This is the Cato Daily Podcast for Monday, February 2nd, 2015.

I'm Caleb Brown.

American auto manufacturers and many members of Congress want to punish Japan for devaluing its currency relative to the dollar.

But such a move by Japan makes U.S. consumers wealthier and lowers prices for inputs

for other U.S. manufacturers.

Dan Pearson, a senior fellow in trade policy studies at the Cato Institute, talks

about the policy and politics of so-called currency manipulation.

Some U.S. manufacturers that compete with imported products have been concerned that other

countries may at times consciously reduce the value of their currency relative to the dollar, which allows those countries to sell products at lower prices

into the United States.

And when those products compete with U.S. firms, then there is political pressure here to do something about it.

A point that our trade guys make all the time is that more than half by value of the stuff Americans import is stuff that Americans use to make

stuff to sell to Americans.

And so I mean what what are, what's a competitive good to one business might be a

God send and an input to another business.

So I guess how do the politics of this sort out when you've got so much value that's being delivered to the United States through imports?

That's one of the points that I think is just not well understood in the current debate.

The American economy actually benefits quite a bit when another country makes a decision to sell us stuff at a relatively low value.

You have so many products that we don't produce in this country that come in from overseas.

Think of coffee and most shoes and t-shirts, things that are used by all families in this country,

but disproportionately some of the lower income families are they

they spend a disproportionate amount of their income on some of those

...