Posts Tagged ‘Currency Exchange Rates’

The price of anything and the value of everything

November 23, 2019

Another piece of on-line fiction that I like.

The Cambist and Lord Iron: a Fairy Tale of Economics by Daniel Abraham for Lightspeed magazine

Abraham is co-holder of the pen name James S.A. Corey and co-author of The Expanse science fiction series,

Does China’s currency manipulation hurt the US?

March 10, 2016

Hillary Clinton, John Kasich, Marco Rubio, Bernie Sanders, Donald Trump and other American politicians accuse the Chinese government of currency manipulation—that is, of keeping the exchange rate for its currency artificially low.

yuanperdollarchinareservesscreen-shot-2013-02-04-at-12-03-15-pm

As the charts indicate, this does not seem to be supported by the facts.  Notice that although the lines in the two charts are going in opposition direction, they both indicate that, over time, it takes fewer yuan to buy a dollar.  In other words, the value of the yuan over time is rising, not falling.

chinausdollar

Even if China was manipulating its currency in a nefarious way, I think it is futile for the U.S. government to demand that foreign countries act against their own perceived self-interest.

It is within Washington’s power to devalue the dollar, and there are reasons why this is not done.

Much of the world’s business is done in dollars.  This includes world oil sales.  Most of these dollars pass through American banks.

This is a source of Wall Street’s power and also Washington’s power.  It is why economic sanctions are so powerful a weapon of American foreign policy.  It is hard for foreign countries to avoid dealing with the United States and American banks.  As a debtor nation, the United States would not have nearly so much economic power otherwise.

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