Friday, December 31, 2010
Comments from Paul Krugman/Internationalization of Renminbi-VI
Paul Krugman, the Laurent of the 2008 Nobel Prize in economics, published his article in the New York Times, titled “The Chinese Disconnect.” Basically, Krugman claims that China’s bad currency policy is threatening the growth of the rest of world economy. It is understandable that Krugman wants the Chinese government to get rid of yuan/dollar rate fixed. Just as the Plaza Accord in 1984, the US destroyed the Japanese economy (near 20-years stagnation) by appreciating the Japanese yen, but the Chinese learned from the Japanese. From the American national interest, Krugman’s perspective might be right. However, it is not right to destroy another country’s economy by satisfying its own national greedy. Remember, the current global financial tsunami was not created from Shanghai, China, but on Wall Street in New York.