Geithner tells China to let their Yuan rise, or to let the US dollar fall

Tim Geithner is saying that China needs to let the US devalue our currency.  Well, he didn't say those words, he said that China needs to let their currency strengthen and that the Yuan is undervalued, but the effects are the same.  He also didn't say how it would make all products manufactured in China more expensive for the US consumers.

It also gives Geithner mental ammunition for imposing retaliatory tariffs.  Via Bloomberg
“China’s exchange rate needs to strengthen in response to market forces,” Geithner said in a speech in Washington today. The country’s policies “have the effect of keeping the Chinese currency substantially undervalued.”

“This is a pace of about 6 percent a year in nominal terms, but significantly faster in real terms because inflation in China is much higher than in the United States,” Geithner said. Taking inflation into account, the yuan is rising at a rate of about 10 percent a year, “so if that appreciation was sustained over time, it would make a very substantial difference,” he said in response to a question after the speech.

“If China does not allow the currency to appreciate more rapidly, it will run the risk of seeing domestic inflation accelerate and face greater risk of a damaging rise in asset prices, both of which will threaten future growth,” Geithner said.

Inflation in China accelerated to 5.1 percent in November from a year earlier, the biggest jump in 28 months, driven by higher food costs. In the U.S., consumer prices rose 1.1 percent in November from a year earlier.

Comments

Popular posts from this blog

October retail sales come in strong, especially auto sales

Tea Party Buffalo Pictures

How to spot a fake Tea Partier