China Educates Washington DC on Exchange Rates

The past few days have been interesting as various U.S. leaders make noise about new "quantitative easing" actions and further debasing (i.e., manipulating) the U.S. dollar.  At the same time, our distinguished leaders attempt to lecture China about what they see as China manipulating the yuan.  In fact, China has done a commendable job of maintaining a fairly stable economy and currency through all of the turmoil from the largely self-inflicted U.S. financial crisis and "Great Recession."  As a public service, a Chinese economics teacher provides an education about what China is doing and why and also where the current foolish course of U.S. action will lead if certain U.S. leaders do not come to their senses fairly quickly.

When choosing the candidates who get your vote, make sure they understand that current U.S. exchange rate and quantitative easing actions will cause serious problems and need to change.

Dee Woo is a teacher in the economics department at the Beijing Huijia Private School.  He wrote an article for the Wall Street Journal's editorial page which is extraordinarily clear about the current exchange rate situation.  He presents China's case very clearly about what it is doing with its currency and economy and why.  China's actions here are actually very realistic and well thought out.  

Mr. Woo also presents a clear and strong case about why the current U.S. course is, at best, self-destructive:  a trade war with China and possibly others which will benefit no one, least of all the U.S.  The last time U.S. politicians pulled something like this was the Smoot-Hawley tariffs followed by the Great Depression and World War II.

This article (click here) should be required reading for the following U.S. leaders of exchange rate and monetary policy.  They all have at least some economic background and should know better.

Timothy Geithner, Secretary of Treasury

Ben Bernanke, Chairman of the Federal Reserve Board

William Dudley,  President of the Federal Reserve Bank of New York

Charles Evans, President of the Federal Reserve Bank of Chicago