Countries like China that control their exchange rates “invite retaliation.”

Discussion in 'Wall St. News' started by ASusilovic, Oct 9, 2010.

  1. Oct. 8 (Bloomberg) -- Countries with fixed currency exchange rates “invite retaliation,” Canadian Finance Minister Jim Flaherty said.

    “There are consequences that are bad for world economic recovery, for a world economic recovery that is fragile by other countries maintaining relative inflexibility in their currencies,” Flaherty told reporters in Washington today.

    “It is very important that we avoid the kind of successive actions that we know historically can follow by artificially fixed currencies which distort trading relationships and invite retaliation,” Flaherty said at a press conference.

    Flaherty is in Washington for the International Monetary Fund’s annual meeting this weekend.

    He singled out China for criticism, saying “only minimal, minor flexibility’’ in the yuan exchange rate had happened since China committed before the June Group of 20 nations meeting in Toronto to “allowing more flexibility in its currency.’’
  2. Fixed exchange rate is plausible only when they do not trade with rest of the world.
  3. whats the problem with fixed exchange rate? NONE!

    why doesnt the US fix their own exchange rate but with like 1 USD to 4 yuan, beats me.:confused:
  4. Revaluing the Chinese currency will lower the value of the dollar and spur US inflation. Unfortunately, it will not solve all of our economic problems. The real problem in our trade relationship with other countries is that the US cannot compete with the low wages around the world. American corporations have been moving their manufacturing businesses overseas for years to benefit from lower labor costs. The only solution to us competing with laborers who work for a few dollars a day is to lower our wages. Since that will never happen, we will have to debase our currency and create inflation until the US dollar becomes virtually worthless. One way or another, the combination of an astronomical national debt and low foreign wages will lead the US into third world status. Passing another Smoot-Hawley Tariff Act will only hasten the process. If you want to protect what savings you currently have, investing in real assets such as precious metals may be the best option.


  6. Read between the lines. "QE 1 was totally useless", so lets parade around and pretend we need to pass the buck with a currency crisis to cover over our F%$k ups.
  7. da-net


    I am not convinced that precious metals is the place to be if things get really bad. eg: great depression

    as a child i remember vaguely that my grandfather said "there are three things everyone needs, food, clothing and shelter"...he lived during the eg above and his banks were wiped out as well as his savings and money in them.

    about 20 years ago i met a gent that lived in Germany before and after WWII, He told me of all the hardships, and how people struggled to feed their families. One eg of his was "iit was so bad that you needed a wheelbarrow full of money to buy a loaf of bread"

    what is interesting to me is that both of them are actually talking about the same thing (3 things)...neither of them considered money or precious metals worthwhile. Today we have Jim Rogers pretty much saying the same thing IMO, so I believe we should listen intently and act appropriately.
  8. Buy land and grow your own food when things go that bad.
  9. U sure?

    RBI has pegged the rupee and the Chinese control their currency value, Panama is pegged to the dollar. What difference does it make in a free market? If they devalue their currency theor products and services appear cheap to the rest of the world and they get more biz. If the currency like the dollar is over valued than we get less..

    So shouldn't everything work its way out?

  10. Yep and that is so easy to do, especially for people who have zero experience growing crops!

    #10     Oct 10, 2010