[Southack]

"Two comments. First, if a foreign country prices their goods such that the products are essentially free then how is the country that imports the goods at a cheap price harmed?"

Infrastructure. Business investments.

Right now, the under-valued Yuan makes China *appear* to be a better investment than the reality. This government currency intervention scheme has caused and is causing new business investments to go to China that would *not* ordinarily occur in a free market (e.g. one without massive government currency intervention).

Moreover, China's currency manipulation allows Chinese firms to get away with "dumping," that is, selling products below their real cost in order to drive competition out of business.

Thus, American jobs are directly lost due to unfair Chinese currency intervention.

In the short-term, this is *great* for the American consumer...for longer periods, however, this sort of Market Manipulation hammers American corporations, profits, hiring, firing, jobs, pensions, etc.

And it isn't sustainable. Eventually, China will be forced to re-value their Yuan...and the longer it takes to reach that point, the more damage to the global economy will occur. For 2004, China had a $120+ Billion trade surplus...but China spent $195 Billion on the global currency markets to keep their Yuan under-valued. That sort of game can't last forever.

In short, China's currency manipulation is a stealth subsidy of their own manufacturers...a currency manipulation that would be illegal if it was performed in any other way besides under valuing their Yuan.

[BeHoldAPaleHorse]

"For 2004, China had a $120+ Billion trade surplus...but China spent $195 Billion on the global currency markets to keep their Yuan under-valued. That sort of game can't last forever."

Lose money on each transaction, then make it up in volume? :)

[oceanview]

glad you are here.

[groanup]

Thank-you for making a reasoned post on this thread.

[NewLand]

For 2004, China had a $120+ Billion trade surplus...but China spent $195 Billion on the global currency markets to keep their Yuan under-valued. That sort of game can't last forever.

I totally agree. That is why the USA will continue to be the leading economic force and technological power for the forseeable future. Just because we lose some of the lower value manufacturing industries does not mean we are losing our position of leadership *or* mortgaging our future, as some of the other doom & gloom posters like to wring their hands about.

[taxed2death]

re: post #20 and #30.

great answers...thanks for making a complicated situation easier to understand.

[familyop]

Ah here's one. ...early morning news late in the day.

Dollar rally flags before inflation data [Dollar is falling again.]
http://www.freerepublic.com/focus/f-news/1405967/posts