A Free Solution to the Jobs Crisis: End China’s Currency Manipulation

[Omaha Steve]

http://www.inthesetimes.com/working/entry/5744/how_to_fix_the_u.s._jobs_crisis_by_ending_chinas_currency_manipulation/

Thursday March 25 10:03 am

By David Moberg

One of the fastest ways to stimulate job growth in the United States would cost the federal government nothing, argues C. Fred Bergsten, director of the Peterson Institute for International Economics, a free trade advocacy think tank. And, he adds, it would even be a blow against protectionism.

Liberal columnist and Princeton Professor Paul Krugman, who won his Nobel prize in economics for his work on trade theory, agrees. As does Economic Policy Institute economist and fair trade critic of existing trade rules Robert Scott.

What’s the seemingly magic bullet? Simply get China to stop depressing the value of its currency by roughly 25 to 40 percent below what its open market rate would be, thus giving huge subsidies to its exports and putting up comparable barriers to imports. Reducing most, if not all, of that advantage would create 750,000 to 1 million new jobs in the U.S., Bergsten conservatively estimates.

But there’s one small problem: how to get China to change.

A bipartisan group of senators, led by Sens. Chuck Schumer (D-N.Y.) and Lindsey Graham (R-S.C.) recently introduced a revised version of a bill that would facilitate actions to remedy currency misalignments with countervailing duties, or tariffs. The legislation adds to growing pressure on the Obama administration, whose Treasury Department is required by law to rule whether China manipulates its currency by April 15.

China has resisted efforts to change its currency policy, largely because so far it has worked so well. The country has grown rapidly with an aggressive strategy of inviting foreign capital to finance industries oriented to export, first and foremost to the United States.

FULL story at link.

[jwirr]

1. But can we do that when we owe them so much and still need to

borrow more for tomorrow?