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Hilarious comments by the USA about the Chinese currency

October 19, 2010 – 7:33 pm

I don’t know about you, but I always have a good laugh, when I hear the comments of the USA regarding the Chinese currency, the Chinese Yuan.

The US politicians say, that the fixed exchange rate is unfair and that the market should decide about the value of the yuan. A fixed exchange rate supports exports from China to the USA, while products from the USA have a hard time finding their way into the Middle Kingdom. Well, not only the USA is crying about the exchange rate, also several other Western governments happily chime in.

As far as I can remember, prices are a question of supply and demand. Let’s assume the Chinese yuan is freely tradeable. Who is then going to stop the USA from printing money and increasing the supply of US-Dollars? It could be called currency manipulation as well. A lot of people around the world hold dollar assets at the moment. They will do something to prevent US-Dollar devaluation. However it won’t go on like this forever as the US-Dollar’s position as world-currency is weakening. The US government can just print money or remove money to control the value of the US-Dollar. That, at least to me, is similarly manipulative as a fixed exchange rate.

The US should rather improve their economy, the US people should work harder instead of spending time on crying about the Chinese Yuan. In fact the US people should be happy about China trying to move forward economically. Each Chinese person who leaves poverty behind and gets hold of some money is a potential buyer of Western luxury brands like Apple, Bentley or Luis Vitton.

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  1. 6 Responses to “Hilarious comments by the USA about the Chinese currency”

  2. This post makes no sense. It’s like the pro- Chinese version of a Glenn Beck logic loop Do they teach economics where you’re from in high school?

    By HAHA on Oct 21, 2010

  3. Blame my government, we didn’t learn about it in school. Feel free to give me explanations about what should be done.

    By Hendrik on Oct 21, 2010

  4. Nice to read a new post of yours :)

    It’s a really hot topic. From a scientific point of view, there is nothing “unfair” in business. China is paying lots of billions of dollars every year due to its fixed exchange rates – and that money goes somewhere; mainly to the US. So actually, we all massivly profit from China’s undervalued currency, as Chinese are actually working for a fare too low salary. I don’t want to explain the detailed economic connection here, but you perhaps want to read about the Mundell-Fleming model.
    Simply look at it in this way: Chinese have too low salary due to the undervalued Yuan. China buys US treasury bonds every year to keep the Yuan undervalued (as CA+CP+OR=0). This gives the US the ability to run deficits while having low interest rates. So the US wins.

    However, soon there will be midterm elections. US-economy isn’t going all that well and people want to know who’s responsible for that – and China is a good scapegoat. If you tell people that their credits and structural problems are to blame, you’re gonna lose in elction as your opponents tells people who’s to blame. Chinese government supports those politicians by reacting childishly to any accusation.

    By Aremonus on Oct 26, 2010

  5. Hi Aremonus,

    I hoped you would chime in and point out any mistakes and add additional info to my post. I’m going to read about Mundell-Fleming now.

    By Hendrik on Oct 31, 2010

  6. I apologise, but this variant does not approach me. Who else, what can prompt?

    By hermes on Dec 20, 2010

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