The World in 3-D: Depression, Deflation, Devaluation.

There's gotta be a better way to take a haircut.

Although it's never discussed by economists (nothing ever really is) what if the very stratagem, currency devaluation, that 's used to fight the Global Depression, is not only the cause, but the re-enforcement for, deflation. If you think about it, it makes sense. As you devalue your currency to boost exports, giving your citizens, without them changing a thing, an advantage over other countries' citizens, by cheapening your currency, that means not only are products cheaper, so your citizens are getting less money for their work, but your currency can now afford less of those things from your competitors that your citizens want, ie, imports. But of course, that's the very reason that you wished to increase the economy's output in the first place: by halting the downward spiral of deflation, via currency debauchery. The problem is, speaking from observation as opposed to dogmatic Free-market (no one has any idea what that means, BTW) ideology, currency debauchery IS deflation, because  although it doesn't satisfy the definition of declining prices in your economy, it perfectly defines it in the Global economy. And in a globalized world, you can do all you want to your own economy, but it's the general sea in which you swim that has the greater effect.

Let's take the main cause of Climate change, the automobile, which just coincidentally (yah, right), is also the main factor in the 'productivity' of economies in most OECD countries, as an example. As the devaluation of the yen floods the markets with cheap Toyotas, Hondas, and Nissans, the response of the competition will be (has been, as this dynamic has been going on for a generation now) to lower the wages of their workers so as to compete on price, and the economic yardstick for cutting costs is always and everywhere to reduce employees wages, followed by their numbers. This means that, unless those people are re-employed at jobs offering higher wages, that you've just lost the customers you gained, and many of them, now not being able to fuel their vehicles, will be forced to sell them, thereby putting your used cars in direct competition with your new products that are coming fresh off the line. In other words, your currency devaluation has the same effect as a pre-announced sales tax
increase. It'll juice your sales in the short term but the downward slide will continue once the spike in sales wears off: you've not increased demand, simply pulled it forward.

Now, one could argue convincingly that all of one's customers are not countries where autos are manufactured, so the ones that don't roll their own, so to speak, will keep buying. However, the economies of your competitors, with their sales crashing, will have their currencies following the same downward trajectory as the plunge in sales, making their products competitive again, as the currency follows the initial devalued currency into the toilet, causing  a worldwide deflation that the actions of no single player can halt, unless they were to close down their factory.

So, without a 'Foundation Trilogy' scenario, whereas certain products are manufactured where the expertise and resources for it abound, instead of every nation trying to manufacture the same high-margin product (that's why everyone tries to jump on the auto manufacture bandwagon), prices would be controlled by that sector of the world economy that has to do with auto manufacturing, for example, whereas PC manufacturing would be under the auspices of a different regime, the only other alternative being protectionism, that bane of globalization that globalization has forced onto us.

The solution is, of course, more complex than that, but until we stop pretending that individual nations can repair a global problem by taking steps to put their own sovereign nations at a competitive advantage, having nothing to do with the quality or desirability of the products they're trying to sell, the world economy will follow Poe's Pit and the Pendulum: pitting each nation against one another until the very 3-D pendulum of Devaluation, Deflation and Depression swings in an arc so low it cuts down all the economies at the knees. We all can see that this is where we are heading. As warned at the end of Shakespeare's Romeo and Juliet, "All are Punished", when for no other reason than that's the way it's always been, we continue to snipe at one another and wish for nothing more than the demise of our 'enemies', even at the price of the lives and prosperity of our own progeny. This is no more than madness writ large.