An inconvenient truth that perhaps some high-ranking U.S. officials have difficulty swallowing is the fact that the imbalances in the global economy is not due to the “scheming” politburo of the Chinese “evil” communist regime but rather their own overblown arrogance. In fact, the “manipulation” of the yuan is in all regards part of a legitimate economic policy and is a practice that has been adopted by every government since the very beginning of time. Given China's peculiar situation, it is quite foolish, setting aside the fact that a major valuation of the yuan would worsen the inflation pressure in the U.S., to expect Chinese politicians to fully submit to their demand, that of markedly letting the yuan rise against the dollar; the effects of such obedience would devastate the manufacture industry as from a series of waves, with the ripple effect propagating the shocks across the entire country, and, in the long run, severely hinder the government's ability to solve its internal problems. The imbalances in the global economy is due to the status of the dollar as a reserve currency. In fact, an increase of liquidity, which the world economy needs in order to grow, or an increase in the supply of a national reserve currency, that of the U.S. in this case, requires the country issuing the currency having growing current account deficits. The country thus cannot properly respond to its own economic needs without hurting the global economy. As some have suggested, the SDR is a better approach for the integration of the world economy. Not only would it soften economic blows by hindering the spreads of contagions, but it would also not spur large trade deficits as the dollar hegemony has, massive U.S. deficits having been fed by the overblown value of the dollar and low interest rates, and not merely a lack of thrift among U.S. consumers. The U.S. must set aside its own agenda and start acting in cooperation with the world, being now, more than ever, dependent on the world.
*Feels dizzy from reading wall of text.* This is a Starcraft forum, you know. Now ecnomycraft... And what do you want to discuss? Or did you just picked a random forum to blow of some steam? XD
Seems very copy and paste to me without any formatting. America and China have an economic bond. China is a producer and America a consumer. We all like money when we exchange it at a bank so it's printed on our own paper.
