Extract from a research brief by by C. Fred Bergsten and Joseph E. Gagnon, at Peterson Institute for International Economics, published December 2012:
More than 20 countries have increased their aggregate foreign exchange reserves and other official foreign assets by an annual average of nearly $1 trillion in recent years. This buildup — mainly through intervention in the foreign exchange markets — keeps the currencies of the interveners substantially undervalued, thus boosting their international competitiveness and trade surpluses. The corresponding trade deficits are spread around the world, but the largest share of the loss centers on the United States, whose trade deficit has increased by $200 billion to $500 billion per year. The United States has lost 1 million to 5 million jobs as a result of this foreign currency manipulation.
Read more at POLICY BRIEF 12-25: Currency Manipulation, the US Economy, and the Global Economic Order.
Hat tip to Simon Kennedy at Bloomberg.
You’ve got to be kiddin us. The US has manipulated its own currency with QE1,2,3, to make itself more competitive. Its problem is that by exporting its own industries to cheap labour countries it has lost not only jobs but its tax base. Of course some people benefit and its the 1% – the rest are floundering. Dumb smucks like Australia have been caught in the headlights and have foolishly allowed its currency to rise thus killing off important industries. The US leadership is so wedded to the one percent that it has forgotten to look after its own people and is now paying the price with a debt it can’t reduce. That little tax hike for the rich ain’t worth an economic bumper in the scheme of things and would barely pay a months installment on an interest only loan. If it was to reign in spending – or face interest rates like it has forced on countries like Greece, Italy and France it would be just as bankrupt as them and face almost certain economic disintegration. Or have I missed something?
Totally agree with your assessment, the US has started this devaluation race and most countries around the world have followed – except Australia! We still foolishly believe in the ‘free market’ and just let our currency float. Even the Swiss have pegged their currency to the Euro now and are actively intervening by buying Euro and discouraging foreigners to invest in Swiss Francs. The ones that still do get penalized.
True, Australia has fallen asleep at the wheel in so far as letting the AUD get too high. As far as the US goes they are still one of the biggest countries militarily, with all their bases, strategically spread around the world, so as the saying goes, he who holds the gun…….
The Australian economy is dying under the high dollar. The manufacturing, technology and service industries are leaving our shores and heading to China and India. Once gone they will never return. When the Chinese and Indians resource their iron ore and coal needs from Africa and South America our dollar will crash and the imports we rely on for everyday living will skyrocket in price. The Reserve Bank has failed miserably to protect the economy and the population from permanent decline.