EVERYONE agrees that the once-almighty dollar is overvalued in relation to major European currencies and the Japanese yen. But how can it be cut down to size? European governments insist that the U.S. devalue the dollar by raising the official $35-per-oz. price of gold. The U.S., just as adamant, is opposed to such a move. It demands that the Japanese and Europeans revalue—that is, make their currencies costlier in terms of the dollar.
It is an Alice-in-Wonderland dispute. What would be the difference between a currency realignment accomplished by 1) foreign revaluations alone or 2) U.S. devaluation combined with inevitable foreign revaluations?...
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