Should President Obama consider writing a thank you note to Chinese leaders for artificially manipulating the Chinese Yuan in the foreign currency markets?
For many years now, Chinese authorities have intervened in the foreign currency market by buying up U.S. dollars spent on Chinese products and, in turn, investing those same U.S. dollars in U.S. Treasury Securities (ie, bonds and notes). For those that are not familiar with the foreign currency market, Chinese authorities buy the same U.S. Dollars provided by the U.S. to purchase Chinese products and, thus, leave or supply Chinese Yuan to the currency traders resulting in a decrease in the price of the now more plentiful Yuan and a correspnding increase in the price of the now more scarce U.S. dollar. The Chinese authorities intervene in the foreign currency market for the sole purpose of depreciating (weakening) the Yuan relative to the U.S. Dollar, thereby helping Chinese exporters to become more price competitive in global markets. It is estimated by many economists, that the Yuan may be overvalued (stronger) versus the U.S. dollar (weaker) by approximately 30% due to China's foreign currency intervention.
So, while it is true that this action taken by Chinese authorities clearly depreciates the Yuan and appreciates the Dollar, thus, unfairly harming U.S. exporters due to higher relative US export prices; it is also hitting the “sweet spot” by sending those same U.S. dollars back to the U.S. Government to fund the record federal deficit spending expecting to total $1.3T in 2011 as well as providing American citizens with reduced prices on imports via the stronger dollar! More specifically, this currency intervention by Chinese authorities provides needed loanable funds back to the U.S. Government lowering borrowing costs or interest rates during this slow and tentative U.S. economic recovery time.
It also appears that US leaders are sending mixed messages to Chinese leaders as in 2010, Secretary of State Hillary Clinton visited Beijing to encourage Chinese leaders to continue to purchase U.S. Government securities, which only occur through currency intervention! This seems at odds with other US leaders admonishment to China for intervening in the foreign currency markets, which if heeded by China, would dry up a significant source of deficit financing causing the U.S. to borrow elsewhere and, thus, raise interest rates to entice that newly sought lending.
In summary, perhaps in the short term the United States should consider not pressuring China, as Treasury Secretary Tim Geihtner, Obama and the media have done regularly in 2011. Perhaps US leaders should lay low, at least for awhile, and start pressuring the Chinese once again in several years or after the U.S. Government gets its fiscal budget in order by reducing considerably its deficit spending and resultant borrowing needs.
Review Questions
1. What specifically are Chinese leaders doing to keep the Yuan weak against the U.S. dollar?
2. Why are Chinese leaders intervening in the foreign currency market?
3. Which parties, both American and Chinese, are helped and hurt by this currency intervention?
4. What would happen, other things equal to U.S. interest rates if Chinese authorities immediately stopped intervening in the currency market? Why?
5. What would be the immediate impact on the U.S. poor and working class if the Chinese immediately stopped intervening in the currency market?
6. What policy position would you take as President of the United States on this currency issue? Why?
I think I understand this...
ReplyDelete1. Chinese leaders are buying up American dollars on the foreign exchange market, thereby flooding it with their Yuan (deacresing supply of dollars, increase in Yuan). This makes it worth less, and the American dollar worth more. That would make American exports less desirable due to cost, and make Chinese exports more desirable due to how cheaply they can be purchased. (by increasing the supply of Yuan, they effectively increase the demand for their products)
2. They are intervening in the markets to make their exports more price competitive, and it would also seem that it is to make a possible competitor's (U.S.) exports less desirable.
3. The parties in the U.S. that are mainly affected are the manufacturers, the consumers, and the U.S. government. The manufacturers are affected negatively because their goods are more expensive than the chinese counterparts, and as such there is less QUANTITY DEMANDED. The consumers are affected positively due to the high value of the dollar, and the global purchasing power that comes with it (basically, foreign goods are cheaper for them). The government is both negatively and positively affected because while China buys our U.S. dollars and reinvests them in bonds/securities, funding our spending, it also means we become financially indebted to another country (not good in the long run).
The main Chinese parties that benefit and are hurt from this are the consumers and manufacturers. Consumers will have a harder time buying foreign products due to a depreciated Yuan, and manufacturers will benefit from increased demand for their good due to the high supply and low price.
4. Once again, I may or may not understand this but...wouldn't the interest rates skyrocket because supply of the Yuan would suddenly drop and supply of the U.S. dollar would increase?
5. It wouldn't be good, because the dollar would depreciate and therefore decrease the buying power of middle/working/poor class citizens.
6. I would continue to let China influence the foreign currency market, but I would try to cut the deficit spending with a passion. Once we control our trillion dollar spending we won't have to rely on China giving us loans of our own money. Then, I would slowly work off paying that debt to China while my dollar was still artifically inflated. Hopefully China wouldn't immediately just stop influencing the foreign currency market, but if it happens I will be in better shape because I had reduced my country's dependence on China to fund itself. Moreover, by depreciating the value of my dollar the Chinese have unwittingly caused my exports to become much more cheap and desirable. Basically, they've ended up shooting their manufacturers in the foot, so to speak. While they may have suddenly increased the value of their Yuan, and experience increased buying power, they also have decreased the demand for their exports. My country ends up getting the $ in the end.
1.Chinese leaders are buying up the U.S. dollars in the foreign exchange market. They are putting more and more of their Yuan in, while depleting the amount of U.S. dollars in the market. They are ultimately decreasing the supply of dollars and increasing the supply of Yuan. By doing so, the price of the Yuan is decreasing while the price of the dollar is increasing because of its scarcity. Those U.S. dollars that were consumed by the Chinese leaders are now spending those dollars and investing them in U.S. bonds and notes.
ReplyDelete2.The Chinese leaders are intervening in the foreign currency market so they can depreciate the Yuan relative to the U.S. Dollar. They are doing this so they can help Chinese exporters to become more prices competitive in markets around the world.
3.The depreciation of the dollar harms the U.S. economy drastically due to higher relative US export prices. However, it is also helping the U.S. Economy because it is sending the U.S. dollars that the Chinese leaders bought back to the U.S. Government. The Government can now use that money to fund other necessities and prove Americans with reduced prices on imports. In this situation the government, the citizens (consumers), and the businesses are all affected. The Chinese leaders are affected favorably and adversely. The consumers and business are harmed because they will not be able to buy as much foreign product due to the depreciation of the Yuan. However, the businesses will be affected favorably because there will be a high supply of Yuan, lowering the prices.
4.Right now the Chinese authorities are intervening in the currency market, lowering borrowing costs or interest rates. If the Chinese authorities were suddenly to stop there intervening, then the interest rates would higher substantially.
5.Right now because the Chinese authorities are intervening, American citizens have reduced prices on imports due to the stronger dollar. If the Chinese authorities were to stop intervening in the market, then the prices would rise and the U.S. dollar would weaken. This would leave the American citizens unable to pay for more services and goods.
6.If I was president, this would be a hard issue to resolve. Because the Chinese are helping the U.S., but at the same time they are not. I would leave the Chinese alone, and hope they would stop the buying of U.S. dollars sooner. Their actions are hurting them as well because they are not able to buy as much foreign product because their Yuan is depreciating.
1. Chinese leaders buy the U.S. dollar and purchase U.S. products, leaving a large supply of Yuan to the currency traders, which results in a decrease of the price of Yuan and increase in the price of the dollar. They use the U.S. dollars to invest in the U.S. market through buying stocks and bonds.
ReplyDelete2. Chinese authorities are intervening in the foreign currency market in order to depreciate the price of Yuan relative to the U.S. dollar, which in turn helps Chinese exporters become more competitive in the global market.
3. American exporters are hurt by the currency intervention because it will cause a higher export price which will hinder other countries from buying our products. It will help the U.S. government because we are then receiving much needed funds to help with our massive deficit. Chinese exporters are helped by this intervention because it helps them become more competitive. The Chinese government is helped because with its investment in the U.S. economy, it will receive a large sum of money over time.
4. Interest rates would go up because there would be less Yuan in the foreign exchange while the U.S. dollar would go up in supply.
5. They would become more poor because they would not be able to afford loans or and sort of thing with interest rates attached.
6. I would encourage Chinese authorities to intervene because we need their involvement in our economy in order to shrink our deficit. I would hope to depreciate the price of the U.S. dollar relative to the Yuan in order to encourage the Chinese purchasing our exports. This would bring a large cash flow which would help lower the deficit tremendously.
1) Chinese leaders are buying the U.S. dollar, purchasing U.S. products, and leaving a large supply of Yuan to the currency traders. This tactic is decreasing the price of the Yuan and increasing the price of the dollar, thus making the Chinese exports more desirable to consumers because of how cheaply they can be purchased.
ReplyDelete2)The Chinese leaders are intervening in the market so that they can help Chinese exporters to become more price competitive in golbal markets and to cause their competitors to be less desireable.
3)The depreciation of the dollar harms the U.S. economy because it increases our export prices and makes them less desireable to the foreign competitors. It is also helping the American government becuase it is sending US dollars back to the American government. The Chinese are helping thier economy becuase the depreciation of their dollar is making their goods seem like a "better deal" than their global competitiors. Over time this tactic of depreciating their dollar will help to increase their revenue.
4)Interest rates would increase because the Yuan wopuld be worth less in the foreign exchange while the U.S. dollar would go up in supply.
5)If the Chinese ceased their intervention then the US poor would continue to be poor becasue the US dollar would depreciate, prices would rise, and the lower class would no longer be able to afford the products.
6) If I were Presidnet, I would continue to allow the Chinese to intervene in the golbal market. Although it is not completely helpful to the US, it is helping to shrink our deficit and to appreciate our dollar. Once our dollar and market recoveres from this sort of "recession," I would then intervene in the Chinese intervention because at that time we could afford to lose the Chinese help. In doing this, it would hopefully depreciate our dollar to a stable level where our product were now more desireable than the Chinese products.
1. The Chinese are purchasing US dollars and US products, which in turn is leaving the foreign currency traders with a large supply of Yuan. They are using the US dollars to buy stocks and bonds in the US market. The large supply of Yuan relative to the US dollar is depreciating the value of the Yuan and appreciating the value of the US dollar.
ReplyDelete2. The Chinese are intervening in the foreign currency market to depreciate the value of the Yuan to make Chinese products more competive in global markets.
3. The Chinese products are becoming more competitive in the global markets, however imports are very expensive. The American exports are weakened because they are more expensive, however the US dollars are returning to the US government helping the US pay their immense national debt.
4. If Chinese authorities immediately stopped intervening in the foreign currency market the interest rates would drastically increase because the supply of the Yuan would fall as the supply of the US dollar would rise.
5. The poor US citizens would suffer even more. Prices would rise, making their purchasing power fall. They would not be able to afford goods and services and many would become unemployed.
6. If I were President at this time, I would continue to allow the Chinese to intervene in the foriegn currency market. The main reason being, they are helping us pay our huge debt. I might try to depreciate the vvalue of the dollar some what, but I would not be worried that the Chinese can make things for less money because we make different products. We only benefit because we can but their cheap products, and yet still export our technology and medical equipment around the globe for the same price.
1) The Chinese are buying American dollars in the foreign exchange market making the Yuan weak compared to the U.S. dollar. They buy the same U.S. dollars provided by the United States to buy Chinese products and leave the Yuan to the currency traders, making it weaker and more abundant while making the dollar stronger and scarcer.
ReplyDelete2) The only reason that they are intervening in the foreign currency market is because they want to depreciate the Yuan compared to the dollar, which helps Chinese exporters to become more price competitive in the global market.
3) American producers would be hurt by this currency intervention because when the price of U.S. dollar rises, our exports will start to fall because less people would want to buy these expensive American products compared to the cheap Chinese products. Therefore, quantity demanded will fall. However, the government will benefit from this because the Chinese will send the same U.S. dollars back to the government and provide Americans with low prices on imports. Also, with the high price of the American dollar, Americans can now buy more without spending as much. Consumers in the United States would benefit from this currency intervention. In China, the manufactures will benefit because more people will buy their products in the foreign market due to the low prices and the weak Yuan. However, Chinese consumers will be hurt from this because it will cost them more Yuan to buy from the foreign market due to its weakness.
4) If the Chinese stopped intervening in the currency, the Chinese will not provide for loan funds and so interest rates will have to rise.
5) The dollar would depreciate leading to the poor and working class having to spend more to get less goods and services.
6) I would continue this trend because it seems to affect us positively more than negatively. With their intervention, the dollar seems to be strengthening and our consumers are happy and buying more than they would if our dollar was weak. Also, I would want the Yuan to strengthen a little bit so that the Chinese would buy our exports and we would have money flowing in.
1) The Chinese have intervened in the foreign currency market and have bought up the US dollars, and by doing so have made the dollar worth more, while the Yuan has decreased in worth. This causes U.S. exports to be less desirable due to their higher prices. This causes the dollar to decrease in supply, causes it to become scarce and worth more. The Chinese in turn, invest these U.S. dollars back into the U.S. economy. This also helps the U.S. though because of our large amount of debt.
ReplyDelete2) The Chinese intervene for the sole purpose of weakening the worth of the Yuan which helps Chinese exporters become more competitive in global markets due to their prices. In doing this, they also raise the worth of the U.S. dollar, which hurts our exports, but as said above, it helps our fiscal budget to recover.
3) The manufacturers and the exporters of Chinese products greatly benefit from the Chinese intervention. This allows them to become more competitive in the global economic view. This hurts the manufacturers of exports in America, for the U.S. dollar has appreciated making their goods less desirable, causing the demand to increase because the supply of the dollar decreased. This raises prices which therefore alters what products other countries are demanding.
4) I believe that the interest rates of the U.S. would increase. I think this is true based on the fact that the amount of Yuan would be decreased while the supply of the U.S. dollar would increase.
5) If the Chinese stopped intervening it would greatly affect the prices of goods and services. This would hurt the poor greatly, for they would not be able to afford as many services as they used to be able to purchase. This is why the Chinese intervening in our economy is helping our economy.
6) It says in the article that Obama frequently mentions it, along with the media. I believe that although this is hurting exports, it is benefiting something that we desperately need help in, our debt. So therefore, I believe it should be addressed, but carefully, because the amount of money the Chinese are infusing into our economy is greatly helping our national debt. Therefore the President should approach this issue with caution, and I believe confront it in a few years after our debt has changed into some state of stability.
1. Essentially, Chinese leaders are intervening in the foreign currency market in order to depreciate the Yuan in relation to the U.S. Dollar. They are buying up the U.S. Dollars and pushing more Yuan into the foreign currency market. At the same time, they are investing the U.S. Dollars spent on Chinese products in bonds and notes. In doing so, they increase the quantity of the Yuan and decrease its price while at the same time, increasing the price of the U.S. Dollar that is becoming more scarce.
ReplyDelete2. The Chinese leaders are intervening in the foreign currency market in order to help their exporters become more globally competitive. They are helping to do this by depreciating the Yuan in comparison to the U.S. Dollar, giving them an unfair advantage when it comes to exports because the U.S. exporters have to deal with higher export prices on their products.
3. Overall, it affects three main aspects that contribute to the flow of the economy. The manufacturers, consumers, and U.S. government are all affected by the currency intervention. The intervention will hurt U.S. manufacturers trying to export their goods because of the appreciation of the dollar which results in higher prices on their exported products and less of a demand for their products. Oppositely, the intervention will help the Chinese businesses because since the Yuan has depreciated in relation to the U.S. Dollar their exports will be cheaper and the supply of Yuan will reduce prices and increase a demand for their products. Due to this, U.S. consumers will benefit from the higher value of the dollar and cheaper foreign products. On the flip side, it will hurt Chinese consumers who want to buy foreign products since the Yuan has depreciated. Lastly, the U.S. government is affected by the intervention because the U.S. Dollars will flow back into the U.S. when the Chinese invest in the U.S. Treasury Securities allowing the government to help fund programs and spend on various necessities to improve the U.S economy.
4. Other things equal, the U.S. interest rates would increase if the Chinese leaders suddenly stopped intervening in the foreign currency market. This would happen because the Yuan would begin to appreciate and the U.S. Dollar would depreciate resulting in higher interest rates on exported goods. It would have the opposite effect of what is currently happening with the Chinese intervention in the market.
5. There would be a negative impact on the U.S. poor and working class if the Chinese leaders stopped intervening in the currency market. Right now, with the intervention, the dollar is appreciated which means the dollar is strengthened and they can buy more goods and services. If the Chinese intervention stopped, the goods and services would by less affordable for the poor and working class because the dollar weakened and they can’t get as much for it.
6. I understand why this would be a tough situation to decide on as president. If I were president, I think I would let things continue as they were with the Chinese intervention and try not to rely on their investments to help control the outrageous deficit. As of right now, it has its benefits and downsides for both countries and any changes would not have a huge impact because it may just switch who was benefiting and who was hurting than originally.
1. The Chinese leaders are intervening in the foreign market by attempting to depreciate the value of the Yuan in comparison with the dollar. They are buying the US Dollar, therefore inserting more Yuan into the market and making the US Dollar much more scarce. This causes the price for the US Dollar to rise in cost, while the Yuan depreciates in cost.
ReplyDelete2. The Chinese are intervening in the foreign market in order to increase the competitiveness of their exports in relation to other foreign competition. They hope that the Yuan will depreciate in value compared to the US Dollar because it will make them more competitive.
3. The exporters in America are hurt by this because it makes their products more expensive, thus less desireable. The government in America benefits, because the new sum of money helps to alleviate the debt we have. This will also help Chinese exporters, because it will make them more cost competitive in the foreign markets. This will also help the Chinese government, because it brings more money into the government.
4. If the Chinese were to stop intervening, the interest rates would drastically rise because the Yuan would immediately begin to appreciate in comparison to the US Dollar.
5. This would hurt the poor, because it would cause the US Dollar to depreciate in value thus making goods more expensive.
6. If I were President, I would leave China to continue doing what they are doing. Although this both helps and hurts America, I believe that China would eventually stop because it does not benefit them very much.
1.Chinese leaders are buying up U.S. dollars in the foreign market,resulting in more yuan and fewer dollars. This action depreciates the Yuan in relation to the dollar, making U.S. exports less attractive to buyers, and Chinese exports more attractive.
ReplyDelete2. Chinese leaders do this in order to put their exports in a more competitive position in the world market.
3. American exporters and manufacturers are harmed because the goods and services they offer now appear more costly. On the other hand, it provides the U.S. government with much needed financial support.Chinese exporters gain a more competitive place in the world market, ultimately increasing their revenues.
4. If the Chinese stopped their intervention, the supply of the dollar would increase, while the supply of yuan would decrease, ultimately resulting in the rising of interest rates.
5. The U.S. dollar would depreciate in value, making it hard for some Americans to afford goods and services.
6. If i were President, I would not pressure China towards any decision. Though there are benefits to the government, we must find other ways to alleviate our debt.
1. The Chinese authorities are intervening in the foreign currency market to depreciate the Yuan compared to the U.S. Dollar. They do this by buying U.S. Dollars provided by the U.S. to purchase Chinese products. This leaves over an excess supply of Chinese Yuan to the currency market, which depreciates it value.
ReplyDelete2. They want to depreciate the Yuan so that their exports can become more competitive because of their relatively lower prices.
3. For the Chinese, by manipulating the currency, they are hurting themselves by depreciating their own currency, but they are also helping themselves by making their export prices more competitive.
The depreciating Yuan is hurting Americans because it causes the U.S Dollar to appreciate and cause exports to other countries to be more expensive. However, it also helps Americans because imports from China can be received a much lower relative price. It also provides funds to be sent back to America to help lower borrowing costs and interest rates.
4. If the Chinese authorities decided to stop intervening in the currency market, a large financial deficit would occur and would cause the U.S. to borrow somewhere else which would in turn cause interest rates to go up.
5. I believe that if the Chinese stopped intervening, the interest rates would substantially raise and the poor would not have enough funds to compensate for the sudden rise in prices. They would just fall further into poverty.
6. If I were the President of the United States I think that I would promote the intervening in the foreign currency market by China. They are in the end helping our country import more goods and services at lower costs because of the deflation of the Yuan.
Review Questions1. The Chinese leaders are buying American dollars, by buying American products. This in turns leaves a large supply of Yuan in the foreign exchange market. The Yuan is therefore weakened, while the American dollars are becoming stronger. The weakened Yuan in the foreign exchange market allows people to buy Chinese exports for less money. 2. The Chinese leaders are intervening in the foreign currency market in order for more countries/people to purchase their exports. This makes for a competitive market.
ReplyDelete3. The American party is hurting because their dollars are becoming stronger, while the Chinese party is helped because the Yuan is becoming weaker. On the other hand, the American party is helped because they can now buy more without spending as much. Also, their money in China is useless, so China has to buy American goods with their money. Likewise, the Chinese party is hurting because they now have to pay more for spending less essentially.
4. If Chinese authorities immediately stopped intervening in the currency market, interest rates would increase. This is because the Chinese could not provide for loan funds, because the supply of Yuan in the market would decrease. 5. If the Chinese immediately stopped intervening in the currency market, the U.S poor and working would have to buy less goods and services. This is because the U.S dollar would depreciate. 6. What policy position would you take as President of the United States on this currency issue? Why? As President of the United States, I would I would continue to let China influence the foreign currency market, but I would try to cut the deficit spending with a passion. Once we control our trillion dollar spending we won't have to rely on China giving us loans of our own money. Then, I would slowly work off paying that debt to China while my dollar was still artifically inflated. Hopefully China wouldn't immediately just stop influencing the foreign currency market, but if it happens I will be in better shape because I had reduced my country's dependence on China to fund itself. Moreover, by depreciating the value of my dollar the Chinese have unwittingly caused my exports to become much more cheap and desirable. Basically, they've ended up shooting their manufacturers in the foot, so to speak. While they may have suddenly increased the value of their Yuan, and experience increased buying power, they also have decreased the demand for their exports. My country ends up getting the $ in the end
I would continue this trend because it seems to affect us positively more than negatively. With their intervention, the dollar seems to be strengthening and our consumers are happy and buying more than they would if our dollar was weak. Also, I would want the Yuan to strengthen a little bit so that the Chinese would buy our exports and we would have money flowing in..
Francis Rodriguez
ReplyDelete1. Chinese leaders are buying up all the US dollars from the currency exchange. Now this keeps the dollar supply low and so there is a higher demand for the dollar, which makes the dollar stronger against the Chinese Yuan.
The Chinese are doing this so that the Yuan can be a weaker against the US dollar, which makes it easier for Chinese business to export products to the US at cheaper more competitive prices.
2. The Chinese people are hurt because US products are higher in price, but Chinese business exporting goods benefit. The American people benefit because the products imported from china are cheaper, but US business exporting to China are hurt because the US dollar is stronger than the Yuan.
3. If the Chinese stopped intervening in the currency market all the dollars the Chinese government is buying would not make their way back to the US Government and in turn instead of making interest rates low so people can buy things they would make interest rates high and slow our economy and our economy is already hurting.
4. The US poor and working class would not be able to take out loans and so would be hurting because they would have less money.
5. If I were President I would get many opinions from many economists on what to do because I may want the Chinese to stop interfering with the currency exchange because then US business exporting to China could then be much more competitive which would make those business more successful and create more jobs in the US. At the same time to make them stop interfering would be a challenge in itself and from reading this maybe letting them do what they do helps us more this way.
1. In order to make he Yuan weaker, Chinese authorities are buying the U.S. dollars from foreign currency traders, and thus supplying them with more Yuan. This causes an increased supply of Yuan, and a more scarce supply of dollars, making the dollar value go up and the Yuan value go down.
ReplyDelete2. The Chinese intervene in the foreign currecy market to depreciate the value of the Yuan so that the Chinese exports will be more attractive to foreign buyers.
3. American consumers are helped by this because it makes foreign goods cheaper and more affordable to them. American producers are hurt by this because it makes their exports less affordable to foreigners and thus less attractive. The opposite goes for Chinese producers who are helped by this. Their goods become cheaper to the foreign buyer. However,foreign goods become more expensive for the Chinese consumer because their money does not go as far in the foreign market.
4. Interest rates would go up because the loanable funds provided by the Chinese that lower interest rates would stop.
5. If The Chinese stopped intervening in the currency market, it would hurt the poor and working class people. Their dollar would not go as far, and therefore, many of the foreign goods consumed daily would become more costly to them.
6. If I were President, I would ask them to continue intervening in the foreign currency market. Even though it may slightly hurt the American producer, the benefits to everyone else are much greater.
1. The Chinese buy american products with the US dollar. This increases the supply of Yuan, therefore depreciating it value. The dollar gain apprecitaion because the yuan had depreciated.
ReplyDelete2. The Chinese are intervening to give the exports an edge over foreign competition increasing their benefits.
3. The US has to deal with a strong appreciated dollar while China has a depreciated Yuan. The US benefits by spending less money, and CHina benefits by having more money to spend. They have to spend each others currency in each others country hereby benefiting from each other.
4. If the Chinese backed out of the currency market it would cause massive debt to the US because it would rapidly increase interest rates to the point where people could not afford them.
5. I think that if the Chinese pulled back out of the market very few people could afford interest rates and increase the poverty rate and bussiness would lay more people off increasing the unemployment rate.
6. I would be extremely happy that China is depreciating the Yuan because it helps the US economy by purchasing cheap imports. Helping economic growth.
1. Chinese leaders are buying more and more US dollars form the foreign currency market. They are doing this by buying more american products with their currency. When they use the Yuan to buy american products the Chinese are putting more Yuan into the system then dollars. Therefore since there are more Yuan then dollars the value is depreciating for Yuan and appreciating for the dollar.
ReplyDelete2. The Chinese are intervening with foreign currency so they can depreciate the Yuan and make chinese products more competitive in global markets.
3. By the Chinese depreciating the Yuan chinese products are becoming more competitive in global markets. However because the Yuan is so cheap it makes imports extremely expensive. From the American side their exports are weakened because it is so expensive but the money is being paid back to the government to help pay off our national debt.
4. If the Chinese stopped intervening then the interest rates would immediately start to rise. This would happen because the Yuan would start to appreciate as opposed to the dollar.
5. If the Chinese stopped intervening then it would severely hurt the poor. This would make interest rates rise making the dollar worth less which would drive prices up putting the lower class more into poverty.
6. If I were president at this time I would allow the chinese to continue intervening. They are assisting us in importing more goods at lower prices because of what they are doing to the Yuan. Also when they buy our products they are buying them for the same price and helping us pay off our national debt.
1. China is Buying U.S dollars in the Foreign currency market. Which depreciates the value of the Chinese Yuan and appreciates the value of the U.S dollar.
ReplyDelete2. Chinese leaders are trying to keep their Yuan weak against the U.S dollar because they want to make their exporters more competitive globally.
3. American consumers are benefited in this because prices of goods from china are lower. American Businesses are hurt from this because exporting goods to China will become more expensive. Chinese exporters benefit from this because they can sell more of their products and make more money. But it will hurt Chinese imports from the U.S because it will become expensive to import goods from the U.S because the Yuan is so weak against it.
4. U.S interest rates would go up because China would not be putting U.S dollars back into the U.S economy.
5. the Purchasing Power of the poor and working class would be lowered because goods would be more expensive because It costs more to buy Chinese products.
6. If I were president I would let china keep intervening in the Foreign currency market. Because they would end up butting money back into our economy that would help keep our interest rates low.But the most important thing would be to halt the growing deficit and work on getting out of it.
1. Chinese leaders are buying up U.S. dollars spent on Chinese products in the foreign currency market. By doing so, the Chinese leave or supply Chinese Yuan to the currency traders resulting in a decrease in the price of the Yuan and a correspnding increase in the price of the U.S. dollar.
ReplyDelete2. The Chinese leaders are intervening with the foreign currency market to depreciate the value of the Yuan so that the Chinese exporters can become more price competitive in global market.
3. The U.S. producers are hurt because the U.S. exports are more expensive to the Chinese and therefore less people would buy the U.S. products. This also indicates that it is harmful to the Chinese consumers because they have to pay more to buy the U.S. products. However, it is beneficial to the U.S. consumers because they would not have to pay as much to buy the Chinese products. This also implies that the Chinese pruducers beniefit from this because there will be more people buying their products.
4. The U.S. interest rate will rise because the Chinese would not be providing needed loanable funds to the U.S. anymore (which keeps the interest rate low).
5. the value of the U.S. dollar will start depreciating. This would make the poors and wokers to pay more to buy imports therefore would not be beneficial for them.
6. I would probably continue this trend because appreciation of dollars will be beneficial to the consumers. if we stop this, there might be more countries buying the U.S. exports, but the consumers in the U.S. will not be happy because they would have to pay more to get what they want.
1. Chinese leaders buy the same U.S. Dollars provided by the U.S. to purchase Chinese products and, thus leave or supply Chinese Yuan to the currency traders resulting in a decrease in the price of the Yuan and a corresponding increase in the price of the U.S. dollar.
ReplyDelete2. They are buying all the US dollars to keep their exports high, since it costs much less to purchase with the US dollar. Which allows for them to maintain a better competition in the global economy.
3. The consumer is helped as well as the US government because of the purchases of the US bonds. The consumer pays less for the Chinese exports relative to US manufactured goods. Thus it hurts the US exporters because of their lower prices.
4. The US interest rates would begin to soar because the Chinese are a very powerful lender. Also the price of the Yuan would begin to raise to its appropriate level.
5. If they stopped intervening the poor and working class would suffer because their purchasing power would decline and not allowing them to buy certain imported goods.
6. For the short term I would promote the Chinese in purchasing our bonds until we could reduce the national debt.
1. Chinese leaders are buying more and more American products, and therfore buying more American currency. This puts more Yuan into the foreign currency market, which depreciates it in value. Consequently, the US dollar appreciate in value since there is a higher demand for USD.
ReplyDelete2. Chinese leaders are intervening in the foreign currency market because they want to make their products more competetive in the world market. They do this by depreciating the value of the Yuan.
3. First of all, American consumers definitely benefit from this because this makes Chinese goods much cheaper. However, this hurts American businesses and producers because, if the Chinese goods are cheaper, the American people will buy more of the Chinese goods than they American goods. Because there would be more people buying Chinese goods, the Chinese businesses and producers would benefit from this.
4. If Chinese authorities immediately stopped intervening in the currency market, the supply of Yuan in the foreign currecny market would most likely drop, making it much more expensive. This would hurt the American consumer (higher prices for Chinese products) as well as the American government (higher interest rates on Chinese Yuan).
5. If the Chinese immediately stopped intervening in the currency market, interest rates in the U.S. would rise. The poor would probably become even poorer, and the working class would lose money as well.
6. As President, I would do everything I could to keep this system going. While it may hurt some U.S. businesses, interest rates would stay relatively low and American consumers would continue to benefit. The relationship of U.S. dollars and Chinese Yuan is a good one, and one that needs to stay the way it is.
1. Chinese authorities are buying US dollars spent for Chinese products and then leave the Yuan to currency traders. With the heavy supply of Yuan, the price of it depreciates. Therefore is a scarcity of the USD which leads to an increase in the price of it.
ReplyDelete2. Chinese authorities are intervening in the foreign currency market because they want to weaken the Yuan relative to the USD. This helps Chinese exporters to become more price competitive in the global markets.
3. The American exporters will be hurt by the currency intervention because the US export prices are high due to Chinese authorities depreciating the Yuan. It will help the US government because the USD is sent back to the US government to fund the federal deficit. This also leads the American citizens with reduced prices on imports. The intervention also provides loanable funds back to the US government lowering borrowing costs and interest rates.
4. The interest rates would increase because there would be a decrease in the supply of Yuan. The USD would therefore grow in supply.
5. If the Chinese immediately stopped intervening in the currency market the poor and lower-class would suffer. There would be an increase in prices of products. Due to the poor’s income level, they would have to buy fewer goods.
6. If I were President I would keep this system going. It keeps the interest rate low and American buyers would benefit from it.
1. The Chinese leaders are buying up the U.S. dollars while taking the dollars that are spent on Chinese goods to invest in U.S. Treasury Securities which are bonds, notes, etc. Basically the Chinese are buying up all the U.S. dollars and then flooding the currency market with their Yuan. The low supply of the U.S. dollar increases its value. But the Yuan’s value depreciates because there is so much of it in the market.
ReplyDelete2. Chinese leaders are intervening in the foreign currency market to depreciate the Yuan. This gives them an edge over their competition. This makes Chinese products cheaper to buy. This makes Chinese exports more competitive.
3. American exporters are hurt buy this intervention. It causes U.S. products to be more expensive. American consumers are affected positively by this because consumers have more spending power because the dollar has a greater value. Chinese exporters benefit from the depreciation of the Yuan because this makes their products cheaper. Chinese consumers are hurt because they have less spending power because of the depreciation of the Yuan.
4. Interest rates would rise, there would be more of the U.S. dollar in circulation and the Yuan’s supply would decrease causing it to rise in value.
5. The middle class would get closer to becoming poor and the poor would become poorer because the dollar would depreciate which means you have less spending power. Also the interest rates would rise so paying off a loan will take longer.
6. If I was President I’d let the Chinese intervene until our economy picked up and we can start paying off the debt we owe them. Soon after the U.S. pays off the debt I would intervene in the Chinese interference in the foreign currency market. They are cornering the market by purposely making the Yuan weaker. This makes all of their products cheaper so more people will buy them.
1. Chinese leaders are buying up U.S. dollars in the foreign exchange market. They are investing those U.S. dollars in bonds and notes. This increases the supple of Yuan which causes a decrease in the price of the Yuan and an increase in the price of the now more scarce Dollar.
ReplyDelete2. Chinese leaders intervene in the foreign currency market for the sole purpose of depreciating the Yuan relative to the U.S. Dollar. The do this to help Chinese exporters to become more price competitive in global markets.
3. The American exporters are hurt by this currency intervention because the appreciation of the U.S. Dollar making the prices of the export goods higher. It also helps Americans by sending the same U.S. Dollars back to the U.S. to fund the federal deficit spending and reduce prices on imports. . The Chinese exporters are helped because they become more price competitive in the global markets.
4. If Chinese authorities immediately stopped intervening in the currency market the U.S. interest rates would be higher. This would would decrease the supply of Yuan and cause the U.S. to borrow from somewhere else.
5. It would not be good because the dollar would depreciate and the poor and working class would not be able to afford as much.
6. If I were the President, I would allow the Chinese to continue in intervening in the foreign currency. Although it does hurt the U.S exporters it also helps the U.S. by sending the U.S. Dollars back into the U.S.
1. Chinese leaders are buying American dollars on the foreign exchange market. The dollars that they buy are then invested in U.S. Treasury Securities. This increases the supply of Yuan, but decreases the supply of the dollar. This causes prices for the dollar to go up and the prices of the Yuan to go down.
ReplyDelete2. Chinese leaders are intervening in the foreign currency market so they can help Chinese exports to become more price competitive in markets around the world.
3. Americans are both helped and hurt by this currency intervention. Although China’s market intervention harms U.S. exporters due to their higher relative export prices, we are also being benefitted at the same time. The appreciated dollar can be used to fund the federal deficit spending as well as provide Americans with cheaper imports. In addition, this currency intervention provides the U.S. Government with loanable funds, lowering interest rates during this time of economic recovery.
4. The U.S. interest rates would rise. The supply of the Yuan would go way down and the supply of the dollar would go up, resulting in a higher interest rate.
5. If the Chinese stopped intervening in the currency market, then the dollar would stop appreciating and start depreciating. This means that the dollar would be less powerful meaning that consumers can buy less with it. This makes things harder for the poor and working class because they wouldn’t be able to afford as much.
6. This would be a tough choice for me to take if I was president. Although there are many disadvantages to Chinese intervention, it solves the greater issue of the federal deficit. In addition, the public would be likely to support this decision because it reduces the national debt, leading to more support in the next election!
1. The Chinese leaders are manipulating the foreign exchange marker for their own exporting benefit. There are buying up American dollars in the foreign exchange market which in turn makes the Yuan week compared to our U.S. dollar. The supply of Yuan is increasing in the foreign exchange market while the supply of U.S. dollars is decreasing causes its price to increase. The Chinese then invest that money into U.S. equities and notes.
ReplyDelete2. They are intervening for their own economic self-interest. They are manipulating the market so their exporters can contend strongly against global competition. Their main goal is to depreciate the value of the Yuan compared to our U.S. dollar so they can export more goods and therefore increase their GDP.
3. Both parties, American and Chinese, experience benefits and disadvantages in this situation. American exporters will suffer because of the rising dollar price. Foreigners will be less willing to buy American products because they will be more expensive. Americans also undergo benefits because the Chinese are pumping investments into our country because China is buying bonds and notes. American importers will also thank the Chinese for a stronger dollar because they will be able to buy more from overseas. However, since our imports will increase our GDP will fall. Chinese exporters will benefit because of the depreciated Yuan will cause people to buy Chinese, and thus increase their GDP. Conversely, Chinese consumers can suffer because they will not be able to buy foreign goods because of their weakened Yuan.
4. Other things equal, if the Chinese authorities immediately stopped intervening in the currency market, U.S. interest rates would rise immensely because of a increase in the supply of American Dollars compared to the decreased supply of Yuan.
5. If the Chinese immediately stopped intervening in the currency market, the U.S. poor and working class would suffer because our dollar would be weakened. They would not be able to get cheap products overseas and overall goods and services. They would also be hurt from the rising interest rates.
6 . If I were President of the United States, I would not touch this policy issue at all. We do a lot of trade with China and they will soon take our place as the number one strongest economy. Such action to intervene with their foreign exchange strategy could affect our business with them. The advantages of this policy seem to outweigh the disadvantages. Even though our exports are dropping slightly (and could decrease our GDP) we are experiencing a stronger dollar which is helping our domestic importers. They are also helping our economy by buying bonds and notes and I simply don’t believe there is anything wrong with what is going on and I would let the economy direct itself according to economic self-interest. The economy tends to fix itself and government regulation would hurt that process.
1. Chinese leaders are purchasing all the U.S. dollars in the foreign currency market and then investing those same dollars in the U.S. Treasury Securities. This causes a surplus of Yuan and a shortage of Dollars, consequently causing the Yuan to depreciate and the dollar to appreciate. As a result the cost of U.S. exports increases for the Chinese and the cost of Chinese exports decrease for Americans.
ReplyDelete2. As I stated above the Chinese intervene to make their exports less expensive to American consumers and make American exports less desirable due to the higher costs to their people.
3. The parties that are affected on both sides are the governments, the consumers, and the exporters. Both governments are helped by the Chinese government interfering in the foreign currency market. Chinese exporters are helped tremendously, but on the flipside this economic tactic by the Chinese hurts U.S. exporters. U.S. consumers benefit while it becomes more expensive for the Chinese consumers to purchase U.S. goods.
4. If the Chinese authorities immediately stopped intervening in the foreign currency market U.S. government spending would be adversely affected and we would not be able to borrow anymore money, most likely causing a temporary crisis. Chinese exports would become more expensive as this would cause the Yuan to appreciate and U.S. exports would become cheaper to the Chinese.
5. Every day essential goods would become more expensive, which would make things harder on the U.S. poor and working glass.
6. If I were president I would try and scale back government spending a small amount but encourage the Chinese to keep intervening.
1. Chinese leaders are buying up large amounts of US dollars spent on Chinese goods and reinvesting them in US Treasury Securities. This makes the dollar scarcer and the yuan more plentiful resulting in an increased dollar value and decreased yuan value.
ReplyDelete2. Chinese leaders are intervening in the currency market in order to drive down the price of the yuan to make it competitive in global markets.
3. The increased dollar value harms US exports but the reinvestment in the US government helps fund the deficit and provide American citizens with cheap imports. This meant that the US government had more money to loan in order to drive down borrowing costs and interest rates. China benefits by making its yuan competitive in the global market. This encourages people to buy cheaper Chinese exports.
4. The US would be forced to borrow money elsewhere meaning a raise in interest rates and a possible deflation of the US dollar. This would occur because money is needed to fund the deficit and the Chinese are mainly responsible for inflating the dollar.
5. The US poor and working class would have a difficult time acquiring loans and buying goods because of the higher interest rates and prices due to a deflation in the dollar’s value.
6. I would ignore the issue at least until the US economy fully recovers because as of right now the Chinese are doing more help than harm. If the president chose to make this an issue during the recession the economy would be unnecessarily harmed further.
1) The Chinese are purchasing American dollars in the foreign exchange market and reinvesting them into U.S. Treasure Securities, which makes the Yuan weaker than the US dollar. The supply of the yuan is increasing in the market while the supply of the dollar is decreasing, which makes the dollar more expensive and the yuan cheaper.
ReplyDelete2) Chinese leaders intervene to make depreciate the yuan. This makes Chinese goods that are traded less expensive and more competitive in the foreign exchange market.
3) The advantages and disadvantages are shared by both countries in this matter. The American exporters are at a disadvantage because of the rising dollar price. People in foreign countries will be less likely to but American goods because of the increased prices. But, the American economy is at an advantage because the Chinese continue to spend money on American investments. The Chinese will benefit from the depreciated Yuan, which will increase their exports. But, with the weakened yuan, imports will decrease.
4) Interest rates would rise rapidly because the yuan would be worth less and the US dollar would increase in supply.
5) If the Chinese halted their intervening, the poor would be in trouble. Interest rates would increase, causing the US dollar to depreciate in value. This would make it difficult for the poor to buy goods in America.
6) If I were President, I would continue allowing the Chinese to intervene with the market because it keeps the interest rates low, allowing the lower-class of people to spend more in our economy. The Chinese are also investing in American stocks and bonds which helps the US economy.
1. The Chinese leaders are buying up the U.S. dollars in the foreign exchange market, increasing the supply of the Chinese Yuan and decreasing the supply of the U.S. dollar.
ReplyDelete2. They are intervening in the market in this way to make their products more competitive and desirable in the foreign market.
3. American exporters are hurt by this Chinese intervention because it raises the price of our exports which in turn causes other nations to be more hesitant in purchasing our products if they can import them from somewhere that has a lower cost. It helps the United States government because it provides funds that can be used to reduce the national deficit. Chinese exporters benefit from this intervention because it allows them to be more competitive and sell more goods. The Chinese government is helped its intervention is seen as an investment in the U.S. economy and over time, they will receive money.
4. Interest rates would go up because there would be less Yuan in the foreign exchange market in this situation whereas the U.S. dollar would go up in supply.
5. If the Chinese stopped intervening, the poor in the United States would continue to suffer and the percentage of population in America that is poor could possibly rise. This is because the U.S. dollar would depreciate, prices would rise, and the people would not be able to afford the goods and services.
6. If I were President, I would continue to allow the Chinese intervention in the foreign exchange market, at least for the time being. This is because at this time, one of our main focuses should be to reduce the national debt, which the Chinese are helping us with through their buying of the U.S. dollar in the foreign exchange market. However, once we recover to the point where our economy is more stable, I would move to end Chinese intervention because we could afford to lose their help.
1. In order to keep the Yuan weak against the U.S. dollar, Chinese leaders are buying the same U.S. Dollars provided by the U.S. Treasury Securities, leaving Chinese Yuan to the currency traders resulting in a decrease of the price of the now more plentiful Yuan and an increase in the price of a scarce dollar.
ReplyDelete2. Chinese leaders are intervening in the foreign currency market to depreciate the Chinese Yuan in relation to the US dollar. Therefore helping the Chinese exporters become more price competitive in global markets.
3. Both American and Chinese parties are helped by this currency intervention. China is helped because the exporters become more price competitive. This hurts the US because it harms US exporters due to higher relative US export prices. However, this intervention also helps the US. By sending the US dollars back to the US Government it provides Americans with reduced prices on imports due to a stronger dollar. The intervention provides funds back to the US Government lowering interest rates.
4. If Chinese authorities immediately stopped intervening in the currency market interest rates would rise. Also Chinese exports would decrease and American exports would increase.
5. The US poor and working class would not be able to purchase as many goods and services because the dollar would depreciate. Their salaries would not buy them as much as before. The poor Americans may not be able to provide their family with the necessities.
6. I think the President should leave this currency issue alone. The Chinese are hurting our economy through this process however they are also helping our economy. I think the two balance each other out. The bad effects of the intervention are less important than the benefits.
1.) The Chinese leaders are basically going into the foreign exchange market and purchasing all the US dollars and replacing them with the Yuan, which in return is adding a significant supply of Yuan and diminishing its value. With this increase in the supply of the Yuan, it is in return increasing the demand for their products.
ReplyDelete2.) The reason that they are intervening in the market is because they want their exports to be more price competitive and give others a higher demand for their products.
3.) In the US the parties affected by this are the Consumers, manufacturers, and the US government. This affects the manufacturers because it raises the export costs for their products and in return lowering the quantity of their products exported. For the consumers this is a very positive thing because it raises the value of the US dollar and consequently allows consumers to have more purchasing power. The way that the Government is affected is that the Chinese are taking our US dollars that they exchange for and reinvesting them into US bonds and securities which inreturn causes a negative effect and makes the US more financially debted to the Chinese. For the Chinese the consumers and manufacturers are affected because the consumers have less purchasing power due to the inflation of their Yuan, and the manufacturers create a higher quantity and lower prices of their products so they have an increase in demand which is good.
4.) If the Chinese all of the sudden stopped intervening in the currency market the interest rates for the currency would skyrocket and would have a negative effect on the market.
5.) If this occurred the poor and working class would become even more poor or weaker in society because of the higher interest rates.
6.) If I were the president regarding this issue I would let the Chinese government intervene in the currency market to help lower the interest rates and help the US dollar become more equal to the Chinese Yuan to increase the US exports and the Chinese imports of US products and services.
1. Chinese leaders are buying U.S. dollars in the foreign currency market, which makes the Yuan weaker as compared to the dollar. Then, they are investing those same dollars in the U.S. Treasury securities. Therefore, they are depreciating the Yuan and appreciating the U.S. dollar.
ReplyDelete2. Chinese leaders are intervening in the foreign currency market to depreciate the Yuan as compared to the U.S. dollar. This in turn, helps Chinese exporters become more price competitive in the global market.
3. American exporters are hurt but this intervention, however, Chinese exporters are helped by this intervention.
4. If the Chinese immediately stopped intervening in the foreign currency market, then we would not be provided with loan funds from the Chinese. Therefore, American interest rates would have to rise.
5. If the Chinese stopped intervening, the American poor and working classes would suffer even greater than they do. Prices would rise and they would, but their purchasing power would decrease.
6. If I was President of the United States, I would continue to allow to Chinese to intervene in the market until the United States was stable enough on its own. The intervention providing many positives as it is helping us clear our enormous debt.
1)The value of the U.S. dollar is rising because it is now considered scarcer. This is because The Chinese are buying U.S. currency through the foreign exchange market to buy products. This is weakening the value of the Yuan and strengthening the value of the American dollar.
ReplyDelete2) The Chinese are intervening in the foreign currency market because they want to strengthen the U.S. dollar and weaken the Yuan so that they become a top competitor in the world market.
3)American exports would be impacted by this because Americans products would become more expensive and less people would want to buy them. So, U.S. producers would be negatively impacted. Americans will be able to buy more from other countries because the dollar will be worth more, and the Yuan will be worth less. However, since the Chinese are buying American dollars, that money will be sent to the government and therefore the government will be positively impacted. In China, the Yuan will be worth less, so Chinese manufacturers will be positively impacted because they will have lower prices and people will buy from them. However the Chinese population will be negatively impacted from this because their money is worth less so they will not be able to buy as much for the amount of money that they have like they used to.
4)If the Chinese stopped intervening, interest rates would significantly rise.
5) The U.S. dollar would depreciate, and negatively impact the lower class. They would have to spend more money and in return get fewer commodities.
6) I would say that this overall has a positive effect on the U.S., so I think it should continue. With the U.S. dollar strengthening, our consumers and produces are for the most part positively impacted.
1. The Chinese authorities are buying up U.S. dollars and products in the foreign exchange market. This is causing an excess in supply of the Chinese yuan. The Chinese are then using the dollars that they obtained from the market and investing them in the U.S. economy in the form of stocks and bonds. This is appreciating the dollar or making it worth more and depreciating the yuan.
ReplyDelete2. The Chinese authorities are doing this so that they can sell more Chinese products with the depreciated yuan. They hope that this will help to make their goods more competitive in the foreign market.
3. This process helps the Chinese producers because it makes their products more desirable and competitive against other countries. However, it also causes the Chinese imports to be at a higher price. In contrast for the U.S., this process causes the price of exports to go up; however, it provides the nation with revenue to help reduce our debt.
4. If the Chinese immediately stopped intervening in our market, then interest rates would significantly increase. This would be cause by the increase in supply of the yuan and decrease in supply of the dollar.
5. The poor would have to sacrifice more than they already must due to the dollar depreciating. This would cause the price of the dollar to go up which means that they poor would have to pay more to get less.
6. If I were president of the United States, I would encourage China to keep interfering with our market. Although the price of our exports is rising and it is important for other countries to buy them, I believe that it is more important to reduce our trade deficit. We are facing major debt right now, and we should do all that we can in order to fix it. Right now, China’s interference is helping with the deficit so I think that we should continue on this path.
Jack Murphy
ReplyDelete1. Chinese leaders are buying U.S. currency for the sole purpose of increasing the supply of Chinese Yuan, while increasing the price of the scarce U.S. dollars. This helps Chinese exporters become more price competitive in global markets because the more Yuan that are in the market, the cheaper the value of Yuan becomes.
2. The Chinese authorities intervene in the foreign currency market for the sole purpose of helping Chinese exporters to become more price competitive in the global markets. They can sell their products for much lower costs than other countries because their currency, the Yuan, is so cheap due to the large quantity in the market.
3. Both the Americans and Chinese benefit from this currency intervention by the Chinese. Although the Chinese gain an upper hand on the price of their exports, enticing other countries to buy their goods over American goods, they don’t exactly put their new U.S. dollars to waste. They invest those dollars back into the US economy by means of both bonds and notes. American leaders want the Chinese to continue to invest their U.S. dollars back into the economy, but want them to stop intervening in the global market, which is how they get the U.S. dollars in the first place.
4. If the Chinese immediately stopped intervening in the currency market, the value of the U.S. dollar would most likely decrease, due to their being a bigger supply of dollars. We would have less buying power dollar for dollar and the Chinese Yuan would probably increase in value as well. The Chinese would no longer be able to invest U.S. dollars back to us through bonds and notes.
5. The immediate impact on the poor and working class if the Chinese authorities immediately stopped intervention would be bad. Their dollars would have less value. Prices of imports would probably increase as well.
6. If I were the President, I would leave the Chinese alone. I would tell them that what they are doing hurts our exports, but we appreciate the stronger dollar and money that they return to us by means of stocks and bonds. I think there should also be a limit on how many dollars one nation can by because it seems that foreign countries are capable of manipulating our dollars more than we are.
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ReplyDelete1. In order to appreciate U.S. dollars and depreciate Chinese Yuan, Chinese leaders are buying up U.S. dollars and investing them on U.S. Treasury Securities. They supply Chinese Yuan to the currency traders so that there are abundance in Chinese Yuan and scarcity in U.S. dollars.
ReplyDelete2. Chinese leaders are intervening in the foreign currency market because depreciated Chinese Yuan causes increase in Chinese exports and ultimately improves its economy.
3. American exporters would be hurt by this Currency intervention because it makes American exports more expensive, making imports of U.S. goods less favorable by other countries. However, this would benefit American citizens because prices on imports would be reduced. This currency intervention by Chinese authorities would also benefit U.S. government because it lowers borrowing costs or interest rates. In China, this would benefit Chinese exporters since more countries would want to import less expensive Chinese goods. However, it would hurt Chinese consumers because price of imports will start to rise.
4. If Chinese authorities immediately stopped intervening in the currency market, interest rates would rise because U.S. will not be provided needed loanable funds anymore.
5. If the Chinese immediately stopped intervening in the currency market, U.S. poor and working class would be hurt because they would have to spend more money to buy goods with depreciated dollars.
6. If I were President of the United States, I would keep this intervention of Chinese leaders until the economy of U.S. gets better since this intervention helps to lower both borrowing costs and interest rates when economy is bad.
1. Chinese leaders are buying the U.S. dollar, purchasing U.S. products, and leaving a large supply of Yuan to the currency traders. This tactic is decreasing the price of the Yuan and increasing the price of the dollar, thus making the Chinese exports more desirable to consumers because of how cheaply they can be purchased.
ReplyDelete2.The Chinese leaders are intervening in the market so that they can help Chinese exporters to become more price competitive in golbal markets. They are helping to do this by depreciating the Yuan in comparison to the U.S. Dollar, giving them an unfair advantage when it comes to exports because the U.S. exporters have to deal with a greater export price on their products.
3.The depreciation of the dollar harms the U.S. economy because it increases our export prices. The Chinese are helping their economy out because the depreciation of their dollar is making them more competitive in buying and selling goods.
4. If the Chinese immediately stopped intervening in our market, then interest rates would increase because the Yuan would be worthless in the foreign exchange while the U.S. dollar would go up in supply.
5.If the Chinese ceased their intervention then the poor would continue to be poor becasue the US dollar would depreciate, therefor, the poor would no longer be able to afford the products.
6. If I were President, I would continue to allow the Chinese to intervene in the golbal market. Although it is not completely helpful to the US, it is helping to to appreciate our dollar and minimize our deficit.
1. Chinese leaders are buying U.S. dollars in the Foreign Exchange market which causes the supply of U.S. dollars to decrease while the supply of the Yuan increases. This causes the value of the U.S. dollar to increase while the value of the Yuan decreases.
ReplyDelete2. Chinese leaders are intervening in the foreign currency market because a weaker currency is a “competitive” currency. A weak currency is preferred by the Chinese because if the Yuan is “cheaper” than the dollar then the U.S. will naturally buy the Chinese products because they are more affordable than products of equal quality produced in a country with a “more expensive” currency.
3. In a way both parties are helped by this currency intervention. The United States is helped by the currency intervention because it increases the purchasing power of the dollar, while the Chinese are helped because it makes their products less expensive and more competitive in the world goods market.
4. Other things being equal, if Chinese authorities immediately stopped intervening in the currency market then U.S. interest rates would immediately rise.
5. If the Chinese immediately stopped intervening in the currency market then the immediate impact on the poor and working class would be negative, since the price of Chinese goods which populate Target, Wal-Mart and Dollar Stores would rise. In the long term, the impact would be considered positive since the U.S. dollar would become more competitive, making U.S. products less expensive and more attractive in international markets and increasing jobs in the U.S.
6. The situation calls for a policy that will benefit the U.S. economy in both the short-term and the long-run. At this point, the U.S. economy is fragile and should not be destabilized further. Letting things continue to keep borrowing rates lower until the U.S. economy is stronger seems to be the best policy. In the short-term, this keeps the economy from deteriorating further and puts the U.S. in a better position for long-term recovery.
1. The Chinese leaders are buying US dollars and US products, therefore decreasing the amount of US dollars(increasing its value) and increasing the amount of Yuan(decreasing its value) in the currency traders. This plan allows Chinese exporters to obtain more business because the Yuan is so cheap.
ReplyDelete2. Chinese leaders are intervening because they want the Chinese exporters to have more sales. By lowering the cost of the Yuan it is cheap to buy from Chinese exporters.
3.American exporters are hurt, but American importers are helped. A 180 degree moments occurs when Chinese exporters are helped, but Chinese importers are hurt.
4. The interest rates would rise because the US Dollar would increase in the exchange market.
5. The impact would be negative because the US dollar would depreciate and the poor would not be able to turn their life around and begin making money.
6. I would allow the Chinese to continue to intervene right now. They are making jobs for us and raising the value of our dollar. But as we begin to get back on our feet I would begin talking to Chinese officials, getting them to stop playing with the US Dollar.
1. The Chinese are buying the US dollar on the global market causing its value to increase. This is causing the Chinese Yuan to depreciate making their products more desirable on the global scale.
ReplyDelete2. The Chinese are intervening because it causes the US dollar to be more expensive and makes the Chinese Yuan less expensive. This makes other nations buy the Chinese products over the Americans.
3. This intervention benefits both nations. It makes the US dollar appreciate which allows the US to buy more imports. It makes the Chinese Yuan less expensive so other nations buy their exports on a larger scale boosting their economy.
4. All other things being equal if the Chinese stopped their intervention it would cause the US dollar interest rates to increase causing the dollar to depreciate.
5. If the Chinese immediately stopped their intervention it would have its largest impact on the US lower class compared to any other class in the US. They would have to pay more for previously cheap commodities.
6. If I was the president I would have a hard time resolving this situation because the US borrows so much from the Chinese already and in all we would have to end up borrowing again. Which is the last thing the president should do because it puts our nation into debt even further.
1. The Chinese are manipulating their currency which is making it depreciate. They are doing this by buying U.S. dollars which causes the dollar to appreciate and creates a large supply of Yuan in the market which ultimately depreciates the value of the Yuan.
ReplyDelete2. The Chinese are doing this for the sole purpose of depreciating their currency and appreciating ours. They want to do this so that their goods (which are relatively low in quality) will sell cheaper and remain cheap in the world market which will allow china to grow because more countries will buy their goods.
3. The United State’s manufactures are getting crushed due to China’s intervention with the currency. Because China is making their currency cheaper and the dollar more expensive, fewer consumers are buying US goods from US manufacturers. The US consumer is being helped by China’s manipulation because it makes Chinese goods cheap for the US consumer to buy. So if the US consumer is buying Chinese then the Chinese manufactures must are being helped because more people are buying Chinese. But indirectly the Chinese consumer can not buy US goods cheap because China is appreciating the dollar.
4. US interest rates would increase if China no longer loaned money to the US. They would increase because the US would try to get other countries to loan money to help the US debt, and to convince countries to loan the US money the interest rates would be higher to make the idea of lending money more attractive to the foreign countries.
5. The effect on the poor, if the Chinese stopped intervening in the currency market, would be horrible. Interest rates on credit cards and loans would go up. And goods and services from that were once cheap for the poor would spike up and would become more expensive.
6. I would allow the Chinese to manipulate until I got the national debt under control by cutting government spending which is causing our debt to constantly increase. Once the debt is under control and Chinese were no longer buying our currency their money would appreciate which would make our products more attractive to the international consumer.