Friday, September 17, 2010

China Is Target of the Ryan-Murphy Bill

From Roubini Global Economics:
On September 15-16, the House Ways and Means Committee held hearings on the Currency Reform for Fair Trade Act (H.R. 2378, the Ryan-Murphy bill), which would allow duties to be applied to countries with undervalued currencies. China is the main target of the bill, though the Treasury has yet to label China a currency manipulator. The bill has 143 co-sponsors, but a vote is not scheduled yet. The chances of the bill passing in the Senate are considerably lower given its schedule before the midterms.
It utterly amazes me that this bill has 143 co-sponsors, since what the Chinese are doing is propping up the value of the dollar, which makes goods cheaper here in the U.S. then they otherwise would be.

The Chinese policy is a bad policy, but it is so for the Chinese domestically. It creates internal inflation, since the People's Bank of China must print yuan to prop up the dollar. For U.S. consumers it is a gift horse that unions have been trying to kill for decades.

The unions and their tools in Congress are really trying to kill off the Chinese Santa Claus that brings us gifts 365 days a year.

1 comment:

  1. What the fuck is an "undervalued" currency? How will they measure that?