Big Mac's Currency Lesson

The WSJ lays out the dangers of a weak dollar policy using Iceland's Big Mac example. Effective next weekend, Iceland's three McDonald's franchises will be closing due to the high import costs of its ingredients due to a declining kroner.

But the lesson here is not about the dangers of globalization or the virtues of buying local. Since Iceland's banks collapsed last fall, and its currency with them, the cost in local currency of all imports, and not just fast food, has soared. This has done nothing to "cushion" the blow to Iceland's economy from what amounted to an international run on its banks. What it has done is added a currency panic to a financial panic, and made Iceland's prospects bleaker than they otherwise might have been.

...debasing one's currency makes a country poorer, not richer. Just ask the residents of Reykjavik, who now must travel 900 miles to get their Big Mac—in Dublin.

Let that be a lesson to the U.S. government, who is willing to screw its citizens (further) in order to reduce its own inflated debt problem.