In reference to China Joins Currency War With Surprise Devaluation, Biggest One-Day Move on Record reader Martin writes …
Hi Mish,
I don’t fully understand from your latest post what is the significance of congress labeling China a currency manipulator? Does it matter? Also you say they shouldn’t, aren’t they obviously a manipulator?
Can you elaborate?Thanks for all the great insights!
Martin
Significance
The significance of Congress labeling China a currency manipulator is the likelihood that president Obama would have to hike tariffs on a number of Chinese imports. This would likely result in a tit-for-tat response by China.
No one wins trade wars. Instead trade suffers.
Manipulators
- China does manipulate currency to force yuan down.
- The US has undergone QE to force the dollar down.
- The US and China both manipulate interest rates for the same reason.
- The EU manipulates interest rates and also launched an inane QE policy.
- Japan does all three: Currency interventions, QE, Interest rate manipulation.
No one should point fingers here. They are all guilty
Mike “Mish” Shedlock
