On Tuesday, the Obama Treasury Department sparked bipartisan outrage when it released a report denying that China manipulates its currency, a belief widely held by Democrats and Republicans alike.
By artificially lowering the value of its currency, Chinese companies sell products and services at lower prices than their American competitors. That means fewer U.S. jobs and more outsourcing to China.
I won’t bore people here with the details, because most of the readers here know and understand what the Chinese are doing. So, I’ll just briefly describe it here.
The Chinese have tied their currency to the value of the US dollar. They do this so their currency can be artificially cheap, causing labor prices and other things to be lower than everyone else. As the dollar weakens, the Chinese also weaken their Yuan. This continues to provide an incentive for the producers to produce in China. Typically, as one economy strengthens and another weakens, then the strengthening currency will raise in value relative to the one weakening. Let’s look at a couple of graphics.
Notice the two differences in the motion of the currencies? This is an obvious telltale sign of currency manipulation. Let’s look at another currency and how it performs against the Dollar and the Yuan at the same time.
The Euro’s performance against the Dollar and they Yuan are exactly the same, with an ever so slight lag by the Yuan! Given the economic differences of the US and China, this is an impossibility without manipulation. But, our federal government refuses to label China as a currency manipulator.
Well over half the US population voted for this serial liar. I wonder if they’ll make the connection about who is in the pocket of China and who wasn’t. …….. Naw, they won’t.