Re: Geithner Takes Aim at China Policy
The Geithner speech is nonsense on two levels. Number one, and most importantly, if a country holds its currency cheap, it is subsidizing the living standards of its trading partners. If the Chinese are foolish enough to subsidize our lifestyle--which, by the way, they have been doing for some time now--then why would we desire that they stop? Secondly, the logic of his argument is childish. If we think China's monetary policy is wrong, why are we encouraged to do the same thing? (I can just hear Mrs. Geithner asking her little boy Timothy why he jumped in the mud puddle...and little Timothy telling his mother that he did it because his friend did it.)
No country can force another country to pay its bills or cause another country to have higher unemployment. The most damage that a country can do to another is indirectly--by adopting policies that reduce its contribution to the world economy. For example, the world is worse off because Cuba is a communist country and does not produce goods for the world market.