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A stronger renminbi could probably help solve at least some of the U.S.'s woes. But pointing the...

A stronger renminbi could probably help solve at least some of the U.S.'s woes. But pointing the finger at Beijing fails to acknowledge Washington's role in the currency imbalance - which is unlikely to resolve itself unless Americans learn to save and invest more and consume and borrow less.
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Comments (8)
  • PowerFlux
    , contributor
    Comments (3) | Send Message
     
    But first, Americans need capital to save. And that means jobs.
    18 Sep 2010, 04:58 PM Reply Like
  • IndianTiger
    , contributor
    Comments (7) | Send Message
     
    The mess that the US economy is in right now isn't created by the exchange rate between the US dollar and the renminbi. Perhaps politics in the US is really about pointing your fingers at the outside so people would, for a second in their lives, forget about the mess inside.
    18 Sep 2010, 05:00 PM Reply Like
  • mike mohr
    , contributor
    Comments (452) | Send Message
     
    I agree with you. But unfair trade and tax cut for outsourcing firms has intensified the problem.
    U.S. must tax outsourcing firms and raise taxes on foreign imports.
    19 Sep 2010, 09:03 AM Reply Like
  • Jake Huneycutt
    , contributor
    Comments (1402) | Send Message
     
    Mercantilism fuels nationalism.

     

    You can call it "finger pointing", but only an idiot doesn't complain when he is playing by unfair rules. The 'Americans are finger-pointing' argument is an emotional appeal, that distracts from the underlying economic issues.

     

    There is overwhelming empirical evidence that suggests that currency issues are driving the global imbalances; and they are likely to blame for the negative to low-growth environment.

     

    If your goal is really to assign "blame", then it's difficult to deny that the US is as much to blame as China, Japan, and Europe. The US is the nation that essentially set up the flawed Dollar Reserve system and also the nation that looked the other way when its favored post-WWII ally, Japan, started manipulating its currency.

     

    Keynes and the Brits opposed the Dollar Reserve system, instead favoring using the 'bancor', an international clearing currency backed by 30 different commodities:

     

    en.wikipedia.org/wiki/...

     

    But it's silly to look at this under a lens of 'who is to blame?' The only real question is what works best economically; and the current system is broken. Until everyone realizes this (the Chinese, the Americans, the Japanese, the Germans, etc., etc., etc.), then we are going to continue to have issues.
    19 Sep 2010, 11:33 AM Reply Like
  • surfgeezer
    , contributor
    Comments (7947) | Send Message
     
    The problem is debt, not the system. That said a "basket" will be helpful, but painful as mercantile countries will have less need to buy US debt.

     

    So many posters slam the "idiots" that bought houses they couldn't afford, betting on continued appreciation. Yet they still want tax cuts and services.
    20 Sep 2010, 01:05 AM Reply Like
  • Uncle Pie
    , contributor
    Comments (3653) | Send Message
     
    To see the US Treasury secretary plead with America's biggest creditor to help us debase our own currency is to see the epitaph of American economic hegemony.
    18 Sep 2010, 06:28 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2698) | Send Message
     
    Re: "...unless Americans learn to save and invest more and consume and borrow less..."

     

    Given the fact that our leaders have not even started to pay down a penny on our national debt of $15T strong, which is growling by the seconds as I write, this prospect appears unlikely.

     

    Children follow their parents who lead and exemplify.
    18 Sep 2010, 06:41 PM Reply Like
  • Duude
    , contributor
    Comments (3398) | Send Message
     
    It won't happen but suppose China agreed to raise the value of their currency 30% in the next year. US consumers, especially those that shop for discounted merchandise would see their buying power drop like a rock. Even non-Chinese made goods would increase in price so as to expand margins. We wouldn't suddenly be saving more, but less as people do what they can to stay afloat. No longer matter what the Fed does with the fed funds rate, interest rates will rocket higher. The US would either have to cut spending dramatically, (which would be smart,so we can rule that out) or we'd need to find someone else to buy our expanding debt burden. Paul Krugman suggested the Fed buy it which would only exacerbate what would already be a free-falling dollar. World oil markets would respond with $150-200 a barrel oil. But we wouldn't hear anymore talk of deflation. A few industries would benefit but it wouldn't be nearly enough to offset the pain brought about by inflation. No, I think a far better strategy is to pursue a much healthier free trade environment between the US and China. Aside of currency manipulation, China blocks free trade like no other exporter country on Earth.
    19 Sep 2010, 07:26 AM Reply Like
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