Chinese Currency War a Red Herring?

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In the 1930s countries tried to gain advantages by exporting more. This is happening today.

If the US undermines its reserve currency status, we could eliminate our privilege.of being able to borrow cheaply. China should let its currency appreciate but this is not a panacea. Big banks get money from the Fed at no interest and either sit on it (over a trillion dollars) or lend it abroad.

Currency controls are gaining acceptance all over the world. Developing countries like Brazil are taxing incoming money and forbidding money in housing that causes bubbles. Taxes on outflows and on banks with excess holdings could push banks to real investments at home.

More stress on public investment, job creation and helping states maintain their employees should be central, not monetary policy. Monetary policy is limited in an economic depression and cannot replace alternative economic policy. Demand-side problems cannot be solved with supply-side policies, trickle down hocus pocus.

to watch Robert Reich interviewed on The Charlie Rose Show, click on

to watch the 12-minute October 28, 2010 interview with Gerald Epstein, professor of economics and co-director of the PERI Institute in Massachusetts, click on

demandside's picture
Jul. 31, 2007 4:01 pm

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