To anyone with a sence of history, the bush administration's decision to bless a cheaper dollar must seem disquieting. It may be defensible as economic policy or simply as acceptance of the inevitable. After all, huge U.S. trade deficits (now roughly $500 billion annually) have flooded the world with so many dollars that a sizable currency decline was, at some point, likely. But the cheaper dollar, by making U.S. exports more price competitive and hurting other countries' exports, raises the unsettling specter of "beggar thy neighbor" policies.
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