Friday, October 15, 2010

Currency Wars and Accounting Identities | Op-Eds & Columns

Short, sweet and to the point (my English Comp professor would love it): A laser-focused analysis of why it is so important to pressure the Chinese to allow its currency to re-price more freely against the dollar.

Gradually, so it doesn't abruptly disrupt China's economy in a substantial way? OK.

Diplomatically, so it doesn't spark a trade war that repeats the folly of the Smoot-Hawley Tariff Act? Sure.

But, it's got to be done. And more rapidly than the glacial pace that China's leadership has allowed to date. China has milked their advantage long enough; if they want to have a market to export to in America over the long run, they have to recognize they cannot continue to unfairly manipulate the dollar-renminbi exchange rate.

Dean Baker's concluding paragraphs offer both clear advice & a stern scolding to our confused Republicon friends in Congress:

"If one wants to get the budget deficit down, then it is necessary to reduce the trade deficit.
This raises the possibility that perhaps the deficit hawks don’t really give a damn about the deficit. Perhaps the deficit hawks just want to cut Social Security and Medicare and other programs that benefit the middle class and moderate-income people. Of course, it is also possible that the deficit hawks are just confused when it comes to economic policy. It’s hard to know for sure, but these days ignorance and/or dishonesty appears to be the price of admission to Washington policy debates."

Currency Wars and Accounting Identities | Op-Eds & Columns: "- Sent using Google Toolbar"

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