New York Senator Chuck Schumer is calling for legislation that calls China on the carpet over its currency manipulation practices. According to Schumer, “we are fed up with your government’s intransigence on currency manipulation. If you refuse to play by the same rules, we will force you to do so.” It is true that China’s manipulation of the RMB (yuan) exchange rate unfairly penalizes American firms. Frankly, it is nice to see a Democrat point out Obama and Geithner’s inability to address this issue during the past two years. But aside from the political grandstanding, there are several things Schumer is not telling you.
First and foremost, while the Chinese currency situation contributes to U.S. economic problems, it is hardly the sole cause of the current predicament. The housing crisis is the real boogieman, and it resulted from years of U.S. government interference in the housing market. During the past two years, Obama’s incessant attack on business, wealth, and success in general has stymied the recovery altogether. I believe the President’s constant manipulation of U.S. business activity has done more harm than China’s currency exploitation. We can’t blame poor economic policy on Hu Jintao.
Second, China is not the only nation guilty of self-promoting financial intervention. In fact, the Chinese and others have complained about the uptick in U.S. interference in global markets. The Federal Reserve’s ongoing plan to purchase $600 billion in bonds will weaken the dollar relative to other world currencies. Brazil’s Finance Minister Guido Mantega referred to this action as throwing money from a helicopter. He was right.
Finally, the U.S. debt to China is exceeds $1 trillion and continues to grow. Our increased debt finances China’s exports to the U.S., but this is not Beijing’s fault. We’ve created this mess on our own. Recent “stimulus” packages and big spending programs only fuel the fire.
The point here is that Obama, Schumer, and the Democrats—and even some Republicans—have taken action over the past two years that has stifled the U.S. economy. They’d like for you to focus on the RMB exchange manipulation—as if China is solely responsible for the current state of the economy—but this is only one part of the overall problem. Schumer might be right in this instance, but it’s high time for some intellectual honesty. If we are going to demand that China respect a relatively free and open global market, then we must do the same.
These guys have no shame, they are politicians at their worst.