Of the many economic policies that are accepted as true yet are absolute nonsense, perhaps none is more achingly nonsensical than the notion that weakening a nation’s currency will magically make that nation prosperous.

Like the equally nonsensical Keynesian Cargo Cult’s misplaced obsession with “aggregate demand” driving “growth,” the idea that devaluing one’s money makes one more prosperous does not make even rudimentary sense.

If devaluing one’s currency generated prosperity, then those nations that have destroyed their currencies should be the most prosperous on Earth. The reality is those nations that devalue their currency are poor, for self-evident reasons: devaluing one’s currency lowers its purchasing power, which generates price inflation as imports soar in cost.

By lowering the yield on bonds (the favored method of devaluing one’s currency), the leadership inflates enormous credit/asset bubbles as everyone seeks to borrow nearly-free money to buy real-world assets that generate income streams. This fatally distorts the domestic economy and creates the potential for crisis in the foreign exchange (FX) market.

The obsession with devaluing one’s currency is rooted in the idea that exports are the key to growth, and the only way to boost exports in a world awash in virtually everything is to beggar thy neighbor by lowering the cost of one’s exports in other currencies by devaluing your own currency more than competitors are devaluing their currencies.

The problem with this idea is that the cost to the entire economy exceeds the modest gains in exports generated by beggar thy neighbor devaluation. In most economies, exports are a modest sector of the overall economy. In the U.S., exports are around 13.5% of the economy: $2.35 trillion in a $17.4 trillion economy.

U.S. Exports Hit New Annual Record, Reaching $2.35 Trillion in 2014. The U.S. exported $1.64 trillion in goods in 2014, including capital goods, consumer goods, petroleum products, foods, feeds, and beverages, and automotive vehicles and parts. The U.S. exported $710 billion in services in 2014, including travel, transport, charges for the use of intellectual property, and financial services sectors.