Chinese Manipulations: a Weird View by mattsteinglass
January 27, 2009, 5:00 pm
Filed under: Uncategorized

Bret Swanson in the WSJ thinks it’s not the Chinese who have kept their currency too low; it’s the US that flooded the world with too many dollars after 2005, after first failing to supply enough dollars in the late ’90s.

It looks at first glance as though when you have a country like China that mandates that every dollar exchanged for a yuan go through a central bank which sets an exchange rate by fiat, and another country that pretty much lets its currency float except for setting base interest rates by manipulating the government bond market, it’s the country that has the nonconvertible currency and the exchange rate set by government fiat that can be more properly said to be “manipulating” its currency. But what do I know? My greater concern is that the proliferation of potential reasonable and unreasonable interpretations of economic phenomena is potentially so great that nobody can ever coalesce around a reasonable view of what actually happened, and the potential for deliberate obfuscation in bad faith is insurmountable.


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