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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: neolib who wrote (261029)	4/8/2008 7:24:32 PM
From: goldworldnet	Read Replies (2) \| Respond to of 281500

China likes the Yuan low because they have a large trade surplus with America. * * *

To: neolib who wrote (261029)	4/8/2008 7:26:39 PM
From: TimF	Read Replies (1) \| Respond to of 281500

Why is China's "real wealth" (what is that?) going to decline if their currency appreciates against the dollar? The scenario was one where China dumped it dollar assets and then stopped trading with the US. The first action would cause China's currency to appreciate against the dollar, but its not the action, not the mere fact of appreciation, would be what caused China's real wealth to decline, as the financial assets it holds would decline. The 2nd action would disrupt China's economy, increase Chinese unemployment, and decrease the income of Chinese workers and companies. Each action, even in isolation, would decrease Chinese income and wealth. AFAIK, the dollar going down has hurt me, not helped me. I found that out on my last vacation. Yes it hurts American's who travel abroad, and Americans who import foreign made goods. It helps Americans who are selling or trying to sell goods in other countries, and foreign people who want to vacation in America. The dollar is strong => that means consumers get more cheap imports, so our lives improve. The dollar is weak => we can export more, so our lives will improve. Except perhaps for economists with an agenda to move the currency one way, or who are acting as apologists for politicians who's actions have tended to move the currency one way, you tend to here the pluses and minuses of each, not just the pluses of each. President Truman has been quoted as saying "Give me a one-handed economist!" In response to all the "on the one hand...on the other hand" statements by economists. They aren't prone to making very strong categorically positive or negative statements about currency appreciation or depreciation vs. other currencies. Nobody seems to be able to do a convincingly detailed accounting of all the +/-'s to arrive at a good answer. The economy is massively complex, even if you could collect and process enough data, by the conclusion would be obsolete by the time you did it. Its particularly hard in a case like this where there are serious positive and negative results for each change and where each changes as conditions in the economy change. At the extremes where currencies clearly are massively over or under valued you can get cleared answers, but the day to day, month to month, or year to year changes in most currencies aren't so clear.