To suggest that either the oil or currency markets are, or have ever been, free in the normal sense is ridiculous. They are, and have always been, manipulated by governments and other large interests. But the markets are so large that even these interests have only limited ability to counter the forces of supply and demand.
The Chinese pay a price for the peg they're maintaining; they have to purchase huge quantities of overvalued dollars. So far they think it worthwhile and they seem to have found a way to dispose of those dollars that also works to their advantage.
You (and G-7) are telling the Chinese you have a better conception of what is fair and equitable and in their interests than they themselves do. Not surprisingly, they're not buying.
What is true in all this is that the present situation cannot continue. Either we or the Chinese or both of us must make concessions or see the whole system fail as it did in '29...and I'm afraid it's the American worker and the American middle class which are going to be sacrificed.
"You (and G-7) are telling the Chinese you have a better conception of what is fair and equitable and in their interests than they themselves do. Not surprisingly, they're not buying."
If China could have it's way it's in their best interest to not let the Yen float. However, it's not in our best interest, and it's harming our economy. It's also harming the economy of other countries of the G-7.
We are insisting that they change their policy if they want to trade with us. We are suggesting that theri trading with us in a manner that we feel is more fair is more benificial than them trading under the sanctions we will impose if they don't change their policy.
That's the nature of trade negotiations.
"To suggest that either the oil or currency markets are, or have ever been, free in the normal sense is ridiculous. They are, and have always been, manipulated by governments and other large interests."
The government manipulation in the US is tiny compared to the volume of Oil sales and compared to the similar manipulation of other governemnts.
Our biggest manipulation is taxes, and our taxes on oil and gasoline are but a fraction of what they are in Europe, or even Belize, which I recently visited.
As for other interests manipulating prices. What the left accuses as being market minipulation is almost always a free market at work.
If it's more profitable to reduce production and charge a higher price for a product, in general that's a regular market force at work. It's only when there is a monopoly or collusion and a significant barrier to entry into the market before there becomes a problem.
Opec can be used as an example of collusion to inflate prices, but to a large extent the various nations of Opec are in competition with each other and the real cooperation is pretty minimal.
"The Chinese pay a price for the peg they're maintaining; they have to purchase huge quantities of overvalued dollars. So far they think it worthwhile and they seem to have found a way to dispose of those dollars that also works to their advantage."
Sure, they pay that price by not passing on the benefits their economy has generated to their workers. They keep the workers poor and controlled. They keep the majority of the profits for the governemnt and us it to maintain control and build up their military.
They also provide minimal social services.
At the same time, our industry cannot compete with the Chineese, because the free market demands more for it's workers.