President Obama’s in Korea, and among other things, he is having to explain why the US policy of “quantitative easing” (i.e. print lots of dollars) is justified:
President Barack Obama says the Federal Reserve’s decision to pump $600 billion into the U.S. economy was not designed to weaken the dollar but to give a boost to the nation’s slow recovery.
Obama says the Fed’s action also addressed concerns about possible deflation, a condition caused by extremely low inflation. (Associated Press)
Right. Don’t you worry about your exports, other countries. Sure, because of The Fed, you might experience some quantitative easing of your trade surpluses, but that’s OK.
See, the US isn’t making your exports less competitive on purpose. It’s just an unfortunate side effect of our purely domestic concerns about tepid economic growth. I’m sure you understand, you’re such nice people.
Oh yeah, one more thing. You know that other unintended thing that happens when country’s lower their interest rates down to, well, basically down to zero? A strange thing happens.
Folks will take their money to other places to seek higher returns. So, um, nations that will soon be awash in hot money? Don’t worry about all this. The US didn’t mean it. It’s an accident. It’s like when your doctor gives you a new pill to take for your chronic crotch rot condition, and she says that you might experience some degree of sexual dysfunction. You don’t get mad at the doc, do you? No, you understand that your emasculating failure to get it up is just an unintended side effect.
Well, I think a lot of people owe President Obama (and the US) a great big apology, don’t they? All those concerns you’ve had and really not justified at all, as it turns out. I bet you all feel just a tad bit embarrassed.
By the way, I have the feeling that some folks in China are still bitching and moaning about their own currency issue. You might be thinking, “Hey, what about us? Something doesn’t smell quite right about what your president said.”
Well, in fact Obama has covered any Chinese concerns as well:
Obama says China “spends enormous amounts of money” to keep the yuan undervalued. He says it is important for China, “in a gradual fashion,” to let markets set the currency’s value.
All right, you’ll have to admit that this all makes total sense now. Repeat after me:
Any drop in the value of the dollar is an unintended consequence of US domestic policy, and everyone should shut their pie holes about that.
On the other hand, when the Chinese complain about how many jobs will be lost if the value of their currency goes up too fast, they are not being responsible members of the international community . . . and should shut their pie holes.
I’m glad we had this opportunity to clear up these issues.