Kudlow: both the US Dollar and the Yuan are undervalued compared to gold

Via IBD
Surely, if the Fed were not printing so many excess dollars — which circulate to China — the Chinese money-supply problem wouldn't be so great. Nevertheless, holding back the yuan is creating what looks suspiciously like a big asset bubble. When that bubble is finally punctured, it could do great damage to the economies of China, the U.S., and the rest of the world.


Both the Chinese yuan and the U.S. dollar have depreciated substantially relative to gold. That tells me each currency is way undervalued because money is too loose in both countries. As Prof. Robert Mundell has counseled, U.S.-China currency stability is greatly to be desired. However, that desire can only be accommodated with a high degree of currency- and monetary-policy cooperation — of a sort that is nowhere on the radar screen. Why not look to a gold reference point for both currencies?

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