"Some people in America think the trade imbalance between China and America is caused by the yuan exchange rate, but as a matter of fact, I believe we should have a correct understanding of trade between China and the US," Qin said. "We admit there's a trade imbalance between China and the US... but you cannot put the blame on China. It's the result of the division of labour against the backdrop of economic globalisation."Qin is playing the typical politician and lying, but so is Obama. They both really know what is going on. The source of the trade deficit rests on two actions on the part of China: restriction of imports and currency manipulation. The former necessitates the latter, so in effect the two are one and the same. Notice how there is no mention of the first in the entire piece, however, which is actually the source of the problem. Also notice how there is no mention of the Chinese policy acting as a subsidy to the US, as I talked about previously. The two true, key issues that motivate the entire scheme are left out. How informative. The currency manipulation is primarily a matter of the central bank of China and the Chinese government buying up US Treasury Debt and other financial assets, for which it is now paying dearly as the US financial market goes into freefall. And then they have the nerve to actually complain about it. They didn't have to buy this stuff. I don't normally read articles like this, however Ben sent it, so I thought I'd give it a comment. Most of these mainstream articles are pretty much a waste of time, as anybody who has a clue about economics knows this situation, knows who the players are and what their interests are, and that they haven't changed in 30 years and aren't likely to change any time soon. Further, the article provides no insight whatsoever as to what is actually going on. So it really is a case of "this just in... scientists observe that water is in fact wet." Except that this statement would actually be minimally informative. Mainstream news is pretty much a complete waste of time. This is why I don't watch FoxNews, Bloomberg, or any of the other clones too numerous to count. I've got better things to do with my time. If you wanna learn real econ, I suggest you visit the sites listed under my econ links. If you wanna be tittilated by overschooled, unereducated blondes with gigantic boobs talking ignorantly about money, watch FoxNews and MSNBC. Might wanna put it on mute. Just my opinion anyway. Or you could just go outside and stare into the sun. No offense to Ben, of course.
Thursday, November 6, 2008
This Just in... China Manipulates Its Currency
Ben sends me this link.