so what? surely it is their freedom to do with their currency as they please
U.S. Designates China as Currency Manipulator
261–270 of 356 posts
Re: U.S. Designates China as Currency Manipulator
#262So, really, is there any doubt that this is true? China's currency exchange rate has been abnormally stable for a long time, and the Obama, Bush, Clinton, Bush, and Reagan administrations all knew it was the result of currency manipuliation. They just found it politically unpalatable to admit it out loud. The real question would be, why is the U.S. finally admitting this out loud? 1) amping up a trade war 2) decoupli…
US decoupling itself from China would have an avalanche of effects, including huge inflation on most consumer goods, and outright product shortages. China is also a huge foreign debt holder, and if presumably no longer a buyer due to decoupling, will send US interest rates skyrocketing.
China holds only 5% of US federal government debt, down from a peak of 11%. If they stop buying it won't cause interest rates to skyrocket. The impact would be a few basis points at most.
Re: U.S. Designates China as Currency Manipulator
#263why don't all countries let their currencies float?
Re: U.S. Designates China as Currency Manipulator
#264US sad they can't set Fed rates like the People's Republic of China without incurring interest. Federalize the Federal reserve and we would be capable of doing similar.
Re: U.S. Designates China as Currency Manipulator
#265One thing that I think is getting lost in this discussion is the role of intent on currency manipulation. Switzerland has the strongest currency in the world due to the country's reputation for governmental and financial stability. This makes Swiss labor extremely expensive for reasons mostly outside of their control, and the Swiss government has tried (and largely failed) to remedy this. Technically, this is devalua…
If having two different exchange rates -- "offshore" and "onshore" -- doesn't say currency manipulator, I don't know what does.
Every currency has onshore and offshore rates. For example, you can buy dollars or Eurodollars, which is simple US currency kept offshore.
Eurodollars have different exchange rates because they don't have the reserve requirements from the Fed. i.e: it's less regulated.
The RMB has a heavier regulation whereby the exchange rate isn't allowed to fluctuate. This does increase the difference in value for the onshore and offshore currencies.
But having that distinction does not by itself make it a currency manipulator.
Re: U.S. Designates China as Currency Manipulator
#266Stock futures down another 2%. Amazing how much money one can lose in a matter of days. Stomach churning.
If day to day fluctuations of just 5% or whatever get your stomach churning then you probably shouldn't be trading futures.
Re: U.S. Designates China as Currency Manipulator
#267>Treasury uses three criteria to apply the designation: actively intervening in their currency markets, having large trade surpluses with the U.S., and having large overall current-account surpluses.
Monday’s action by Treasury is mostly symbolic, requiring the U.S. administration to consult with the International Monetary Fund to try to eliminate the unfair advantage the currency measures have given a country.
Does that mean it is only "unfair" if it negatively affects the US? such a definition of "fair" means that no country should be allowed to do better than US
Re: U.S. Designates China as Currency Manipulator
#268Earlier quoted context omitted.
US decoupling itself from China would have an avalanche of effects, including huge inflation on most consumer goods, and outright product shortages. China is also a huge foreign debt holder, and if presumably no longer a buyer due to decoupling, will send US interest rates skyrocketing.
China holds only 5% of US federal government debt, down from a peak of 11%. If they stop buying it won't cause interest rates to skyrocket. The impact would be a few basis points at most.
That is presuming private ownership effects won't be big. And they will be. China owns more corporate debt in the US than anywhere else and it is a high percentage.
Re: U.S. Designates China as Currency Manipulator
#269Earlier quoted context omitted.
They have a large nuclear arsenal.
Which might not mean as much as you think, thanks to the doctrine of Mutual Assured Destruction ( https://en.wikipedia.org/wiki/Mutual_assured_destruction )
That only works as long as you have targets worth destroying. China has a lot. US, fewer... Russia, we do not even know the targets.
Re: U.S. Designates China as Currency Manipulator
#270Earlier quoted context omitted.
> obviously America will be able to make these products American entrepreneurship doesn't mean all the manufacturing would take place in America. Entrepreneurial people are already moving to build more manufacturing in other countries where labor is less expensive and more plentiful than America. I don't think anyone was arguing that America would manufacture everything they currently import from China.
Even if the companies laterally move overseas manufacturing to other Asian countries, the end result is still China losing economic control over the United States. Can't those other countries start behaving like China? Sure, but doubtful it would go anywhere.
And this happened instantaneously with a wave of magic wand and no costs, right?
The cost to the USA would make the recent debt crisis look like a picnic.