Friday, May 13, 2005

Be Careful What you Wish For

“In Washington these days, complaining about China has become standard operating procedure. The Bush administration regularly calls on China to allow its currency to rise and Congress talks of taking steps to punish China for not doing so.

Be careful what you wish for.

As speeches of low-level Chinese bureaucrats are read with care for hints as to just when Beijing will allow its currency to rise, perhaps it would be better for Americans to ponder the impact that China's current policies are having.”

To put it very simply, when the Chinese finally decide to let their currency float free, they will then stop buying US Treasury bonds at current rates, and all interest rates in the US will rise.


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