October 3, 2020 — From early on in this pandemic, a common reaction has been “at least, maybe now we will get serious about addressing climate change.” One can see the logic. The terrible toll taken by Covid-19 should remind us of the importance of three things: the need for science, the role for public policy, and the usefulness of international cooperation. With these three revelations firmly in mind, we can see that we also need them to respond to the problem of climate change.
August 27, 2020 — The US Treasury’s tendentious interpretation of the IMF’s External Balance Approach this week found a 4.7 % undervaluation of Vietnam’s currency. It may pave the way for the US Commerce Department to impose countervailing duties (in a case involving the tire market), for the first time in a currency case. See Mark Sobel’s useful update of August 27. The Treasury claimed to find undervaluation despite small Vietnamese current account surpluses and fx reserves equal to only four months of imports. This finding is an ominous step in a predictably misguided US movement to use allegations of trading partners’ currency manipulation to justify protectionism.
August 24, 2020 — The price of gold reached an all-time record high of $2,000 per ounce this month. Mainstream economic thinking has treated gold as a side-show since the world went off the gold standard. Nevertheless, the recent spiking in the price signals some important trends. It is not merely “sound and fury signifying nothing,” as sometimes seems true of financial markets.
There are three ready explanations for the historic increase in the price of gold: (i) monetary policy, (ii) risk, and (iii) a spreading desire for an alternative to the dollar as a safe haven. Each of these explanations contains some truth.