which is why America needs deflation, or deflationary pressures (such as devaluation of the dollar against foreign currencies expressed as local price inflation) .
> Devaluing the dollar against a foreign currency.
Ok, so labour traded for global goods intermediated by cash means we can remove the intermediary and think about the just the work for goods trade.
Imagine I work 1 hour for 10 loaves of bread. If I get more bread for my time, my value has inflated, if I get less bread for my time my value has deflated.
Ok now lets add money to the picture. (please excuse unrealistic exchange rates and the lack of profit margins to help illustrate the point)
If I work 1 hour for $20 and it currently buys $30 CAD and $30 CAD buys 10 loaves of Canadian bread, then we have the same scenario as describe before. The price of bread on the shelf in USA is $2 USD, or 6 minutes of my time.
Now looks what happens when we devalue the USD...
I work 1 hour for $20 and it buys $20 CAD (Less than before), and $20 CAD buys 6 2/3rds a loaf of bread. The price of a loaf of bread on the shelf is $3 USD ($20 USD/6.66) or 9 minutes of my labor. See how the price in USD went up? That's the deflation of a currency against another currency.
And that's how US labor becomes "cheaper" because the rest of the world now gets 9 Minutes of your time for one loaf of bread.
