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Guest Post: Is China A Currency Manipulator?

Tyler Durden's picture


Submitted by John Aziz of Azizonomics

Is China A Currency Manipulator?

Mitt Romney thinks so:

China has an interest in trade. China wants to, as they have 20 million people coming out of the farms and coming into the cities every year, they want to be able to put them to work. They want to have access to global markets. And so we have right now something they need very badly, which is access to our market and our friends around the world, have that same– power over China. To make sure that we let them understand that in order for them to continue to have free and open access to the thing they want so badly, our markets, they have to play by the rules.


They’re a currency manipulator. And on that basis, we go before the W.T.O. and bring an action against them as a currency manipulator. And that allows us to apply tariffs where we believe they are stealing our intellectual property, hacking into our computers, or artificially lowering their prices and killing American jobs. We can’t just sit back and let China run all over us. People say, “Well, you’ll start a trade war.” There’s one going on right now, folks. They’re stealing our jobs. And we’re gonna stand up to China.

The theory goes that by buying U.S. currency (so far they have accumulated around $3 trillion) and treasuries (around $1 trillion) on the open market, China keeps demand for the US dollar high.  They can afford to buy and hold so much US currency due to their huge trade surplus with America, and they buy US currency roughly equal to this surplus.  To keep this pile of dollars from increasing the Chinese money supply, China sterilises the dollar purchases by selling a proportionate amount of bonds to Chinese investors.  Supposedly by boosting the dollar, yuan-denominated Chinese goods look cheap to the American (and global) consumer.

First, I don’t really think we can conclusively say that the yuan is necessarily undervalued. That is like assuming that there is some natural rate of exchange beyond prices in the real world. For every dollar that China takes out of the open market, America could print one more — something which, lest we forget — Bernanke has been very busily doing; the American monetary base has tripled since 2008. Actions have consequences; if China’s currency peg was so unsustainable, the status quo would have collapsed long ago. Until it does, we cannot conclusively say to what extent the yuan is undervalued.

What Romney is forgetting is that every nation with a fiat currency is to some degree or other a currency manipulator. That’s what fiat is all about: the ability of the state to manipulate markets through monetary policy. When Ben Bernanke engages in quantitative easing, or twisting, or any kind of monetary policy or open market operation, the Federal Reserve is engaging in currency manipulation. Every new dollar that is printed devalues every dollar out in the wild, and just as importantly all dollar-denominated debt. So just as Romney can look China in the face and accuse them of being a currency manipulator for trying to peg the yuan to the dollar, China can look at past U.S. administrations and level exactly the same claim — currency manipulation in the national interest.

While China’s currency policy in the past 40 years has been to attract manufacturing, technology, resources and investment into China (and build up a manufacturing base to provide employment to its low-skilled population) by keeping its produce cheap, America’s currency policy has sought to enjoy a free lunch made up of everyone else’s labour and resources. This has been allowed to develop because of America’s reserve currency status — everyone has needed dollars to access global markets, and so America has rested on her laurels and allowed her productive industries to decline. Why manufacture the bulk of your consumption when China can do it cheaper, and Wal Mart has no problem with slave labour? Why manufacture your military hardware when China can do it cheaper? Why produce your own energy when you can instead consume Arab and Latin American oil?

Former U.S. ambassador Jon Huntsman raised this issue in an article from China Business News in a cable that was eventually leaked via Wikileaks:

The U.S. has almost used all deterring means, besides military means, against China.  China must be clear on discovering what the U.S. goals are behind its tough stances against China. In fact, a fierce competition between the currencies of big countries has just started.  A crucial move for the U.S. is to shift its crisis to other countries – by coercing China to buy U.S. treasury bonds with foreign exchange reserves and doing everything possible to prevent China’s foreign reserve from buying gold.


If we use all of our foreign exchange reserves to buy U.S. Treasury bonds, then when someday the U.S. Federal Reserve suddenly announces that the original ten old U.S. dollars are now worth only one new U.S. dollar, and the new U.S. dollar is pegged to the gold – we will be dumbfounded.

Today when the United States is determined to beggar thy neighbor, shifting its crisis to China, the Chinese must be very clear what the key to victory is.  It is by no means to use new foreign exchange reserves to buy U.S. Treasury bonds.  The issues of Taiwan, Tibet, Xinjiang, trade and so on are all false tricks, while forcing China to buy U.S. bonds is the U.S.’s real intention.”

Romney and others of his ilk might brush this off, believing that China’s $3 trillion dollar reserve hoard was gained through unfair means — slave labour, cutting corners in quality, the aforementioned “currency manipulation”, etc, and that that somehow gives America the right to inflate away its debts and screw its creditors. To some degree, they have a point. If China had a problem with America inflating away its debts, it should never have put itself so deep into dollar-denominated paper. If China recognised that America’s debt position was unsustainable, it should never have put so much into something so unsustainable, irrespective of supposed American pressure.

In the short term, though, I think escalating the trade war through the imposition of tariffs is a very bad idea. America is a consumption-led economy, and with middle class incomes already squeezed, a constriction of the supply of cheap and readily available goods is likely to put a lot of downward pressure on consumption. And it’s not just consumption — in today’s hyper-globalised world, a huge proportion of manufacturing — including military hardware — at some stage flows through China.

As Vincent Fernando noted:

Most of America’s key military technologies require rare earth elements, whose production China holds a near-monopoly over.


It’s thus perhaps no surprise that China has made the threat of rare earth export restrictions a new political bargaining chip.

American corporations could gradually pull out of China and shift to manufacturing and extracting resources elsewhere including America (which has large rare earth deposits), but it would be a challenging process. Rebuilding an industrial base is hard: skilled and experienced labour takes time to develop (American labour is rusty and increasingly unemployed and disabled), and supply chains and webs have all agglomerated in China. Building up domestic supply chains takes time, expertise and entrepreneurial zeal. And any destabilisation could spook global markets.

So let’s make no mistake: in the short term America needs China far, far, far more than China needs America. The notion that China needs America as a consumer is totally false; anyone can consume given the dollars or gold, and China holds $3 trillion, and continues to increase its imports of gold.

Peter Schiff summarises:

The big problem for countries like China and India is that they still subsidize the U.S. They buy our Treasury bonds and lend us all this money so we can keep consuming. That’s a big subsidy and a heavy burden.


They can use their money to develop their own economy, produce better and more abundant products for their own citizens. It’s a farce to think that the only thing China can do with its output and savings is lend it to the U.S. government, especially when we can’t pay it back.

Mitt Romney seems intent on destabilising this fragile relationship. American policy that incentivised globalisation and the service economy has very foolishly drawn America into this fragile position where its economy is increasingly fuelled not only by energy coming out of the politically and economically unstable middle east, but also by goods coming from a hostile and increasingly politically and economically unstable power.

And make no mistake — although China has done well to successfully transform itself into the world’s pre-eminent industrial base and biggest creditor, it has a lot of bubbles waiting to burst (particularly housing), stemming from the misallocation of resources under its semi-planned regime. Which makes this entire scenario doubly dangerous. Any shock in China would surely be transmitted to America, simply because it is becoming increasingly pointless for China to continue subsidising American consumption (through buying treasuries) when they could instead spend the money raising the Chinese standard of living. That could mean a painful rate-spike.

The real problem is that Romney is trying to address a problem that is very much in the past. If Romney was elected as President on this platform in 2000, things might be different. But China got what it wanted: by keeping its currency cheap and its labour force impoverished it became the world’s pre-eminent industrial base, the spider at the heart of the web of global trade, and a monopoly on important industrial components and resources. China used American demand, technology and investment during the 00s to develop. Now the imperative is not to grab a bigger share of global manufacturing, or a bigger hoard of dollarsit’s to leverage that position toward the ultimate aim of returning China to its multi-millennial superpower status. The promise of Chinese primacy is quite simply the strongest tool for the CPC to retain its (increasingly shaky) grip on China.

However we should not discount the possibility that bursting economic bubbles may stoke up some kind of popular rebellion against the Communist authorities in some kind of Chinese Spring. A new more pro-Western regime is surely America’s best hope of containing China, while gradually manoeuvring itself out of dependency on Arab oil and Chinese goods. But that may just be wishful thinking; it is possible that a new Chinese regime may be vehemently anti-Western; the Opium War and China’s 20th century humiliation still ring deeply in the Chinese psyche.

So it is unclear what is next for China, and the relationship between China and America. But having the world’s biggest manufacturing base and a monopoly over rare earths is a strong position to be in if your ultimate aim is to manufacture huge quantities of armaments in the pursuit of an aggressive, expansionist foreign policy…


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Wed, 05/09/2012 - 13:48 | 2410520 Divided States ...
Divided States of America's picture

No, we are.

Wed, 05/09/2012 - 13:55 | 2410533 Colombian Gringo
Colombian Gringo's picture

Romney is a new world order hack, marching to his masters commands.


Romney Obama, Obama Romney, Romama, Obamney,  Left/Right, same shit from a common asshole,  just separate piles.

Wed, 05/09/2012 - 13:58 | 2410565 tarsubil
tarsubil's picture

I'm not sure Romney is as much a hack or stooge as Obama. Perhaps, Obama is to Romney what Nixon is to Poppy Bush?

Wed, 05/09/2012 - 14:07 | 2410610 Popo
Popo's picture

Define "currency manipulator".   

Isn't any nation with a central bank and a fiat currency a currency manipulator?

Wed, 05/09/2012 - 14:11 | 2410625 redpill
redpill's picture

Of course.  But even if Romney knows what it means, he doesn't really care.  Truth is irrelevant in politics.

Wed, 05/09/2012 - 14:22 | 2410692 Dr. Richard Head
Dr. Richard Head's picture

Agreed.  It is a part of the boogeyman lexicon that scares the Romney out of the sheep.

List of Pavlovian key words (update as necessary)

-          Terror, terrorists

-          Currency Manipulators

-          Underwear bomb

-          Iran Nuclear bomb

-          Speculators

-          Muslims


Wed, 05/09/2012 - 14:31 | 2410722 Titan Uranus
Titan Uranus's picture




Woman Hater



Wed, 05/09/2012 - 14:32 | 2410728 Sauk Leader
Sauk Leader's picture

I want to know where this even came up! The Obama Re-elect media I am sure has no fucking clue what he's talking about, just calling Wall St. to see if this is something they can use against him. Focus on the issues Romney, Gay Weddings, Student Loans and Trayvon.

Wed, 05/09/2012 - 14:15 | 2410645 HarryM
HarryM's picture

The public digs the tough talk on china.

Someone to blame

Trump was getting a lot of positve feedback when he attacked them.

The best is look what the Fed is doing - ie today - looks like we may go green on 2 indexes , and they call China a manipulator

Wed, 05/09/2012 - 15:05 | 2410913 mickeyman
mickeyman's picture

No, by definition the US is not a currency manipulator :)

Wed, 05/09/2012 - 14:10 | 2410619 Dr. Richard Head
Dr. Richard Head's picture

People who attach to the Romney campaign are the stooges, as they accept the fact value of this man's obvious lies and disinformation (Obama as well) and believe that putting their R team horse or their D team horse in will make one horse hair worth of difference. 

Wed, 05/09/2012 - 14:00 | 2410575 NotApplicable
NotApplicable's picture

He had me right up until he said,

"Mitt Romney thinks"

LOL, yeah right!

Wed, 05/09/2012 - 15:41 | 2411049 CrashisOptimistic
CrashisOptimistic's picture

Romney may not have pure motives, but unlike Obama he actually understands money.  He has an MBA and a law degree from Harvard.  blah blah blah his finance credentials.

You already know all this.  His resume is superior, regardless of ideology.

Wed, 05/09/2012 - 16:00 | 2411149 blunderdog
blunderdog's picture

But Obama's been President and kept us safe from terrists since he was swore in!  Mittens ain't done anything as great as that.

(You were joking, right?)

Wed, 05/09/2012 - 14:13 | 2410640 Ookspay
Ookspay's picture

lemme guess Gringo, everyone but Ron Paul is a Bilderberger NWO plant and lackey, right? Shheeesh!

Romney is not my dream candidate, but he will do. A POTUS with a financial background, may not be all bad. He seems to get the China currency manipulation game, no?

The markets will take off like a rocket as soon as Romney is elected or even pulls way ahead in the polls. There is a lot of pent up "exhuberance" waiting to be "irrational" again...

Wed, 05/09/2012 - 14:16 | 2410649 Dr. Engali
Dr. Engali's picture

You forgot your sarc disclosure. If you're not careful people might think you're serious.

Wed, 05/09/2012 - 14:26 | 2410707 Bay of Pigs
Bay of Pigs's picture

Green arrows for heavy <sarc>


Wed, 05/09/2012 - 14:34 | 2410749 Ookspay
Ookspay's picture

Oops, sorry Doc, forgot... Of course I will vote for Obama/Biten 2012, what else could possibly go wrong?

Wed, 05/09/2012 - 14:33 | 2410745 DavidPierre
DavidPierre's picture

Ookspay... in his own words:


"hi skewl drop owt, dum an ugli to! i lik wine wemin an wiff! gunz and wisky plus redbul also i think good! realijus to, whin i wunt stuf frum God i prey. plese led me be zeero hedge passwurd gitter, i not rite dum stough to much alot, okey?"

A 10 week old MORON!


Wed, 05/09/2012 - 14:45 | 2410815 Ookspay
Ookspay's picture

it okey daved. yu can mak fun ov mi wen yer kidz not arownd... plez teech me to bee smort n funy lik yu! i giv gren arow to giv yu mor valu!

Wed, 05/09/2012 - 22:47 | 2412052 monoloco
monoloco's picture

A lot of right fart smellers here tonite.

Wed, 05/09/2012 - 15:04 | 2410901 resurger
resurger's picture

"the markets will take off like a rocket as soon as Romney is elected or even pulls way ahead in the polls. There is a lot of pent up "exhuberance" waiting to be "irrational" again....."


Hope Fuel Rockets.

Wed, 05/09/2012 - 15:11 | 2410927 Ookspay
Ookspay's picture

Ahh, I remember hope. But who cares what fuels the rocket, lips are lips.

Wed, 05/09/2012 - 14:22 | 2410693 El Oregonian
El Oregonian's picture

Obamney 2012!!!

Wed, 05/09/2012 - 15:32 | 2411003 williambanzai7
williambanzai7's picture


Wed, 05/09/2012 - 16:05 | 2411044 Aziz
Aziz's picture

nice work 

by the way I am gonna write an article on Bernanke and Obama's gay marriage, you got any suitable pics?

Wed, 05/09/2012 - 14:06 | 2410598 MarkS
MarkS's picture

So are you saying that China is not a currency manipulator?  Of course they are.  What do you think the peg is all about?  Why do you think they widened it when the $US started rising against the Euro$, so they could appreciate faster?  NO, they widened the band so that they could keep it from rising and making their goods increase in price in their biggest export market.

Yes, we are a currency manipulator and so is every other nation that can manipulate their currency.  Why the hell wouldn't you manipulate your currency if had the opportunity to strengthen your trading position?  Especially, if there was no likely punishment for doing so.    


Wed, 05/09/2012 - 14:11 | 2410627 Dr. Richard Head
Dr. Richard Head's picture

Why wouldn't a country manipulate its currency?  To benefit the people of course and to increase their purchasing power.  Then again the self interests of the status quo would suffer and we wou;dn't want that now would we?

Wed, 05/09/2012 - 14:49 | 2410833 Kayman
Kayman's picture

"So let’s make no mistake: in the short term America needs China far, far, far more than China needs America."

Make no mistake without China, America is wounded but will survive.  Without Western export markets for their shit products, without unlimited pollution of the atmosphere, China is dead.

America will rue the day our myopic financial criminals and corporate ostriches built up the China monster.  Nazi Germany and Imperialist Japan would have wet their panties, if they had the American investments in their plant and equipment.

Cheap crap for America is more than offset by the loss of good jobs.


Wed, 05/09/2012 - 15:06 | 2410912 FreedomGuy
FreedomGuy's picture

First, trade deficits are an illusion. China gets our money but we get their "stuff". The trade is even. If you looked at the flow of goods we get way more stuff than they do so they run a trade deficit in goods.

Additionallly, if they prop up the value of the dollar it raises the price of commodities like oil to them and reduces our relative price.

Ben Bernanke artificially raises the demand for treasuries by purchasing over half the issues. We all play with currencies but it is a great tactic for an election year. We got to economic war and even real war based on false theories and fake bad guys.

Wed, 05/09/2012 - 14:18 | 2410667 Gully Foyle
Gully Foyle's picture

Don't any of you people work?

If so how many are fucking off on company time?


Wed, 05/09/2012 - 15:09 | 2410824 Umh
Umh's picture

I'm retired. So how about you. Are you browsing on the company dime?



Wed, 05/09/2012 - 15:01 | 2410888 Dr. Richard Head
Dr. Richard Head's picture

It's called multi-tasking.

Thu, 05/10/2012 - 03:34 | 2412424 rotagen
rotagen's picture

I don't ever want to see the words Mitt Romney and Theory together in the same sentence....geeze.  Might as well listen to any other christian moron talk about the history of the earth.

Wed, 05/09/2012 - 13:51 | 2410531 Memphis10
Memphis10's picture

Who isn't? Thats what I say! HAHA! Just gotta traverse the markets cunningly, thank god for liquidity and dumb money.

Wed, 05/09/2012 - 14:09 | 2410622 SheepDog-One
SheepDog-One's picture

Romney says 'Pull my finger'!

Wed, 05/09/2012 - 13:50 | 2410535 buzzsaw99
buzzsaw99's picture

Romney = scumbag.

Wed, 05/09/2012 - 14:53 | 2410841 Kayman
Kayman's picture

Yeah, Buzz.  Great choice- Scrumbag or Scum-sucking bottom feeder.

Wed, 05/09/2012 - 15:00 | 2410886 resurger
resurger's picture

I cant believe you got 5 Junks buzz = 5 idiots

Wed, 05/09/2012 - 15:32 | 2411016 GeneMarchbanks
GeneMarchbanks's picture

At least five plan on voting for the 'lesser of two evils'. Am I right, tards?

Wed, 05/09/2012 - 14:00 | 2410536 hedgeless_horseman
hedgeless_horseman's picture



It 's different when we do it, just like nuclear weapons, murder, torture, tariffs, and state controlled propaganda. 

The U.S.A. is exceptional! 

Wed, 05/09/2012 - 13:50 | 2410537 LawsofPhysics
LawsofPhysics's picture

Would the list be shorter if you simply asked what country isn't manipulating their currency?

Wed, 05/09/2012 - 13:58 | 2410566 DOT
DOT's picture

{   }

Wed, 05/09/2012 - 14:04 | 2410599 JR
JR's picture

The Euro Zone downturn has been exacerbated by the common currency.

The Economist in July 2011: “Despite a relatively small primary deficit projected for this year, Greece is peculiarly vulnerable because of the scale of its indebtedness and the fact that so big a chunk of it is held abroad, a characteristic also shared by Ireland and Portugal, the two other bailed-out countries. As important, in joining the single currency, these economies lost the ability to reduce debt by inflation and to spur growth and competitiveness through devaluation. That makes investors fear that the only way to relieve oppressive debt burdens is through default…”

Wed, 05/09/2012 - 13:55 | 2410550 carbonmutant
carbonmutant's picture

Is the FED manipulating Equities markets?

Is the Pope Catholic?

Is this a trick question?

Wed, 05/09/2012 - 14:04 | 2410590 NotApplicable
NotApplicable's picture

All your cakes and efforts to defend them are belong to us!

Gee, must be an election year.

Wed, 05/09/2012 - 14:22 | 2410695 Marco
Marco's picture

Bake sale ban = ban on selling cookies in schools ...

Wed, 05/09/2012 - 13:59 | 2410577 Temporalist
Temporalist's picture

The pope isn't catholic he's Super Catholic.  It comes with the hat.

Wed, 05/09/2012 - 13:56 | 2410559 Dr. Engali
Dr. Engali's picture


"Mitt Romney seems intent on destabilising this fragile relationship."


Make no mistake...Romney will talk one thing and do another. He is a new world order tool the same as our current TOTUS. It doesn't matter to TPTB who wins they both work for them.

Wed, 05/09/2012 - 14:31 | 2410729 blunderdog
blunderdog's picture

I agree with on that, but if there's *any* chance that Romney would actually *do* what he's making noises about, he'd be the ideal pick to completely crush the American Empire.

There could be no better way to overplay our strength than to start an overt trade-war with something as quaint as tarriffs. 

China can knock our lights out by fucking with Taiwan if they want to.  They wouldn't have to do much.

We'd "win" any shooting war if we finished it up in under a year, but we wouldn't have a chance in a war of attrition.  Nuking 'em wouldn't work.

Wed, 05/09/2012 - 13:57 | 2410560 Temporalist
Temporalist's picture

The Chinese think Rmoney plays with his food by leaving his dog atop his car.  The Chinese also know that torturing dogs is not worth the effort when you can torture humans instead; something on which they agree.

Wed, 05/09/2012 - 14:37 | 2410767 Titan Uranus
Titan Uranus's picture

Why hasn't anyone asked the dog whether he liked it? (Romney's, not Obama's)

Wed, 05/09/2012 - 15:13 | 2410936 Umh
Umh's picture

Because they are scared that equal time would require asking Obama's dog if he is just a prop.

Wed, 05/09/2012 - 13:58 | 2410564 Zen Bernanke
Zen Bernanke's picture

Sure China manipulates, but the US central bank corners the market in that department.  don't you wonder how much taxpayer money was spent power reversing the stock markets higher three days in a row? 

Wed, 05/09/2012 - 13:59 | 2410571 TooRichtoCare
TooRichtoCare's picture

Why wake up to the reality of the shit show we're in? why not just carry on printing more & more money, and yapping on & on about inconsequential crapp like whose fiat currency is artificailly higher than whose?  Let's just stay in ignorant bliss....  

Wed, 05/09/2012 - 14:10 | 2410589 GeneMarchbanks
GeneMarchbanks's picture

'So let’s make no mistake: in the short term America needs China far, far, far more than China needs America. The notion that China needs America as a consumer is totally false; anyone can consume given the dollars or gold, and China holds $3 trillion, and continues to increase its imports of gold.'

Again you beat this topic to death. One slave population clings to another. It is interlocked no matter what Peter Schiff says since the intention isn't to get paid back but to devalue in the long run.

'Any shock in China would surely be transmitted to America, simply because it is becoming increasingly pointless for China to continue subsidising American consumption (through buying treasuries) when they could instead spend the money raising the Chinese standard of living.'

Already happening, just look at Australian dollar and housing and commodity prices.

'Now the imperative is not to grab a bigger share of global manufacturing, or a bigger hoard of dollars, it’s to leverage that position toward the ultimate aim of returning China to its multi-millennial superpower status.'

Where? Which Dynasty expanded into the West?

Wed, 05/09/2012 - 14:14 | 2410643 Sandmann
Sandmann's picture


Wed, 05/09/2012 - 14:03 | 2410592 MFL8240
MFL8240's picture

An Obama fan no doubt.  What a fucking jokester!

Wed, 05/09/2012 - 14:08 | 2410618 Aziz
Aziz's picture

In a choice between Romney and Obama with a gun to my head I honestly don't know who I would support. They're as bad as each other.

Wed, 05/09/2012 - 14:16 | 2410655 Dr. Engali
Dr. Engali's picture

The choice is easy for me.... I'd vote for Obummer so this fucker collapses sooner.

Wed, 05/09/2012 - 14:18 | 2410665 akak
akak's picture

I'd chose the gun.

Wed, 05/09/2012 - 14:30 | 2410717 Winston Churchill
Winston Churchill's picture

Talking weapons,I stumbled across this:

How many barrels of oil do you think they cost ?

Wed, 05/09/2012 - 14:38 | 2410766 Iwanttoknow
Iwanttoknow's picture

I concur.

Wed, 05/09/2012 - 15:33 | 2411013 Stuck on Zero
Stuck on Zero's picture

Quick question ... is Aziz a Chinese name?  Must be.  He sounds like a Chinese agent.

Wed, 05/09/2012 - 14:05 | 2410601 l1b3rty
l1b3rty's picture

Heck Yeah. China is part of deboyyzzz...

Wed, 05/09/2012 - 14:05 | 2410603 SheepDog-One
SheepDog-One's picture

Mittens Romney is an asshole.

Wed, 05/09/2012 - 14:10 | 2410623 Dr. Engali
Dr. Engali's picture

I wish you would stop degrading assholes by associating him with them. :>

Wed, 05/09/2012 - 14:16 | 2410650 Dr. Richard Head
Dr. Richard Head's picture

I agree.  My asshole is really helpful in getting rid of the waste in my system.  These hacks of bipartisan politics simply create the waste an inject it into the system. Anti-assholes if you will. 

Wed, 05/09/2012 - 15:05 | 2410904 Kayman
Kayman's picture

A-hole. One of the most useful parts of the body.  Try living without one.

Thu, 05/10/2012 - 00:23 | 2412233 Belteshazzar
Belteshazzar's picture

traditional Chinese curse: 'may your son be born without an arsehole'

but seriously, we all know the one true candidate is this guy right here:

'fiat money is worthless and you can neither ride nor eat gold, but ponies are both an excellent petroleum free transportation source as well as a contingency protein source'

Wed, 05/09/2012 - 14:08 | 2410616 razorthin
razorthin's picture

Manipulator, counterfeiter what's the difference.  Shut up manikin.

Wed, 05/09/2012 - 14:14 | 2410642 Sandmann
Sandmann's picture

Yes but in the absence of Tariffs - which were accepted under Bretton Woods - Curtrency Manipulation is the only response to Mercantilists like Japan and China running perpetual Trade Surpluses. Bretton Woods had schedules for punishing perpetual surplus countries but the US always blocked the implementation

Wed, 05/09/2012 - 14:25 | 2410699 BanjoDoug
BanjoDoug's picture

It's not in the Federal Gov't best interest to punish currency abusers, because the fed wants to sell them our debt on a long term basis.....  it's a win-win-win scenario....  until we drive off the cliff, which I think is getting pretty close now....

Wed, 05/09/2012 - 14:28 | 2410715 Aziz
Aziz's picture

I agree with you for once, though it would have been much better to do it in 2000 before it became a problem.

I'd be very careful in introducing tariffs right now. The damage is done.

Wed, 05/09/2012 - 14:31 | 2410731 GeneMarchbanks
GeneMarchbanks's picture

I'd be very careful in introducing tariffs right now. The damage is done.

Why? Who will stop them?

Wed, 05/09/2012 - 14:42 | 2410792 Aziz
Aziz's picture

Just by stopping/slowing buying treasuries they can cause some mischief. Look at the size of the deficits...

Wed, 05/09/2012 - 14:58 | 2410878 GeneMarchbanks
GeneMarchbanks's picture

Stopping won't happen while slowing(buying less I assume?) means nothing since the LARGEST buyer will step up gladly.

Back to my question, who'll stop them?

Wed, 05/09/2012 - 15:02 | 2410899 Aziz
Aziz's picture

Largest buyer will step up gladly.


More money in excess reserves. More potential for explosive inflation.

By the way, the likeliest answer to your question is the American consumer, who is used to cheap slave goods at Wal Mart and will make a terrible fuss if their slave goods become more (possibly much more) expensive. 

Wed, 05/09/2012 - 15:20 | 2410956 GeneMarchbanks
GeneMarchbanks's picture

Operating under the assumption that the 'American Consumer' is i) not clinically dead ii) that he has any political clout, you'd be correct. Problem is peak consumption passed in 08, now another race has begun: who can upset each others' economy more ie Currency Wars. You know this already.

More money in excess reserves. More potential for explosive inflation.

Non sequitur.


Wed, 05/09/2012 - 15:37 | 2411037 Aziz
Aziz's picture

Sequitur — the more they print, the harder it will get for Benny to hide the inflation on PDs balance sheets. 

Also, I don't think it's to do with consumer clout, I think it's to do with bankster clout  — consumers have the power to do what TPTB want them to do, which is consume, preferably on credit because TBTF banks like the spreads between credit card debt and ZIRP.

Wed, 05/09/2012 - 14:54 | 2410855 Umh
Umh's picture

Are they Merchantilists because they're winning? And what surplus anyway; they are buying stuff from us. Last I checked Treasuries are stuff.

Wed, 05/09/2012 - 14:13 | 2410637 jimmyjames
jimmyjames's picture

f China’s currency peg was so unsustainable, the status quo would have collapsed long ago. Until it does, we cannot conclusively say to what extent the yuan is undervalued.


Or overvalued-

Thu, 05/10/2012 - 00:26 | 2412235 Belteshazzar
Belteshazzar's picture

agreed-- speaking from firsthand experience, cost of living and real estate in major Chinese cities is now at or closing with parity with NYC levels, so tell me again whose currency is undervalued mmkay

Wed, 05/09/2012 - 14:14 | 2410647 the not so migh...
the not so mighty maximiza's picture


Wed, 05/09/2012 - 14:33 | 2410747 mendigo
mendigo's picture

Romney = Obama - brain
Obama = puppet

Wed, 05/09/2012 - 14:19 | 2410659 Money 4 Nothing
Money 4 Nothing's picture

Is China A Currency Manipulator? 

answer- yes

Is the United States a Market Manipulator?

answer- yes

So were even. Thank God they do manipulate it because if they didn't we would tank. Let them re-value the Yuan and watch what happens.

Wed, 05/09/2012 - 14:19 | 2410674 chet
chet's picture

So far he's only picked fights with China, Russia and Iran.  Surely we can add a few more before the election.

Wed, 05/09/2012 - 14:20 | 2410676 bdc63
bdc63's picture

Seriously, who cares.

Would someone just run this train off of the cliff already ... I am sick to death of all this pre-collapse waiting shit.

Wed, 05/09/2012 - 14:19 | 2410678 BanjoDoug
BanjoDoug's picture

To even ask the question in this article's title is an insult....  of course they friggin' are....  just like the Japs have been for decades.   As long as the U.S. Treasury sells debt (esp since it needs too) these countries can manipulate their currencies to get an export advantage.   Even Homer Simpson know this much...

Wed, 05/09/2012 - 14:20 | 2410680 Jesse
Jesse's picture


This guy is an idiot.

Wed, 05/09/2012 - 14:28 | 2410708 GeneMarchbanks
GeneMarchbanks's picture

No he's just a kid. He's 60% correct, 30% regurgitating MSM 'commentator' talking points, 10% confused.

Wed, 05/09/2012 - 14:33 | 2410748 Aziz
Aziz's picture

60% correct?

That's a turnaround on what you thought yesterday! 

Wed, 05/09/2012 - 14:41 | 2410796 GeneMarchbanks
GeneMarchbanks's picture

It ain't, we agree in the context of: what the relationship of Chimerica has been up until recently. We disagree on intentions of the Communist party and from what I can tell, corruption amongst the elite. Lastly, you dismiss their huge vulnerability in keeping the population placated and fed.

Wed, 05/09/2012 - 14:59 | 2410858 Aziz
Aziz's picture

The corruption among the elite in China is ridiculous, possibly even greater than our own elite, though there are better and worse examples (Bo Xilai seems particularly egregious).

Also they are hugely vulnerable in keeping the population placated and fed, as I noted when I wrote:

However we should not discount the possibility that bursting economic bubbles may stoke up some kind of popular rebellion against the Communist authorities in some kind of Chinese Spring. 

At the same time, I think our own elites (we love central planning too) have the same vulnerability to keeping the Western people placated and fed, considering that our own people have come to expect a much higher standard of living. 

As for the intentions of the CPC, well I think their intentions are pretty obvious, the problem is whether or not they can achieve any/some/all of them, and that's a question to which we can only guess.

Wed, 05/09/2012 - 14:22 | 2410684 akak
akak's picture

AnAnonymous, your "thoughts" here?

Is or is not China an offuscating mandibler of the concurrent?

Wed, 05/09/2012 - 14:21 | 2410687 BTHB
BTHB's picture

If China is a currency manipulator, the Fed, Bernanke and other Central Banksters are the ring leaders.

GATA's extensive research into the Fed's and Treasury's Plunge Protection Team's gold price suppression schemes is clear evidence of a conspiracy to retain the fiat money system in perpetuity, and with it, steadily debase paper currencies.

Wed, 05/09/2012 - 14:24 | 2410700 Logans_Run
Logans_Run's picture

I am a self-confessed currency manipulator. I love to stack and restack my gold and silver coins in my personal safe.

Wed, 05/09/2012 - 14:41 | 2410791 azzhatter
azzhatter's picture

I manipulate between gold on top then silver on top, can't decide

Wed, 05/09/2012 - 14:31 | 2410723 verum quod lies
verum quod lies's picture

Some of the hallmarks of a socialist/cultural Marxist argument:

1)      A lack or absence of facts.

2)      Changing the subject.

3)      Confusing the issue, or even ignoring the issue at hand.

4)      Ad homonym attacks on those they disagree with.

5)      Reliance on obscure or unintelligible theory.

6)      Contradictory statements.

7)      Confusion of causation.

This article is just plain silly and mostly confusing, and with the exception of ad homonym name calling, it has all the hallmarks of a standard media op-ed piece. Just f_ing say they manipulate their currency and be done with it.

Remember, one of the conditions for joining the WTO was that communist China would not do that. Pegging your currency is, by definition, currency manipulation. Please get your basic Exchange Rate Regime (“ERR”) history right. Since Breton Woods I the U.S. has been the central currency of the ERR (i.e., since the end of WWII). It still is, and there is now no implicit gold backing (since the early 1970s i.e., it’s all fiat all the time). Therefore, under the current ERR and WTO rules, and regardless of my or your opinion on the subject, China manipulates and the U.S. doesn’t. Also, nobody seems to want the “reserve currency” status that the U.S. has, or else the system would have already collapsed, so please stop with the great deal the U.S. gets shipping away its jobs and technology while getting “cheap” stuff. Like immigration, I don’t even remember voting for that great trade; as with so much that is wrong with the world today stop trying to rationalize why we need to continue doing the stupid thing. Let me get this straight, in the same way that the solution to too much debt is more debt, the solution to currency manipulation is more currency manipulation. Pull your head out of your as_!


Wed, 05/09/2012 - 14:40 | 2410784 blunderdog
blunderdog's picture

    ....there is now no implicit gold backing (since the early 1970s i.e., it’s all fiat all the time). Therefore, under the current ERR and WTO rules, and regardless of my or your opinion on the subject, China manipulates and the U.S. doesn’t.

The second sentence doesn't follow logically from the first, but I'm sure you're onto something.

Where are the formal WTO guidelines for that determination?  You've skipped those crucial facts.  The argument sounds almost ...well...I guess you'd call it "Marxist."  Heh.

This is funny:

   4)      Ad homonym attacks on those they disagree with.

It's really tempting to call you retardant.

Wed, 05/09/2012 - 14:43 | 2410798 Aziz
Aziz's picture

"ad homonym (sic) attacks..."


i smell a troll.

Wed, 05/09/2012 - 14:59 | 2410887 blunderdog
blunderdog's picture

I thought so too, but I am curious, though: does anyone actually know about this or where to find the info?

The WTO didn't have any concerns about "currency manipulation" per se--unfair trade practices were primarily focused on things like government subsidies. 

The IMF has always been the institution looking at currency manipulation, and way back in '78, it was specifically determined that a currency peg ITSELF is perfectly legitimate.


Has the WTO adopted "currency-policing" policy?  If so, why don't they simply adjudicate between the US and China?

Wed, 05/09/2012 - 15:50 | 2411092 verum quod lies
verum quod lies's picture

Try to stick to the question. One more time, the article poses/asks a rhetorical question: Is China a currency manipulator. By the current rules it is, and the U.S. isn’t. Simply, no need to push the tired, and incorrect, anti-American mantra that the U.S. is somehow just as bad because the Fed prints money and pushes down interest rates. Yes, under the current ERR all countries print fiat currency. So what? That is how the current ERR is organized. The question is about currency manipulation, and it’s not my question it’s the authors headline question that he doesn’t even seem much interested in answering but feels compelled to cast aspersions upon the U.S. largely because it prints money that isn’t backed by anything. Again, O.K., but what ERR and/or WTO rules did the U.S. break by doing so, and which ones has communist China broken? One more time, the U.S. is fine and red China is a currency manipulator. Calling me names doesn’t change history and the facts.


Wed, 05/09/2012 - 16:07 | 2411169 blunderdog
blunderdog's picture

   Calling me names doesn’t change history and the facts.

So....why won't you just document the rules that are being broken by China's currency peg, then? Currency pegs are pretty common. 

Is every country that pegs a currency a manipulator?  Like Switzerland?

Personally, I think you're talking completely out of your ass and you don't have a single "fact" to bring to the discussion, but I'd really like to be proven wrong.

Wed, 05/09/2012 - 15:15 | 2410941 mendigo
mendigo's picture

You raise some interesting points.
Could you explain why those common debating techniques can be ascribed to marxism?
Aré you associating the author with Karl Marx - as in ad hominum.? Do you know what ad hominum means? Does your use of ad hominum mean that you aré marxist?
Aré you in fact Mitt Romney?

Wed, 05/09/2012 - 16:07 | 2411173 blunderdog
blunderdog's picture

It's not Mitt--Mitt knows how to spell "hominem."

Wed, 05/09/2012 - 14:30 | 2410725 slackrabbit
slackrabbit's picture

god please give us ron paul


Wed, 05/09/2012 - 14:42 | 2410776 ArrestBobRubin
ArrestBobRubin's picture

Tis always rich when the latter-day Money Changers or their retained monkey-boys point fingers like this. China buys trillions of bankster junk, then the banksters try to devalue it further, to inflate it away. Then they offer to kick you off SWIFT if you don't give them a knob job. But see it's those damn slant-eyed devils the banksters victimized via opium addiction awhile back who are the true problem here.

Yessirree Bob! See, it's the poor, poor ancient global currency fraudsters who are the REAL victims in this... History's Victimizers all dressed up like "victim", yet again. I wonder, how is it they're able to portray it ever thus? One might even get the silly notion they own all the inputs or something. Or at least the Wardrobe Dept.

Let's just remember what's important here people: only the interests of those few who have nothing but hatred and bloodlust for balance of humanity. For it is a God-sanctioned hate and bloodlust don't forget.

Wed, 05/09/2012 - 14:39 | 2410782 azzhatter
azzhatter's picture

I was visiting my mother at the assisted living palace she moved to. The consensus of the seniors on Romney was the old ladies think he's handsome and the men think he knows how to make money. A couple of them like Ron Paul and would like him to move in there. Obama is viewed as disgraceful and can't be trusted. Looks like a landslide for Mittens

Wed, 05/09/2012 - 14:42 | 2410801 mendigo
mendigo's picture

I thought the virtuous cycle went:
1) China makes shit
2) We send them toilet paper for that shit.
3)They flush the toilet paper back to us.
Where do yuans figure in?

Wed, 05/09/2012 - 14:44 | 2410806 Sleepless Knight
Sleepless Knight's picture

Fucking Mittiot

Wed, 05/09/2012 - 14:49 | 2410832 tony bonn
tony bonn's picture

i hate to be mean - especially of azizonomics - but this article is bullshit....all of the problems described herein go back to the debt as money long as money is debt based these trade, development, and economic problems will grow worse and so will financialization....

money must be freed of its interest demands....until then, mammon reigns supreme and slavery will befall all but the .1%....

Wed, 05/09/2012 - 14:58 | 2410875 Aziz
Aziz's picture

Follow the implications. As I say at the start, fractional fiat currency makes you a currency manipulator. That's the root. 

Wed, 05/09/2012 - 14:56 | 2410860 bahaar
bahaar's picture

Throughout the last decade:

China pegged RMB to fiat currency US dollar.  Or in other words they printed money (umpteen QEs)

China kept it's interest rate (0.7%) far below their inflation rate (7%).  Or in other words Financial Repression.


So Ben Bernanke has taken a page out of China's economic policy.  That is, Printing Money+Financial Repression = Inflation+ Job growth.  China has no right to cry foul.


As for industries moving from China, why is it perceived to be so difficult?  After all, companies uprooted 200 year old industries from America only about 10-30 years ago and planted them in Chinese soil.   Chinese picked up skills quite fast.  So why won't Americans?  Especially when the American generation which worked on factory floors is still alive.

Wed, 05/09/2012 - 17:07 | 2410918 sschu
sschu's picture

What is the right response to the mercantilist?  

Inflate your currency, make the other guy pay for his locking in exchange rates.  The average factory worker in China pays the same base price (not including taxes and other localized costs) for gas as we Americans do.   

Inflation is raging in China, I have read (but do not necessarily subscribe to) the idea that there will be "wage parity" with the US and China in the next 5-10 years in manufacturing.  So the key unit labor cost advantage is evaporating in China.

This portends BIG problems/challenges/opportunities, both for the US, China, SE Asia and the world.

Such is the moral hazard of mercantilists and central bankers.  Will we ever learn?



Wed, 05/09/2012 - 15:13 | 2410938 Walt D.
Walt D.'s picture

The US calling China a "currency manipulator", is like Kim Kardasian criticizing someone for having a big ass.

Wed, 05/09/2012 - 15:22 | 2410968 Bansters-in-my-...
Bansters-in-my- feces's picture


They don't come much dumber than Mitt.

Wed, 05/09/2012 - 15:26 | 2410985 Bansters-in-my-...
Bansters-in-my- feces's picture

Mitts so dumb he thinks the Pope is Jewish.

Wed, 05/09/2012 - 15:40 | 2411042 css1971
css1971's picture


You really think China is worried about 3 trillion dollars? Imagine there's a big reset and the 3 trillion goes away. China still has everything they wanted. They got the real stuff; the factories, the infrastructure, the jobs. The wealth.


Wed, 05/09/2012 - 15:56 | 2411127 Walt D.
Walt D.'s picture

So let's get it straight.

Interest Rate Maipulation Good - Currency Manipulation Bad

Wed, 05/09/2012 - 17:40 | 2411431 mendigo
mendigo's picture

Aren't interest rate and value of currency essentially equivelant.
If you can borrow it for free then it has lttle value.

Wed, 05/09/2012 - 17:01 | 2411336 mendigo
mendigo's picture

So in short our problems aré caused by
Middle East
Europe and
did I miss anyone important?

Wed, 05/09/2012 - 17:45 | 2411447 earleflorida
earleflorida's picture

Corporations are people too? Especially the 'American Corporations in China that like the sound of deflated money hitting the bottom line with a 'renminbi ca`ching --- never-to-forget the expatriate hymn - 'When in China, do as the Chinese Corporation's do[?] for Chinese are Corporation, too? 

Chinese age-old proverb:  "Why chinese manipulate own money, when chinese guest graciously eat from same ding" 

Wed, 05/09/2012 - 20:48 | 2411823 covert
covert's picture

china is foreclosing on america.



Thu, 05/10/2012 - 12:50 | 2413659 earleflorida
earleflorida's picture

"China's Economy Boom the Next Big Bubble Ready to Burst: Economic Speculation in China"      * [dated __ May/2010]

Note: The same *thing* [anybody remember the movie, 'The Thing' from the 50's?], that's put the U.S. and Europe in fiscal paralysis is/was the housing bubble. Today, as I write, China now has this anomaly [incorrect word, but great for spinning the 'TOP' ?] in spades, but, for them, no CDO's, CDS's, CMO's, MBS's, and ABS's for cover. Nobody, and I mean nobody knows, or has any ideal of what Alt-A & Tier III's are running amuck under the cover of "Pure Totalitarianism, other than the "BIS & FRB"!   

Wed, 05/09/2012 - 20:23 | 2411764 kedi
kedi's picture

"American corporations could gradually pull out of China and shift to manufacturing and extracting resources elsewhere including America (which has large rare earth deposits), but it would be a challenging process."

But don't do it till you have drained their supply of the vital resource, paying them in ever more worthless paper, while you keep your supply in the ground for later. But I suspect the Chinese see such a plan. I wonder what their counter is? There is a very interesting chess game going on between China and the U.S. Unfortunately the U.S. player as always thinks they are master of everything. Although the U.S. has always had domination of any particular interest as the long term base policy, it seldom conducts the policy with long term vision and planning. The lack of real longterm vision of particular actions in keeping or maintaining domination so often results in blowback that is costly to correct, in lives, wealth and cover story credibility. I feel the Chinese are more adept and more patient in their plans. They seem to be willing to trade more time for less trouble. The quiet, patient, stoic adversary. Very dangerous.

Wed, 05/09/2012 - 21:45 | 2411945 blunderdog
blunderdog's picture

+1 fuckin' boom.  nail and head and fingers and noses.

Wed, 05/09/2012 - 20:57 | 2411848 chinaboy
chinaboy's picture

Manipulator talk not withstanding, Mr. Romney is expected to send an envoy to Beijing to clarify if he really have a shot in the presidency. Politician needs to say whatever they say to please the voters. But the reality hardly changed. Look back the past decades. Most of "acting tough on China" had expired as soon as candidate became president. What did Mr. Romney say? Yawn.

Wed, 05/09/2012 - 23:35 | 2412161 silverdragon
silverdragon's picture

Just buy Physical silver and eventually you get to win.

10,000 industrial uses.

Thu, 05/10/2012 - 02:53 | 2412382 GeoffreyT
GeoffreyT's picture

Here's the thing, Azizonomics. 

If what I readon the internet is true, Mitt Romney believes that in 1823 an angel named Moroni (Italian for 'moron'? You be the judge) spoke to some dude, on a hill somewhere in upstate NY. This dude then deciphered some secret golden plates using a stone inside a magic hat that only he could understand.

So... (and bear with me here, because this is where it gets kinda sketchy)

One of two things is true: either

  • Mitt Romney actually believes that shit (in which case he is a gullible retard who should not be entrusted with so much as a bake sale)


  • he knows it's horse-shit and fakes a sincere belief because he thinks that course of action is profit-maximising for him.

The great thing about this dichotomy is that it has precisely the same analytical outcome: whether he's a fucking nutbart retard or a sociopathic charlatan, not a single scintilla of anything that comes out of his mouth should be trusted.


Note - the ExACT SAME methodology works for any religion... be it the insane priomitive racial-supremacist wittterings of the "snip your cock and I will make you the Master Race, then kill all these people and take their shit... oh, and kill your kid (psych! kidding!)" cult of Avram the sister-fucking nomad, or the "Do not think that I come to repudiate the OT - I come to complete that insane batshit tribal whackery" of Caucasian Jeebus, the blonde poster-boy of the Bible-tards. (OK, I paraphrased Jeebus' statements about fulfilling the OT - he might have used slightly different adjectives).

Anybody who believes that crap is a retarded numptie, and anyone who pretends to believe that crap in order to accrue credibility from idiots, is vile and sould not be trusted.

Until we get to the stage where everybody thinks like me, otherwise-bright people will continue to parse statements from politicians as if they contain any analytical content: as if any politician actually thinks anything like what he claims to think. May as well ask Charles Manson for his views on 'No Child Left Behind', for all the good that will do.


I would have thought that even die-hard idiots who believe in the process, would have had their minds changed by the sharp 180-degree turn by Rastus Hopey-Changey (from "Hope&Change" to "Hope I don't rain a drone down on yo' shit, motherfucker... Wassat? Due process? Evi-dence? Trial? Who you think you is, boy? You think you's folks? Hey, Michelle, Hillary come lookit this dumbass... motherfucker thinks he's folks. Sheeee-yit. Git yo' shit out mah face, boy, for'n I have you fucking kil't."

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