Date: September 13, 2010 9:50:58 AM MDT
To: "Trout, Larry R @ CSW-SLC" <larry.r.trout@
Subject: RE: Krugman attacks China
Tell the PRC that we will make up any trade deficit with them by selling
additional arms to the ROC.
From: Trout, Larry
Subject: Krugman attacks China
I didn't expect to see this from Krugman...
'You see, senior American policy figures have repeatedly balked at doing
anything about Chinese currency manipulation, at least in part out of
fear that the Chinese would stop buying our bonds. Yet in the current
environment, Chinese purchases of our bonds don't help us - they hurt
us. The Japanese understand that. Why don't we?
Some background: If discussion of Chinese currency policy seems
confusing, it's only because many people don't want to face up to the
stark, simple reality - namely, that China is deliberately keeping its
currency artificially weak.
The consequences of this policy are also stark and simple: in effect,
China is taxing imports while subsidizing exports, feeding a huge trade
surplus. You may see claims that China's trade surplus has nothing to do
with its currency policy; if so, that would be a first in world economic
history. An undervalued currency always promotes trade surpluses, and
China is no different.
And in a depressed world economy, any country running an artificial
trade surplus is depriving other nations of much-needed sales and jobs.
Again, anyone who asserts otherwise is claiming that China is somehow
exempt from the economic logic that has always applied to everyone