On Tue, Nov 23, 2010 at 10:53 AM, Jim Devine <[email protected]> wrote: >>> Why Paul Krugman Waves the Flag for Uncle Sam >>> >>> by Michael Hudson >>> >>> The Fed and Congress have told China to revalue its currency, the >>> renminbi, upward by twenty per cent. This would oblige the Chinese >>> government and its central bank to absorb a loss of half a trillion >>> dollars - over $500 billion - on the $2.6 trillion of foreign reserves it >>> has built up. These reserves are not merely from exports, much less >>> exports to the United States. They are capital flight by US money >>> managers, Wall Street arbitragers, international speculators and others >>> seeking to buy up Chinese assets. And they are the result of US military >>> spending in its bases in Asia and elsewhere - dollars that recipient >>> countries turn around and spend in China. > > raghu wrote: >> What kind of tripe is this? > > _why_ do you think that it's "tripe"?
Let me count the ways. First of all, the $2.6T stockpile of dollars is in large measure due to persistent trade imbalance NOT speculative capital flight. Speculative inflows exist of course and maybe even substantial but it is beyond ridiculous to ignore the elephant in the room i.e. export dollars. Secondly, we have to really stupid to fall for the PRC's cover story that capital losses are the reason why they don't like Bernanke's money printing; there is another stronger motive for their complaining which is that it makes maintaining their preferred currency exchange rates more difficult. Thirdly, what has US military spending have to do with the PRC's dollar hoarding (except in some convoluted indirect sense in which everything that happens in the universe is part of One Holistic Reality)?? Let's face, this is two ugly imperialists facing off against each other. What sense does it make to take sides in such a fight? -raghu. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
