Tag: "China"

The Yuan, the Dollar: Repeating the Policy Mistakes of the Great Depression

In several recent speeches, I’ve mentioned that our policy makers seem intent on repeating the policy mistakes of the depression. I mention the clamor for the Fed to withdraw or mop up excess reserves even though bankers feel the need to hold them without significant incentive. Doing that very thing during the depression caused bank […]

The Dollar: Beggar My Neighbor, or Myself?

The headline in today’s Wall Street Journal says “World Tries to Buck Up the Dollar.” The headline writer no doubt savored the opportunity to use “buck” for its double meaning even though it might have been more accurate to say “World Tries to Hold Down It’s Currencies.” That would have gotten closer to the world’s […]

Dollar-Yuan Diplomacy

My 15 Seconds I attended a conference in Beijing in 2003 sponsored by the Chinese government. While in China, I also met with several Chinese officials, including the new Premier, Wen Jiabao, officials of the central bank, and the agency in charge of maintaining the exchange rate of the Yuan, or Renminbi. In several television […]

Dollar Confusion

Credits in the U.S. balance of payments give rise to a demand for dollars. Debits reflect the supply of dollars. Together, they determined the exchange rate for the dollar. So far, so good. Everybody knows that. Then why is it that virtually all the commentary on the dollar on financial TV and in blogs fails […]

The Dollar, the Deficits, China Holdings and Domestic Investment

We continue to discuss the topics above as separate issues, without acknowledging their interdependence. They are mutually determined as in the solving of simultaneous equations. For example, our budget deficit indirectly, and our current account deficit more directly, affect the dollar exchange rate and the size of our trade deficit (and capital inflow). With China’s […]

Borrowing from China

The talks by our Secretary of State and Secretary of the Treasury with the Chinese about U.S. borrowing have once again created some mushy commentary by the talking heads. They speak in terms of how much U.S. debt China will be willing to buy in the short-term and in the long-term. No one has thought […]

Will China Buy our Treasuries?

I don't quite have the answer to that question, but I would argue that the question itself reflects some common confusion. If all exchange rates are free to adjust to market forces, they would tend to produce a balance between each country's trade with the rest of the world. Strictly speaking, that assumes no unruly […]