US/China Trading Bloc?
Zimran Ahmed is asking why the alarm about the Yuan. I have my own questions. If it is good for the Europeans to share a common currency, why shouldn’t the U.S. become more competitive by forming a single-currency trading bloc with China? Pegging yuan to the dollar means that we’ve alreadycreated a de facto common currency. And although we don’t share a central bank,at least we are moving in the right direction, and it’s not as if the Chinese are the ones printing dollars out of thin air. If we do convince them to unpeg their currency, I have a feeling that in 20 years we will be regretting it. Old Europe initially had the same arguments against allowing Eastern Europe into Euro-land that we use to say that China should not peg to the dollar.Cheaper labor, less reguations, etc. — but now Eastern Europe is the growth engine for all of the countries in the Euro bloc.