Hmmmm, what about China? From what I can see, their policy of weak yuan has sure been good for them...
weak yuan may be a factor but it is not everything, there r lots other reasons involved, besides the US didn't maintain a strong currency for charitable reasons, how a nation becomes strong economically is due to the contributions from the individuals, the US used to be composed of mainly immigrants, people that are hungry for better things, that 's the stage that China is in now
Japan's manufacturing got clipped in the last decade, by the Asian tigers and China. Their percentage share of global manufacturing dropped while the US' remained stable. The popular "US manufacturing was cut in half" story is a myth.
Well a few ETers get it. - - 'Weakening' the currency comes from printing money like crazy and the consequences will be inflation and elevated interest rates. Big corps that do business overseas will benefit, but main street and the people back home are going to get shafted. As for all the blame on China, - - - they peg their currency because they don't want to get screwed by people who continually print money in order to pay back less than they borrowed in real terms. Its somehow 'unfair manipulation' that the Chinese are smart enough not just to want to bend over and take it ? Well just check out how much the dollar has devalued since the creation of the Fed in 1913. (For those who don't understand all this, sometimes is a good idea to actually think & investigate, and not just parrot the crap you hear from the media.) - - -
Not sure I'd agree with this... Weakening the currency doesn't necessarily result from just printing money. The BoJ has been desperately printing money like there's no tomorrow, on and off, for 10yrs now, but has yen gotten any weaker? Moreover, who says that a weaker ccy always leads to inflation and elevated interest rates? When UK left the ERM did UK inflation get unhinged? What about Mexico after peso's spanking in 1994?
Well....here it is .... Name the countries that benefited from a weaker currency ? Ask Argentina....2002 to now.... ................................................................... Furthermore what would stop countries from having "fiat wars" ? Is it not true that any country should be optimizing its position ? .................................................................... The next question is .... What would be the optimal actions that the US could take today in order to improve its financial position ? A sustainable solution .....? .................................................................... Have the actions that have been taken so far by US officials been a positive or a negative for improving the long term financial US position.....? Have the solutions been beneficial in the short run.....and harmful for the long run ....? .................................................................... With regards to the actions taken to date in the US....who has benefited from them the most ? Why ? ...................................................................... What has to happen in order to provide for a dramatically better financial future for the US and the world ....? ...................................................................... Has it ever been the case that running massive deficits through government mandates ever been good policy for any country historically ? ....................................................................... Why broker dollars via govt. mandates....? When one runs a $1 through govt. ....how much of that dollar is effectively utilized....? Does it make sense to create unsustainable jobs if a $40,000 job costs $1000000 ....? ....................................................................... How can people lose....what they do not have ? ie unfunded govt. liabilities.... ......................................................................... Is it now not clear that scarce resources must move to the financial sector that is the driver of the real economy ? And is this sector not the smaller entrepreneurial businesses ? In what way have the govt. programs sought to center scarce resources to them.....????? ......................................................................... Is the structure of US govt. appropriate ? Is it appropriate that the US govt. is controlled by those who have the most well paid lobbyists.....? Is the lobbyist system flawed....? If so....what can be done to change it .....???? .......................................................................... One can clearly argue that most of these issues have not been properly addressed.... Thus how can one expect a more positive outcome ?
The Yuan has risen from 8.27 to 6.83 against the dollar since it floated - an appreciation of 17%. How is that a "weak yuan"? You're also assuming causation from correlation, which is unjustifiable given the myriad of economic factors at play. How do you know the "weak yuan" (which has actually not been particularly weak) has been good for them? It's quite possible the Yuan level has had very little to do with the thriving export sector - potentially it's far more to do with cheap labour costs, significant internal regulatory reform towards freer markets, reduction of external trade barriers, accumulation of capital and knowledge starting from a low base etc. It's possible China has had export success *despite* the level of the Yuan. Even if the level of the Yuan has helped, there is simply nothing in your argument that demonstrates this. Pointing out a correlation in a complex system with multiple input and output variables does not demonstrate causation. And even if it did, there are numerous - arguably a clear majority - of counterexamples on both sides (weak currencies of failed exporting nations; strong currencies of thriving exporters) so your own logic argues against your conclusion.
Firstly, my argument is not whether the yuan has appreciated or not. I am simply saying that yuan has always, as a matter of POLICY, been weak vs the currencies of China's main trading partners. Would you disagree with this claim? Secondly, you're absolutely right. In no way am I suggesting that it's a given that China benefited from a weak yuan. As I said, it seems that way to me, but, as you correctly point out, it's in no way a foregone conclusion in a complex system, such as the Chinese economy. And, indeed, there are counter-examples. So would you disagree that, in China's specific case, a policy of weak yuan beneficial to the development of the Chinese economy? I do know for a fact that some academics do disagree with this view.
On that note, maybe it was the state sanctioned rejection of intellectual property constraints, wages 50x lower than developed countries, free prison/slave labor, and complete disregard for product safety rivaling a drug dealer's cutting his product with insecticide (fake medications, chinese firewall, infant formula with melamine) that helped things along. Prior Yuan peg was 4:1 reset to 8:1 so a 17% retracement is not so remarkable.