What if the Export-Import Bank expires?

Politico is now reporting this is very likely to happen.  That does not distress me, but if it bothers you I have a simple offset: a looser monetary policy.

The biggest recent “tax” on our exports has been the strong and rising U.S. dollar.  So a simple way to boost exports would be to depreciate the dollar.  Even a slight depreciation likely would offset the effects of Ex-Im expiration by more than a factor of one hundred, perhaps by more than a factor of one thousand.  Ex-Im is a relatively small program and it has nothing to do with more than 98 percent of American exports.  Many of its foreign beneficiaries, such as Pemex and Chinese state-owned enterprises, don’t need the subsidy to fund their imports.  Boeing is still reporting a robust demand for its planes.

Inflation has now undershot the Fed’s target for what — 36 months in a row now?  So a looser monetary policy will hardly bring hyperinflation down upon our heads.

Again, I am not saying we need to do this.  I am simply saying we could, and, if necessary, we could wash away all of your Ex-Im tears, just like that.


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