Tuesday, October 04, 2011

"A return to economic health would look much...

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"A return to economic health would look much more achievable if we weren't spending $500 billion more each year on imported goods and services than foreigners spent on our exports.
To get our trade deficit down, however, we need to make American products more competitive, which in practice means that we need the dollar's value to fall in terms of other currencies. Yes, some people will shriek about "debasing" the dollar.

To be fair, there are some arguments against action on China that would carry some weight if the times were different. One is the undoubted fact that inflation in China, which is raising labor costs in particular, is gradually eliminating that nation's currency undervaluation. The operative word, however, is "gradually": something that brings the United States trade deficit down over four or five years isn't good enough when unemployment is at disastrous levels right now.
And the reality of the unemployment disaster is also my answer to those who warn that getting tough with China might unleash a trade war or damage world commercial diplomacy. Those are real risks, although I think they're exaggerated. But they need to be set against the fact — not the mere possibility — that high unemployment is inflicting tremendous cumulative damage as we speak."
Holding China to Account
Legislation that would threaten sanctions against currency manipulators won't solve our economic problems on its own, but it can contribute to a solution.
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con·cept: "A return to economic health would look much...