Wealth & Money Quote by Martin Feldstein

An overvalued dollar looks like a national indulgence masquerading as policy: it flatters consumers with cheaper imports while quietly reassigning the bill to producers and future growth. Feldstein’s phrasing is doing more than describing exchange-rate mechanics. It’s staging a rebuttal to the reflexive claim that a “strong dollar” is unambiguously bad for the U.S. economy. He concedes the obvious perk - bargain foreign goods - then pivots to a subtler, almost sly upside: if export volumes don’t immediately collapse, each unit sold abroad translates into more foreign currency proceeds when converted back. In other words, a pricey dollar can still make the export ledger look healthier in the short term, even as it erodes competitiveness.

The intent is technocratic, but the subtext is political. “Overvalued” signals distortion without saying “mistake,” giving policymakers room to defend status quo arrangements: consumer purchasing power, Wall Street confidence, and the optics of a strong currency. Feldstein is also hinting at the lag between exchange rates and real trade flows. Export “volume” is treated as sticky - contracts, supply chains, and habit don’t reprice instantly - so the currency effect can be spun as benign.

Context matters: late-20th-century America repeatedly lived this tension, especially in strong-dollar eras that widened trade deficits while keeping inflation down. Feldstein’s real target is simplistic moralizing about trade. He’s reminding readers that currency policy creates winners and losers, and that the winners (importers, consumers, asset holders) are often the ones whose preferences get rebranded as the national interest.