Many conservatives and libertarians believe that when China inflates its currency, it makes the products they produce cheaper for Americans by lowering the value of its currency (and invisibly taxing its citizens).
This is like claiming that higher inflation in America will make our industries better able to produce higher quality goods at a lower cost. It is bizarre to claim that taxes and inflation cripple private industry’s attempts to innovate and improve their products (true), and also time claim that the same actions in China will have the opposite effect.
Dollars and RMB are just mediums of exchange and units of account. If one prison is using Marlborough and another is using Lucky Strike, a flood of new cigarette money, or additional confiscation and abuse by guards will not improve a prison’s efficiency in creating pruno and shanks made for export to other prisons. A shank is still a shank, the change in value is driven by changes in the relative wealth of traders, not the value of their money.
Exports become more appealing to rich nations not because the value of money has changed, but because the exporting nation has become poorer; its average quality of life reduced, relative to the richer nation. Just as a man brought from 1960 to the present era would be willing to work long hours in exchange for an average modern lifestyle, so too are men living in oppression and poverty in the third world.
The value of a nation's money is not the driver of changes in levels of imports or exports. They are correlated because government actions that affect the nation's average quality of life also affect the value of money. A government that makes life harder for its citizens makes them willing to accept less for their labor. A government that taxes so heavily that it leaves every citizen naked and starving will have a nation of laborers willing to exchange what they produce for food and shelter. A government that takes as little as possible, and encourages the growth of business within its borders, will see the price that its people demand for the products they produce rise over time.
