only source of strength our economy has.

But the WSJ crowd is deeply attached to the idea that a strong dollar = a strong country (and if you believe in America, you believe that asset prices only go up, too). So reason has no impact.

But Serwer’s comments were what bothered me the most. He was saying that Obama and McCain are equally off on the financial crisis. I said that’s not true: Obama has called for expanded regulation, while McCain takes his advice from people like Phil Gramm, who helped create this mess. Plus McCain’s new line denouncing excessive executive bonuses makes no sense: Washington doesn’t set executive compensation! Unless McCain is willing to say what he’d actually do, it’s empty posturing.

And Serwer’s response? “That’s awfully partisan.”

So there you have it: if the facts have a liberal bias, pointing them out is excessively partisan.