Nice beard.
Posted on 01/23/2006 8:42:33 AM PST by Willie Green
For education and discussion only. Not for commercial use.
"I'm just back from China recently and pressed them on [the currency] issue. And found that they are putting in place mechanisms to allow the currency to have greater flexibility....So I think we're on the right course."
~ Treasury Secretary John Snow, January 5, 2006
"...Zhu Baoliang, chief economist at the State Information Center, a think tank within the state planning agency, said Beijing could not afford to let the yuan's value rise by much because it needs to keep exports strong both to absorb excess factory output and to contain unemployment."
~ Associated Press, January 20, 2006
Sources: C-SPAN Washington Journal, January 5, 2006;
"China's currency closes at new high against U.S. dollar, traders say," Associated Press, January 20, 2006
The Bush Administration shamelessly continues its relentless Economic War against the peaceful prosperity of the American Middle Class.
"Think what you do when you run into debt;
you give another power over your liberty."
-- Benjamin Franklin (1706 - 1790)
ping
It is amazing how much anti-American crap comes out of these guys. There must be little reaction from most Americans because America continues to sell-out the USA.
It is as if all elected officials are planted moles from other nations since what they do that is "pro-USA" is nonexistent.
My tagline says it all.
Nice beard.
BOHICA.
What his 'Snow' job amounts to is the more expensive the yuan becomes, the larger will be our trade deficit. Our only trade policy should be 'We buy from you' - 'You buy from us'. Forget screwing around with currency exchanges as a cure. To paraphrase Keynes 'in the long run, we'll all be broke'.
They do buy from us. They buy t-bills.
The Government is not going to go anywhere near resolving this issue simply because they need the Chinese to keep financing our Federal deficit with T-Bill purchases.
And they HAVE to buy T-bills and US dollars in order to PROP up their currency. In the long term, letting the RMB slide is in THEIR interest, though they can't do it quickly without really hurting the T-bills (and themselves).
It's not as simple as WillieGreen thinks.
What did you expect, America would sell there own grand mothers for that quick buck.
However, I believe China will eventually allow their currency to trade at market value. A stronger currency gives China greater leverage to buy commodities such as oil and leverage in acquiring foreign assets. It gives them leverage in acquiring technology and engineering know how for their tech industries. And it strengthens their deposits so that their banks will be stronger overseas as a source of capital.
So, it makes no sense for them to maintain a weak currency forever.
But at the moment, China is still a poor country. Large regions of China still are not part of the global economic system. And unemployment and a restless peasant population is their biggest problem. China has more than enough agricultural labor and wants to put them to work in industry. A low currency will do that. This will be done gradually in kind of a see-saw manner. As China brings more people into the global economy, the currency will rise in tandem.
The transition of China's economy into the global economy is going to require alot of wrangling by all the major economies, but in the end, it will be worth the effort.
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