It's the trade deficit stupid

[blue97keet]

Dr. Peter Morici: America’s leadership deficit

snip

"China undervalues its currency to boost its U.S. sales, domestic employment and growth. Its economic miracle is engineered by Beijing buying hundreds of billions of U.S. dollars, with freshly printed yuan, to keep its currency undervalued and Chinese products inexpensive in U.S stores. Then China uses those dollars to buy U.S. Treasury securities.

President Obama, afraid China won’t buy U.S. debt, won’t challenge China on currency and trade. That demonstrates how little Obama and Treasury Secretary Geithner understand about money and trade.

If China doesn’t buy our bonds, all those dollars Beijing purchases to keep its yuan cheap will get stashed in the vaults of the Peoples Bank of China and go out of circulation.

The Federal Reserve simply could print new dollars to purchase the bonds China now buys and U.S. money supply would be restored. The net effect: the Fed gets the interest on the bonds instead of Beijing. That works for me." snip

http://www.finfacts.ie/irishfinancenews/article_1018467.shtml

[Po_d Mainiac]

1. Dumb PIIG

Psssst....(whisper voice)..china is selling, and the fed IS/HAS been buying

The article is about half accurate..maybe

[permabear1]

2. Peter Morici is absolutely right

Peter Morici's commentary is a bit dated but still very relevant. China has been playing the U.S. for fools for years if not longer. They have artificially kept their currency cheap, while keeping barriers up to protect their domestic industries, while subsidizing their own exports, while looking the other way at all the intellectual property theft that was going on. All the while U.S. politicians just went on their merry way as U.S. manufacturing was decimated and the U.S. exported our wealth away. Americans were happy as long as we had our cheap goods from Walmart and so on and could keep running up our credit cards as the Chinese bought our treasuries and kept interest rates artificially low. Well the game is up and we are now left holding the bag full of debt, with the Chinese holding it over our heads. The American government has failed the American people so badly for so long. And with the on-going failures with even a Democratic administration in charge, it's hard to be optimistic about anything.

[divideandconquer]

3. We've let Japan get away with it for years

"free trade" is a fraud.

[bb62bb62]

5. That's because there is no such thing as free trade.

Every country we deal with has controls of one sort or another to protect their economy. We don't.

what we do need now as a "new" tax is tarrifs to dirce the elimination of the trade deficit. The dollars that we have exported to foreign countries represents the greatest threat this country has ever seen (yes I mean EVER - greater than the Ciivil War, Nazis, Commies, etc). We have literally exported the investment capital necessary to help work our way through the recession/depression we are in now.

[upi402]

4. Isn't this similar to saying we could print dollars to restock Fort Knox? n/t

[Statistical]

6. "The Federal Reserve simply could print new dollars " LOL

Yeah no problem just print a whole lot of money what could possibly go wrong with that.



In case anyone doesn't know that lady is burning money to stay warm after the govt devalued it to the point of being worthless by trying to print its way out of financial problems.

Shortly after this photo was taken the Weimar Republic fell and Nazism rose to replace it.

Every country who has tried to do what the OP recommends has been annihilated by run away inflation.

If any country could be prosperous by just cranking up the printing press for free and with no consequences don't you think every country would have done that by now and we would live in one giant ultra prosperous world utopia (with a nonstop printing press)?