so if china lets it's currency strengthen against the dollar, how is that supposed to help the US economy?
If you race to the bottom it's only a matter of time before implosion...if you don't race to the bottom but realize that there are feasible levels of growth and that economies don't have to pump at full steam and everything doesn't have to cost $1 and if you save money you can have a good life and not be buried in debt, etc. etc. etc. maybe we wouldn't be in this position. I'm of the opinion that I'd rather see Americans live less flashy lives but save money and live within their means...the idea of credit was probably not to overload everyone and ruin their lives as much as it was to make things easier...but profits are profitable and companies are happy when demand is up and so are profits....lenders clearly got happy with lending laxness in the last few years and should be paying for it, luckily they packaged the shit they wrote and sold it off...smart of them but someone pays in the end. Whether there are millions stuck paying out their ears for houses that aren't worth the strain on people's lives they cost or the lenders write-down bad loans and foreclose more and more, someone ends up losing something. Corporate insiders at the lenders are mostly making out like bandits though. They're still living nicely you can be sure.
Helps balance of trade. China's currency is at a ridiculously low artificial level. They do not let it float on the world markets which is why you can't trade it. Ever wonder why China is growing so fast? Exports exports exports. And why do they have all the exports? Extremely low cost of production, some of which is currency related.
How does improving the balance of trade against China help the US? Sourcing will simply shift to another more expensive supplier. There are grounds to believe the US will be hurt, not helped, by a yuan appreciation.
I actually agree with this. I was just explaining how the mechanics work. Basically what Congress is thinking. The real reason the US has such a big bal of trade problem is that they consume like there is no tomorrow. Doesn't matter what the dollar does, unless it completely collapses, which is unlikely for a number of resons. A negative bal of trade is not a negative thing in itself. The fiscal deficit is the problem, and that is 100% due to spending (not low taxes which actually increases receipts, proven time and again). Laffer curve.
Of course the US would be hurt by an appreciation in the yuan...but the point is that unless it corrects, we're just digging a big grave for ourselves. We're essentially filling their pockets with cheap currency(at the expense of their workers who are being artificially underpaid too) and as the yuan gets stronger they will just have more money because they're saving what we're giving them. It's better to get back to the reality of actually buying things at what they can feasibly be made for rather than buying things at a discount at the expense of Chinese people and American companies who can't compete. I'm all for free markets and China is simply not allowing the markets to be free. I'd much much rather see a non-communist/propagandist/censoring country get our business....Mexico or some other Asian nation can probably make what a currency-balanced China can do it for and in some cases likely cheaper. I just think it's stupid to pay a little less in exchange for reality, fairness to other nations, etc. etc. So yes, it would hurt the US, but that's like saying that arresting a guy who's been robbing people might hurt his family's feelings.
From Newsweek magazine, 14 May 2007: In 2006, imports from China totaled $ 288 billion, about 16 percent of all U.S. imports and equal to only 2 percent of America's $ 13.2 trillion economic output (gross domestic product). === I am surprised by these figures. The 16 % value is far less than I expect. I suspect that imported Chinese goods have only a small effect on the USA economy, not a large effect. <img src=http://www.chinadaily.com.cn/english/doc/2005-09/14/xin_08090214073214205021.jpg \img> Chinese cars might sell in the USA if they are made in the USA.
it actually costs more to produce goods in china than it does in the US the reason is that if an item costs $18 to make in the states, the same product costs $20 to make in china (i.e. it costs $12 to manufacture the product and $8 to ship it) china may have already gone bankrupt because it was unable to silence the US and european industry. Sorry Mr. Chinaman, but we outlasted you, and now you have to pay up. so the US government cannot take a moral high ground as they think they are doing, because, by not being tough with china, they are actually screwing up the chinese people what china is doing to its people is making them artificially poor with its currency policy, so either the people cannot save up, or they cannot spend (unless of course they are a party to the communist system) so if the yuan appreciates, the chinese people can save more, and if they don't want to spend their capital, then china can pay the US back with the money in the chinese banks so then the US government can make even more money by charging tax on more exported goods and the US companies can be more competitive because of the higher volume of goods produced