When the US embarks on perennial quantitative easing, that's OK. When the EU does QE as well, that's OK. But when the Bank of China decides it's in the best interest of the nation to let the yuan go down a bit instead of infinitely up, that's Armageddon.
It took the Bank of China to devaluate the yuan on two consecutive days — moving within the 2 percent band that it's allowed to — for the proverbial global financial banshees to go completely bonkers.
Forget the hysteria. The heart of the matter is that Beijing has stepped on the gas in a quite complex long game; to liberalize the yuan exchange rate; allow it to free float against the US dollar; and establish the yuan as a global reserve currency.
So this is essentially exchange rate policy liberalization — not a currency "war", as the frenetic spin goes from Washington/Wall Street to Tokyo via London and Brussels.Sputnik
What the Latest Currency 'War' is All About
Pepe Escobar
ht James in the comments
2 comments:
If only we have a nation practising MMT that just takes the imports and offsets with more govt spending and tax cuts.
A strengthing currency is a good thing morons!
Do any of the Chinese leadership understand MMT that you know of Tom?
Also what wage should the Chinese Job Guarantee have?
I can see China fully floating its exchange rate ONCE they have their own version of SWIFT up and running. They control bank lending quite a bit too.
IMO, China really needs to float and end one child policy and solve the "problem" of high births via contraception and making their citizens wealthy. Combine this with Land Value Tax to reduce regional inequality and target stable house prices. :)
Do any of the Chinese leadership understand MMT that you know of Tom?
Some MMT economists went to China to some time ago. Who knows who, if anyone, listened.
Post a Comment