The single most incredible political headline I have ever seen.

[HeXploiT]

On China, Obama says US must address currency rates
Wed Feb 3, 2010 10:43am EST

WASHINGTON, Feb 3 (Reuters) - President Barack Obama said on Wednesday China and Asia would be a huge market for U.S. exports going forward but it would be important to address currency rates to ensure American goods were not facing a disadvantage.

"One of the challenges that we've got to address internationally is currency rates and how they match up to make sure that our ... goods are not artificially inflated in price and their goods are artificially deflated in price," Obama told senators from his Democratic party.

"That puts us at a huge competitive disadvantage."

http://www.reuters.com/article/idUSWEN960720100203?type=usDollarRpt


I read this story and the most accurate description I can give you is that it felt like I had been punched in the stomach and spit upon.

This is like slowly releasing a deadly plague into the population and then letting loose a headline that we need to work on population control to lesson our effect upon the environment.

I really believe this is one of the most shocking and deceitful headlines I have ever read in my lifetime.

Interpretation....inflation is coming.

 

[Possessed Freak]

This one is better

 

[Craig234]

bama wanting to do something about the currency exchange rates is a shocking headline?

 

[HeXploiT]

bama wanting to do something about the currency exchange rates is a shocking headline?

No. The lie to cover the coming inflation is shocking.

 

[zephyrprime]

bama wanting to do something about the currency exchange rates is a shocking headline?

It's shocking if you understand the nature of the problem. You see, you can't just "do something" about currency exchange rates. Currency exchange rates are what they are for two reasons: debt, and money printing. So if you want to exchange rate to be lower, you have to weaken the currency. If you want the weaken the currency, you have to create more currency. To create more currency in the modern world, you go into debt because most of the money provided by borrowing is created out of thin air including money borrowed from China of money created by the Federeal Reserve when they buy treasuries in their "open market operations".

Historically, when countries have a debt to gdp ratio of 90+%, their economies collapse and then reset. The US is edging up to ~84% now. Other major countries around the world are in dire straits as well. The US has the benefit of being the world reserve currency so nothing might happen right away but the problem is impossible to deal with given the monetary system we have.

 

[Turin39789]

But china dollars are artificially devalued

 

[daishi5]

No. The lie to cover the coming inflation is shocking.

I am with craig on this one, chinese goods have been underpriced for some time due to currency manipulation on the part of the chinese government. When the currency exchange rates float to a more reasonable level, there will be a price increase on chinese goods, but it won't be because of government spending.

 

[zephyrprime]

But china dollars are artificially devalued

Chinese Yuan are artificially devalued. That's what Obama is really implying without actually saying so. Is the solution for us to fight fire with fire and devalue more? Fire is a dangerous thing. Also, do not forget that if the US didn't borrow so much money, the Chinese would not be able to affect the exchange rate much at all because the primary way the exchange rate is influenced is by them buy US treasuries. Also, do not forget that the US dollar is the international reserve currency. If the US didn't borrow money, there would be a liquidity problem internationally that would hamper the entire world's economy because other countries make international purchases largely denominated in US dollars.

What a tangled web we weave.

 

[Moonbeam]

No. The lie to cover the coming inflation is shocking.

I think you've confused lie with hallucination but there would be little incentive to say why since you are clearly enjoying your dream.

 

[Craig234]

I am with craig on this one, chinese goods have been underpriced for some time due to currency manipulation on the part of the chinese government. When the currency exchange rates float to a more reasonable level, there will be a price increase on chinese goods, but it won't be because of government spending.

Right. This headline seemed utterly uncontroversial to me. It's well known that the Chinese artifically control the value of their currency to make their goods cheaper and ours more expensive, which while having the benefit of giving us cheap goods, is a large trade deficit and stimulates their economy making all these things. It's not controversial, it's clear, that fixing that means their currency shifts making their goods more expensive, which is 'inflationary'. THat's not some 'hidden' information. It's like saying that lowering the drinking age has a big hidden secret that more young people will drink.

I didn't even know what he was talking about at first read, because this is so straightforward. The fact they say they want the Yuan more valuable is hiding the inflationary effect?

 

[sandorski]

lol, wow, really.

Not the first time Obama has brought this issue up. Bush brought it up and I suspect Clinton did too, although I can't recall if he did. It's not meant to hide anything, it has been an issue out in the open for a very long time.

Don't eat the foil.

 

[Slick5150]

I do love it when people get outraged about issues they don't understand. It's why this country is getting so screwed up, because everyone wants to be an expert on everything.

Any person with a decent amount on knowledge on the international market would agree with what Obama said. Well, other than the Chinese I guess.

 

[RyanPaulShaffer]

I don't see the outrage, OP. I see nothing in the post you linked that suggests anything...really, at all. The president just made a statement that we have to fix something...he didn't outline any plans to do so. As others have already said, the Chinese have been using economic manipulation tricks to keep their currency devalued and the price of their goods low. Hopefully, these shady tactics will come to an end soon, and we can have a level economic playing field.

 

[silverpig]

China is not going to do this for two reasons:

1. They're happy with the US buying all their stuff.
2. They hold a LOT of USD. Having that get devalued is NOT in their interest.

They want the USD to remain high.

 

[bfdd]

China is slowly increasing the value of the Yuan to the dollar. It was 8 almost 9 Yuan to the Dollar for 10+ years, now it's at 6.8 and I've heard from a very good friend of mine who is Chinese that it should hit 4 to 1 soon rather than later.

 

[brencat]

The Chinese have no intention of seeing their export-driven economy collapse. They will keep their currency pegged to the USD until our dollar gets crushed so badly that inflation in China is out of control. Only then will they release the peg. But if that happens, that will also be the day we won't be selling 10-yr US Treasuries for 3.7% anymore. Yields will skyrocket and the cost of capital, mortgages, etc will also jump dramatically. No one wins in that scenario. That's why it will never happen.

 

[ElFenix]

China is not going to do this for two reasons:

1. They're happy with the US buying all their stuff.
2. They hold a LOT of USD. Having that get devalued is NOT in their interest.

They want the USD to remain high.

its not devaluing the USD its valuing the yuan at its proper, market-set, non-fixed price. and it's expensive to china to keep the yuan low. they've done it so far because the benefit was greater, but soon enough it won't be worth doing anymore.

 

[Steeplerot]

China laugh at your rectum sting!

 

[sandorski]

Get Job at Wendy

 

[Steeplerot]

You don't know? America Capitalist pig today; tomorrow China pork bun!

Haven't watched that in awhile, lol, a bit dated, but classic and true.

 

[sandorski]

You don't know? America Capitalist pig today; tomorrow China pork bun!

Haven't watched that in awhile, lol, a bit dated, but classic and true.

Ya, can never seem to find it when it seems appropriate.