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"Every year China prints 450 billion yuan for the purpose of buying U.S. dollars, says Morici. "This really drives up commodity prices and in turn strangles growth in the United States and in Europe." Rather than continue to raise interest rates to cool the country's economy, he says all China needs to do is stop its "reckless use of currency policy."
"As for financial institutions, Morici says banks "hold too much sway" with their governments. It is not that markets are not regulated enough, but rather that Wall Street is not regulated properly. Why? Because wealthy bankers are able to "game politicians so effectively"."
Interesting article Mark
ReplyDeleteI really like this article. I think we can all agree that one of the threats today to our global economy is the banking industry and the power that it holds. While I also see how China is a threat, aren't most of the largest economic powers in the world a threat? Our practices were a threat from the very beginning. I don't think it's fair to call out China-every country has one or more practices that are good for them but bad for the global economy. It's greater than China.
ReplyDeleteAlthough all large economic powers of the world are considerable threats, I think China is at the top of that chain becuase they already own so many U.S dollars... But why wouldn't China continue doing what they have?
ReplyDeleteI strongly agree with both Beth and Matt. There are plenty other problems that are wrong with the global economy, not just China devaluing its currency and irresponsible banking with China. This article presents the opinion that China and the US are the only two important players in the world economy, but what about the Euro system? The oil industry in the Middle East?
ReplyDeleteAlso, does this guy understand that China will never do anything to hamper its own growth? How does that make sense? They learned their lesson by watching Japan in the 80s, who had huge economic growth and prosperity up until they finally gave into pressures from the US to adjust their currency. As a result they took a huge hit and have been recovering ever since. Even though China has many more resources, why would they want to take that chance? They realize their leverage and honestly I think all these articles are really just adding fuel to reasons why China should keep doing what their doing.
Also, the US will never do anything to stop China from helping them out when we have this much debt to settle. We have had many chances in the past to take a stance on many issues that China neglects, like human rights, environmental issues, etc, and we have done essentially nothing. AKA money is power. and China's got it.