At Least Krugman Understands Monetary Policy, Exchange Rates, and Net Exports

AB readers have had to endure some of my recent frustrations with certain statements on this topic from people who only pretend to understand economics. Which is why I bring you some insights from Paul Krugman:

But the US is an “open economy” — we do a lot of trade with the rest of the world — and there’s another important channel for monetary policy: low interest rates tend to cause a low dollar, which is good for net exports. In fact, the decline in the non-oil trade deficit is one of the few bright spots in the US economic picture. So the second panel in the graphic doesn’t show a failure of policy — it shows the one area in which monetary policy is working! In fact, if a weak dollar wasn’t helping net exports, we’d be in much worse shape than we are.

All that is left to say is: Thank You!