View Full Version : Geithner and Obama: China Manipulating Currency
tmg19103
01-23-2009, 12:33 PM
If China is manipulating its currency, then what is the Federal Reserve doing to the U.S. currency? Keeping it sound and stable?
http://news.yahoo.com/s/ap/20090123/ap_on_bi_ge/geithner_china
Lucille
01-23-2009, 12:40 PM
If China is manipulating its currency, then what is the Federal Reserve doing to the U.S. currency? Keeping it sound and stable?
http://news.yahoo.com/s/ap/20090123/ap_on_bi_ge/geithner_china
It's bad (http://www.ronpaulforums.com/showthread.php?t=176594). It's real bad.
Denninger (http://market-ticker.denninger.net/archives/730-Heh-CONgress-Wake-Up!.html) talked about how stupid it is to piss off China too:
China is aware of what has happened (http://www.news.com.au/business/story/0,23636,24915240-14334,00.html?from=public_rss) and we need them to finance our massive Federal Debt. You do not dare ignore this issue, for they can - and may - force it any time they'd like.
danberkeley
01-23-2009, 12:48 PM
The Chinese government IS manipulating its currency. If they would let it appreciate, America would be screwed because it would not be able to import anything. Nonetheless, this is what we need.
misterx
01-23-2009, 02:03 PM
Why shouldn't they deflate the yuan, it's worked very well for them. Isn't China's first priority to protect the interests of China? Obama needn't worry though, China will let its currency appreciate soon enough. Just as soon as they have all the industrial power that they need, and America has none. Then they will pull the rug on our service and debt based economy, leaving us unable to rebuild for decades to come.
socialize_me
01-23-2009, 02:15 PM
Why shouldn't they deflate the yuan, it's worked very well for them. Isn't China's first priority to protect the interests of China? Obama needn't worry though, China will let its currency appreciate soon enough. Just as soon as they have all the industrial power that they need, and America has none. Then they will pull the rug on our service and debt based economy, leaving us unable to rebuild for decades to come.
You can't simply "deflate". Remember, you can inflate theoretically to an infinite percentage, but you can only deflate, at the most, by 100% (meaning you have no money in circulation). So it's no surprise that a 33% deflation rate by the Fed from 1929 to 1931 created the devastation it did, while an 850% inflation rate by the Federal Reserve from 1980-2007 had not quite the same effects.
Deflation by means of a contraction of the money supply is NOT a good thing for a nation like China. It's no different manipulating the money supply upwards than it is to manipulate it downwards, so if inflation is bad, why would deflation be good? Remember, I'm arguing inflation/deflation by terms of the money supply and not by prices. Price deflation is a whole 'nother argument that has no relevance to this point about China. Either way, if the Fed or a Central Bank inflates and deflates purposely, it's a very bad policy. It's still central economic planning and if anything, deflation actually is worse than inflation itself as it forcefully brings a country to its knees whereas inflation gradually does.
Even with a gold standard you would have monetary inflation. Monetary inflation is not a bad thing if it happens naturally as it would under a gold/silver standard. However, price deflation would occur even though monetary inflation is present because the money supply can never grow as fast as national production does with a truly free market monetary system.
In other words, monetary inflation is inevitable. It will always happen. If monetary deflation happens, then you have serious problems because a shitload of money just disappeared from the market.
fj45lvr
01-23-2009, 02:46 PM
I laugh about this....I think its AWESOME that foreign countries can topple us now based on their decisions on their monetary or investment policies!!!
It will just go to show the consequences for not having followed the Constitution and having Constitutional money!!!
Bring it on China, Oil rich States, and Russia....please pull the plug on the "corporation" known as the United States and the douche bag bankers (whether foreign and domestic) that control the puppets behind the curtain.
Paulitician
01-23-2009, 03:49 PM
No shit it's manipulating its currency. We've known that for years. We've been doing it for years too. Wonder why they're barely starting to fuss now.
misterx
01-23-2009, 04:33 PM
Ok, you got me, deflating was a poor choice of words. I was referring to them keeping the currency from appreciating. All ideology aside, you can't deny that they've benefited greatly from this policy. It has kept the country attractive to industry, allowing them to develop the technology and infrastrcture to be self-sustaining, all the while gutting the backbone of the world's superpower and making us dependant on them. The ability to produce is the only thing that matters in the long-term. Any economy that forsakes industry can never last long.
idiom
01-23-2009, 05:01 PM
Where was it written that Only Americans are allowed to manipulate their currency? Oh right in the IMF and WTO charters...
Lucille
01-24-2009, 11:31 AM
Geithner's China Bash (http://online.wsj.com/article/SB123275567586511815.html)
In a written submission to the Senate Finance Committee, Mr. Geithner said the Obama Administration "believes that China is manipulating its currency." He says he wants Treasury to make "the fact-based case that market exchange rates are a central ingredient to healthy and sustained growth." The dollar promptly fell and gold jumped $40 on the news.
We're not sure what Mr. Geithner means by "market exchange rates," given that the supply of any modern currency is set by a monopoly known as the central bank. When Mr. Geithner says China is "manipulating" its currency, what investors around the world hear is that he really wants Beijing to restrain the number of yuan in circulation and increase its value vis-a-vis the dollar. That's a call for a dollar devaluation to help U.S. exporters.
This would seem to be an especially crazy time to undermine the dollar, given that the Treasury will have to issue some $2 trillion to $3 trillion in new dollar debt in the next couple of years. A stronger yuan would also contribute to Chinese deflation and slower growth, which would only mean a deeper world recession. Even the Bush Treasury never formally declared China to be a currency "manipulator" in its periodic reports to Congress. If the Obama Treasury is now going to take that step, hold on to those gold bars. We're in for an even scarier ride than the Fun Slide of the last few months.
polomertz
01-24-2009, 02:47 PM
Hmmmm.
China Says Geithner's Got It Wrong
http://www.forbes.com/2009/01/24/china-geithner-update-markets-equity-cx_ra_0123markets36.html
China turned up the heat in its brewing trade war with the United States on Saturday. The central bank responded to accusations of currency manipulation by America's Treasury secretary-designate by calling him, diplomatically, a liar.
"These comments are not only out of keeping with the facts, even more so they are misleading in analyzing the causes of the financial crisis," Vice Governor Su Ning of the People's Bank of China said
It's all over the news now.
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