“There are no confident assertions here of what works and what doesn’t—and no blueprints for policymakers to adopt. The emphasis is on the need for humility, for policy diversity, for selective and modest reforms, and for experimentation.”

But within many countries, and certainly within the United States, the benefits of this integration have been unevenly distributed—and this fact is increasingly being recognized.

Productivity is what makes us rich. Specialization is what makes us productive. Trade allows us to specialize.

Members pay funds into the IMF; in exchange they can borrow in times of difficulty “on condition that they undertake economic reforms to eliminate these difficulties for their own good and that of the entire membership.”

Time proved the skeptics right. In December 2001, the long-suffering Argentine economy unraveled completely. Street protests turned violent, the president resigned, and the government announced that it could no longer pay its debts, creating the largest sovereign default in history.

“gold standard” has a nice ring to it; however, the system made for catastrophic monetary policy during the Great Depression and can seriously impair monetary policy even during normal circumstances. When a currency backed by gold comes under pressure (e.g., because of a weakening economy), foreigners start to demand gold instead of paper. In order

An undervalued currency promotes exports (and therefore the industries that produce them). At the same time, a cheap currency raises the costs of imports, which is bad for consumers. (Ironically, a weak currency can also harm exporters by making any imported inputs more expensive.)

In general, a weak currency is good for exporters and punishing for importers.

Currencies that buy more than PPP would predict are said to be “overvalued” currencies that buy less are “undervalued.”