Protectionism Could Lead To American Poverty

By Gary Gibson
Whiskey and Gunpowder
Oct. 20, 2011

To hear the latest batch of political salesmen tell it, China is a drug pusher in a schoolyard full of American schoolkids. The cheap goods the Chinese export market provides the American consumers may feel good, initially, but they are surely destroying America…causing manufacturers to shut down in the U.S. or relocate to China. Americans are, supposedly, trading jobs and long-term economic health to get their consumer goods at a great price.

The insidious method of this undercutting the competition? Underpricing of the currency. More accurately, however, the Chinese central bank is just matching the monetary inflation of the U.S. central bank. If China’s government underprices their currency, it’s only because they are trying to keep up with the U.S. government underpricing its currency.

Politicians are calling for China to knock it off. Or else. They want China to let their currency appreciate against the dollar, instead of losing value as quickly as the dollar.

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