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Unfortunately, forcing such a currency realignment would be a blunder of historic proportions.
Stimulating domestic consumer demand would be a far more direct — and potentially a far less destabilizing — way of reducing saving and trade imbalances than a currency realignment would be.
Higher rates tend to support a currency.
There are, however, two very different potential strategies to address these tensions: a major currency realignment, favored by many in the United States, or structural policies aimed at increasing China's internal private consumption.
A global currency realignment along these lines would result in further improvements in the U.S. trade balance.
From an American perspective, there is a danger that the currency realignment goes too far, and creates a grossly overvalued dollar that crushes U.S. exporters.
"The new economic team will forge an integrated strategy on how best to achieve currency realignment in the current economic environment".
If we had gone to a messy default, we would have had to adopt a new currency, and we were not ready to support a national currency".
The two major-party presidential candidates support such a realignment, a rare point of consensus in a polarized health care debate.
Arguments supporting a Democratic realignment are based on well-researched population and voting data.
Renewed recession, or major currency realignments or protectionism or a massive drop in oil prices -- or a combination of these factors -- are the only ways for the United States to stabilize its foreign liabilities.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com