icandoitdon

Should We Care If China Is Manipulating the Yuan?

i'm afraid you'll have to elaborate a bit on this one, as i don't see your point. what is their "excuse" for debasing the currency, why do they need an excuse to do so, and what is their ultimate intent in doing so? if their purpose is something other than to help the u.s. trade and balance of payments deficits with china i'm curious to know what it is.

On Jan 27 11:00 AM athena wrote:

> Treasury debasing the currency is not their cure, it is their excuse.
>

Should We Care If China Is Manipulating the Yuan?

i think you need a bit of help on this one dr. perry.

the dollar has lost value against the yuan...not gained value. a declining dollar (and appreciating yuan) makes imported chinese goods more expensive in the u.s....not cheaper. conversely, it renders u.s. exports to china cheaper when paid for using their appreciated currency.

the fact that china's currency has gained significant value against the dollar but they still run huge trade surpluses with the u.s. suggests to geitner that their currency should be stronger still. that's what the u.s. is complaining about. geitner believes the chinese are keeping their currency weak in order to goose their exports, which is reflected in the huge u.s. trade deficit with china. he wants to reduce that deficit, which a stronger yuan will help achieve because it will spur our exports and reduce our imports of chinese goods...or so the theory goes.

china is pissed because their currency has already appreciated substantially and they feel they're being used as a scapegoat for u.s. economic problems.

every secretary of the treasury i've ever seen has adopted the notion that debasing our currency would be the cure all for our trade and balance of payments problems. it hasn't been. it never will be.