Sometimes it's hard to know whether stupid-sounding statements by politicians are genuinely believed, or just thrown out there for the rubes. Or both.
One firmly in this category is the line that Mitt Romney kept repeating in the debates, about how China is a 'currency manipulator' and he's going to label them as such on day one of his presidency (presumably so that he can start imposing tariffs. Or maybe just for cathartic value - who knows?)
Romney is not unusually obtuse in this matter - Hillary Clinton has moaned about the same thing in terms every bit as stupid.
Now, is there anything implausible about the claim that China is printing lots of yuan in order to keep their currency low in value? Absolutely not - they are. It's a matter of public record. Is there anything incorrect in the statement that this is hurting US exports to China, and making Chinese imports in the US more competitive relative to domestically produced goods? No, this too is obvious - it's microeconomics 101.
What is far less clear is the implication that the net effect of all this is negative for the US economy. For a long time, the US deliberately pursued a policy of wanting a strong dollar - i.e. they wanted the yuan to be weak relative to the dollar. Why? For exactly the same reason that politicians are now bitching about - it makes imports cheap, which is great news if you're someone who needs to import things, or if you're worried about keeping inflation low. Frankly I wasn't aware that this policy had even been officially abandoned, but what do I know?
Still, if this were all there were to the debate, I'd let it slide - you don't really expect nuanced economic discussion at these rube-fests.
But what's hilariously unexplored is the question of what exactly China is doing with all those extra yuan they're printing that keeps their currency artificially low. How do these translate into an expensive dollar?
Simple - the Chinese pump tons of money into buying US Treasury Bills. You remember those, right? They're the means by which this thoroughly bankrupt nation keeps running trillion dollar deficits and kicking the can down the road on its untold trillions of unfunded liabilities.
Reader, if China ever took the US up on their offer to stop making their currency cheap by printing yuan and buying T-Bills, do you know what would happen? The viability of US T-Bill auctions would become a hell of a lot less certain. And I can promise you, if (or more likely, when) a US Treasury auction fails, it will create consequences far worse than those of China having a currency that may or may not be too cheap. The specifics of how exactly it would play out is not something that you'd want to explore, as things like stock market crashes, runs on money market funds and bank failures start to become realistic possibilities.
As the Hilltop Hoods put it - like a free trip to Afghanistan, you don't want it.
Do you know who agrees with me about this?
Hillary @#$%ing Clinton, that's who. In between complaining about the Chinese currency being too cheap, she was begging the Chinese to keep buying T-Bills which would keep their currency cheap. At least Romney hasn't descended to that level of stupidity of demanding both [A] and [Not A]. Yet.
It is difficult to help people who know what they want but can't achieve it.
It is nigh on impossible to help people who don't even know what they want.
When those people are running the government, it is even more disturbing.
On the plus side though, there's two positive aspects.
One is that these politicians may not actually believe this nonsense, but might just be cynically manipulating the idiots of the electorate that will determine the outcome of the election.
The other is that the federal reserve is buying so much of the current T-Bill auctions already (by just printing money) that the auctions may never fail, and we'll just get pleasant hyperinflation instead.
Small victories, I suppose.