China Slams US - After Obama Slams China
Obama spent the weekend telling China to act like an adult. It seems he feels the Chinese government keeps the Chinese currency undervalued relative to the US dollar.
The Chinese decided they wouldn't sit back and just take it, so they launched their own attack.
So there you two of the world's powerful governments attacking each other over which one's economic policies are more adult.
If you still don't understand why big governments aren't the healthiest option, think about these two behemoths getting at each others' throats.
The U.S. has - by far - the most powerful military force in the world. The Chinese have - by far - the biggest military force. And I assure you I don't want to be caught in the middle of this.
But worry doesn't really accomplish much, so let's turn to what's annoying rather than worrying.
What's annoying about this is that the measuring stick that Obama - and everyone else - uses to claim the Chinese currency is lower in value than it should be (and therefore must be manipulated by those childlike Chinese) may be completely off base.
(Sidebar: This gets to the issue of how there really is not measuring stick available to know exactly what one currency is worth relative to another. So currencies are measured relative to each other. When there was a gold standard, gold served as a measuring stick. So when the gold standard ended in 1971, that was the end of any reasonable way of measuring currencies.)
Now, there's a paper by the BIS (Bank of International Settlements) that comes up with what they think is a better way to measure currencies. Under their methodology, the U.S. currency really isn't overvalued relative to China's currency. And therefore China's currency really isn't "undervalued" to the U.S. currency.
So if the folks at BIS are right, the whole dispute is based on false premises.
Imagine these two powerful governments getting into it over what may be false premises to begin with. But that just brings me back to worrying. So let's not go there right now. I've got work to do today. Worrying will just distract me.
Of course, a gold standard would settle the argument. But why go that route. It's far too simple. Besides all these people employed by all these central banks, and all these academics who produce studies to provide a new methodology to measure currencies would be out of a job. And times are tough. Far be it from me to begrudge anyone their employment.
The Chinese decided they wouldn't sit back and just take it, so they launched their own attack.
So there you two of the world's powerful governments attacking each other over which one's economic policies are more adult.
If you still don't understand why big governments aren't the healthiest option, think about these two behemoths getting at each others' throats.
The U.S. has - by far - the most powerful military force in the world. The Chinese have - by far - the biggest military force. And I assure you I don't want to be caught in the middle of this.
But worry doesn't really accomplish much, so let's turn to what's annoying rather than worrying.
What's annoying about this is that the measuring stick that Obama - and everyone else - uses to claim the Chinese currency is lower in value than it should be (and therefore must be manipulated by those childlike Chinese) may be completely off base.
(Sidebar: This gets to the issue of how there really is not measuring stick available to know exactly what one currency is worth relative to another. So currencies are measured relative to each other. When there was a gold standard, gold served as a measuring stick. So when the gold standard ended in 1971, that was the end of any reasonable way of measuring currencies.)
Now, there's a paper by the BIS (Bank of International Settlements) that comes up with what they think is a better way to measure currencies. Under their methodology, the U.S. currency really isn't overvalued relative to China's currency. And therefore China's currency really isn't "undervalued" to the U.S. currency.
So if the folks at BIS are right, the whole dispute is based on false premises.
Imagine these two powerful governments getting into it over what may be false premises to begin with. But that just brings me back to worrying. So let's not go there right now. I've got work to do today. Worrying will just distract me.
Of course, a gold standard would settle the argument. But why go that route. It's far too simple. Besides all these people employed by all these central banks, and all these academics who produce studies to provide a new methodology to measure currencies would be out of a job. And times are tough. Far be it from me to begrudge anyone their employment.
Comments