Almost exactly 10 years ago, a group of US politicians accused China of manipulating its currency - keeping it artificially weak - in order to boost exports.
"This is accomplished by keeping it as weak as possible.
With recent signs that economic growth is strengthening and that inflation may be on the upswing, the Fed is at what policy makers call an "inflection point" -- the moment when its priority shifts from pumping up a weak economy to keeping it from overheating.
WASHINGTON — The U.S. Treasury has said that China's policy of keeping its yuan weak and its piling up of foreign exchange reserves were "serious concerns," but it stopped short of saying China was manipulating the currency.
But equally important are government policies that support this country's export sector — from Beijing keeping its currency weak against the dollar to its determination to subsidize exporters through tax credits and billions of dollars in low-interest loans from state-run banks.
But increasing the money supply also weakens the dollar, and has opened the United States to the charge that it is doing what it has long accused China of doing: keeping its currency artificially weak, and helping to create dangerous imbalances in the world economy.
On the other side of the world, the Chinese government is keeping its currency unsustainably weak.
Some background: If discussion of Chinese currency policy seems confusing, it's only because many people don't want to face up to the stark, simple reality — namely, that China is deliberately keeping its currency artificially weak.
Trump has repeatedly accused Beijing of trying to gain a competitive advantage by keeping its currency artificially weak, which makes its exports cheaper.
Mr Krugman continues:Some background: If discussion of Chinese currency policy seems confusing, it's only because many people don't want to face up to the stark, simple reality — namely, that China is deliberately keeping its currency artificially weak.But this is patently untrue!
