Chinese manipulation of currency
December 21st 2011 02:44
In 1994, China de-valued its currency by 50% in one day. This was a big price cut on all Asian exports. This caused other Asian currencies to drop in 1998, also leading to a price cut on Asian exports. In 2000 American companies began shifting jobs to China. This was the single most protectionist policy in the history of the world and resulted in America losing just under 12 million jobs by 2010. China's de-valued currency effects the price of all global products.
The US department of congress says every billion dollars of trade deficit is worth six thousand jobs. America has 500 billion dollars of annual trade deficit.
The question must be asked: Is America helpless? The answer is "no". In 2003 George Bush said he was working behind the scenes to fix this problem. Barack Obama also said the same thing. They could both fix the problem by applying an across board surcharge on Chinese imports. President Richard Nixon did this to Japan in 1971. Surprisingly the markets didn't crash. They stalled and then rose to a new high. The only really bad thing that happened at the time was that Jim Morrison died.
The main outcome from this policy was that, in just four months all parties agreed to negotiate a new exchange rate. Unfortunately every time someone tries to do something about this, someone else always screams about "trade war". China is already fighting a trade war with the west. They don't have to conquer us they can just buy us out right.
Michael Crichton touched on this in his book "Rising Sun". In it he portrays corporate Japan as devouring America. Donald Trump has recently put forward this idea too. He also wants to run for American President.
Keep this in mind: Just because we believe everyone should play fair, doesn’t mean others will.
see the inspiration for this article here
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