http://www.thomaspalley.com/?p=86 Economics for Democratic and Open Societies Tue, 07 Sep 2010 02:37:35 +0000 http://wordpress.org/?v=2.6 http://www.thomaspalley.com/?p=86#comment-65147 JLK Tue, 25 Sep 2007 11:11:25 +0000 http://www.thomaspalley.com/?p=86#comment-65147 I think this post has an interesting point. The exploration of the Chinese problem with inflation reflects the United States own problem with its currency. I see how many of the Chinese solutions to inflation mirror actions taken by the Fed with an emphasis on monetary tightening and altering interest rates. I think if you compared how each of the economies has handled the problem, you could draw a convincing parallel. I realize that this is probably your specialty and by no means my own, and I respect your credentials. However, I want to know more about how one economy affects the other specifically. You explain that the Chinese strategy is to “shift the onus of global trade adjustment on the U.S.” What exactly is the process by which the Chinese do this? How do the differences in situations effect the implications of the policies taken by each respective government? How do the problems surrounding the Chinese economy directly affect the U.S. economy? I think this post has an interesting point. The exploration of the Chinese problem with inflation reflects the United States own problem with its currency. I see how many of the Chinese solutions to inflation mirror actions taken by the Fed with an emphasis on monetary tightening and altering interest rates. I think if you compared how each of the economies has handled the problem, you could draw a convincing parallel. I realize that this is probably your specialty and by no means my own, and I respect your credentials. However, I want to know more about how one economy affects the other specifically. You explain that the Chinese strategy is to “shift the onus of global trade adjustment on the U.S.” What exactly is the process by which the Chinese do this? How do the differences in situations effect the implications of the policies taken by each respective government? How do the problems surrounding the Chinese economy directly affect the U.S. economy?

]]> http://www.thomaspalley.com/?p=86#comment-64373 ed Wed, 19 Sep 2007 22:10:16 +0000 http://www.thomaspalley.com/?p=86#comment-64373 If the Chinese revalued their currency abruptly the price of their export products in US dollars would go up and that is likely to push inflation rates up in the US and rest of the world. This could force the Fed to raise interest rates in response to higher inflation. Thus I believe the best strategy for China and the US would be for China to revalue the RMB slowly over time (which happens to be exactly what they are doing). Apart from that I agree 100% with your comments Mr Palley. If the Chinese revalued their currency abruptly the price of their export products in US dollars would go up and that is likely to push inflation rates up in the US and rest of the world. This could force the Fed to raise interest rates in response to higher inflation. Thus I believe the best strategy for China and the US would be for China to revalue the RMB slowly over time (which happens to be exactly what they are doing). Apart from that I agree 100% with your comments Mr Palley.

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