Euro Creator Mundell Blasts CNY Depegging, Says May Erode Stability In Global And Chinese Economies

This is just getting far too surreal: Robert Mundell, the "intellectual" creator of the currently most despised monetary experiment in the history of the world, i.e., the euro, told reporters in Hong Kong, that "China’s pledge to return to a more flexible exchange-rate policy may erode stability in the global and Chinese economies." According to Bloomberg "keeping the yuan pegged to the dollar has been “a great source of stability” for China and the world, the Columbia University professor told reporters in Hong Kong today before giving a speech." Presumably, we should believe Mundell- he knows all about "monetary stability" - just look at Europe to see what happens when you have a monetary union without a political one. It is precisely the inability to adjust relative monetary strength between Europe's countries, thereby providing only a fiscal mechanism to adjust busted economies, that has led the continent to the brink of insolvency and illiquidity. Yet somehow Mundell suggests that "exchange-rate swings were a cause of the global financial crisis." Which in turn leads us to just one question - how long before America's universities stop teaching economics and expose it for the sham science it is and always has been, and out its professors, as nothing more than hollow charlatans preaching a gospel of Keynesian lies.

More from Bloomberg:

Keeping the yuan pegged to the dollar has been “a great source of stability” for China and the world, the Columbia University professor told reporters in Hong Kong today before giving a speech. While U.S. President Barack Obama welcomed the move, “he is not an economist,” Mundell said.

Mundell, credited as the intellectual “father” of the euro, has previously called for the European currency to be fixed against the dollar, saying exchange-rate swings were a cause of the global financial crisis.

The central bank’s announcement followed pressure from trading partners including the U.S., where lawmakers threaten legislation that could penalize Chinese imports. An under-valued yuan, or renminbi, gives the nation an unfair advantage in trade, they argue.

The central bank’s announcement followed pressure from trading partners including the U.S., where lawmakers threaten legislation that could penalize Chinese imports. An under-valued yuan, or renminbi, gives the nation an unfair advantage in trade, they argue.

“It’s wrong for the U.S. to force China to destabilize the renminbi, I myself don’t think it’s a good idea,” Mundell said. He called the Chinese move “political.”

The yuan has traded at about 6.83 per dollar since July 2008, a policy that the central bank indicated is no longer necessary after the Chinese economy cemented its recovery.

In a question-and-answer document published yesterday, the People’s Bank of China said that a floating exchange rate will help the nation to restructure its economy, curb inflation and asset bubbles, and reduce trade imbalances.

Since Central Bankers all fall under the "economist" umbrella, as it is all too clear even to the remaining money printers out there that the days of extend and pretend are over, and everything is just empty rhetoric to assuage the masses, and assorted political puppets, as the terminal winddown accelerates. We look forward to, and gladly will be entertained, by many more such hours in which the economist and bankers of the world increasingly turn on each other as the last days of Keynesianism arrive.