Wednesday, February 23, 2011
Currency Wars-VI/Internationalization of Renminbi-XIV
Two economics Professors: Barry Eichengreen and Douglas Irwin published their article “Preventing A Currency War” in the Japan Times, comparing the 1930’s Great Depression and the current Lehman Depression. The article indicates that one of the largest differences between then and today is currency disputes. Today, the villain “is not
, but the U.S Federal Reserve Board, which has been reluctant to use all the tools at its disposal to vanquish deflation and jump-start employment growth. Doing so would help to relieve the pressure in Congress to blame someone, anyone – in this case China for American’s jobless recovery (15 December 2010).” To blame someone – China – is perfect for the American regime to gain its creditability for its people. The another issue of the FED totally blindness is “globalization” today. Even though the FED increases another 600 billions to boost American economy, majority of these money becomes “hot money,” going to emergency market like China . Only a fraction dollars stays into the China for creating job. As a result, Bank of China must increase its interest rates in order to prevent inflation. Consequently, the global economy will face great challenge right now. It might be the worst than the 1930’s great depression.