BITO - Currency Weakness: The British Pound

• The value of the British pound continues to fall against the U.S dollar as U.S. policymakers continue to keep a tighter rein on things than British policymakers.
• This is not a new phenomenon, but the actions of the British that support this weaker currency just point to what U.S. policymakers need to avoid moving forward.
• It is easy for policymakers to support programs that devalue their currency because these programs produce accelerated economic growth in the short run.
• However, in the longer run, these policies contribute to lower living standards and weaker productivity growth.
• Supporting currency weakness is not "a free lunch" as some politicians suggest, but, then these politicians may only be interested in just the net election.

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