Henry Paulson Wouldn’t Have Done This
Treasury Secretary-designate Tim Geithner was reported to have mentioned yesterday that he believes the Chinese are “manipulating” their currency, presumably downward against the dollar in an attempt to goose their exports. This issue is going to get a lot of play in the next few months, because China’s mercantilist policy depends on an artificially undervalued currency. Since this causes tremendous imbalances in global capital flows, | Read More »
Who’s Going To Pay the US National Debt?
As I write, the public debt (sometimes called the national debt) of the US stands at $6.3 trillion, roughly 40% of GDP. (You’ve heard many people say that the debt is actually about $10.6 trillion, but that’s fictional, as I explain below.) As we know, the question of who will pay off the debt is an interesting and urgent one. Especially now that, through a | Read More »
China Devalues Its Currency
It seems to me that focus has shifted away from China’s economic and financial doings during the acute financial crisis that began last September. The story in China for most of this year and last year has been extremely high inflation (particularly in prices for staple foods), and vigorous measures by the country’s banking and monetary authorities to reduce the formation of credit. Up till | Read More »
Too Much Money, Not Enough Economy
We spend a lot of time worrying about the economy in the United States, especially as it relates to politics and policy. We’re facing very slow growth, well below the long-term trend, and certainly below what we’re capable of. At the same time, inflation is running well above normal (we reached a 5% annual rate in June). Europe faces similar problems, although their policy response | Read More »