The RMB and the Magic of Accounting Identities
One nice things about writing a
blog is that I don’t need to be topical. Not only can I write
worriedly about rising contingent debt levels three or four years before
they become obvious, but I can also revisit a controversy that took
place March involving Paul Krugman and Stephen Roach. I revisit this
old controversy because although the period of nasty trade dispute seems
to have come to an end, with conciliatory noises being made between the
major parties, trade tension is not going away. In fact it is going to
become internationalized, with more noise coming from other developing
countries, who have already begun complaining about RMB policy (for
example last week the governors of the central banks of both India and
Brazil came out with strong statements about the RMB). In the end,
large trade deficits are not politically compatible with high
unemployment, and in my opinion things only will get worse on both
fronts.
blog is that I don’t need to be topical. Not only can I write
worriedly about rising contingent debt levels three or four years before
they become obvious, but I can also revisit a controversy that took
place March involving Paul Krugman and Stephen Roach. I revisit this
old controversy because although the period of nasty trade dispute seems
to have come to an end, with conciliatory noises being made between the
major parties, trade tension is not going away. In fact it is going to
become internationalized, with more noise coming from other developing
countries, who have already begun complaining about RMB policy (for
example last week the governors of the central banks of both India and
Brazil came out with strong statements about the RMB). In the end,
large trade deficits are not politically compatible with high
unemployment, and in my opinion things only will get worse on both
fronts.