...I think China should make the yuan stronger. Not however, for the reasons most pundits argue but rather because China needs to rein in the obvious inflationary excesses of their current boom, and currency appreciation would be one way of achieving that.The Chinese propping up of the dollar is causing the Chinese to print a huge amount of new yuan, which is fueling a bubble economy in China that will inevitably result in a crash.
And furthermore, yuan appreciation would reduce the political pressure for barriers against Chinese imports.
BTW Karlsson continues his analysis of the Chinese currency situation by taking on the defective analysis of Paul Krugman.
Karlsson writes:
Case in point is Paul Krugman's latest column. Almost all of his columns and blog posts contain errors, and I don't have the time or will to try to correct them all. But the latest one was unusually misleading even for being Krugman.So if you haven't seen a good bloodying of Krugman this week, click here.
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