# Μονά-ζυγά δικά μου



## Costas (Nov 15, 2010)

Άρχισε να εθνικολαϊκίζει ο Paul Krugman (NYT):
At the predictably unproductive G-20 summit meeting in South Korea, the president faced demands from China and Germany that the Federal Reserve stop its policy of “quantitative easing” — which is, given Republican obstructionism, one of the few tools available to promote U.S. economic recovery. What Mr. Obama should have said is that nations running huge trade surpluses — and in China’s case, doing so thanks to currency manipulation on a scale unprecedented in world history — have no business telling the United States that it can’t act to help its own economy.

But what he actually said was “From everything I can see, this decision was not one designed to have an impact on the currency, on the dollar.” Fighting words! 

Ορίστε όμως τι λέει ο Daniel Gros (CEPS.eu)
Today, the US Treasury can still borrow unlimited amounts at rock-bottom interest rates. [=an 'exorbitant privilege'] Indeed, the interest rate on inflation-protected bonds has now become -0.5%, even for a five-year maturity! The US government is thus essentially being paid in real terms to take investors’ money – a generous offer that it is accepting on a huge scale, in the hope that channeling these resources to American consumers will boost household spending and thus generate more jobs. 
(...)
Today, China has replaced Germany (and Japan) as the world’s top exporter – but with one difference: it manages its exchange rate tightly, using capital controls and massive intervention in currency markets. As the only major economy with capital controls, China has created its own “exorbitant privilege”: it can determine its exchange rate because no other big countries impose capital controls. 

The two global economic superpowers resent each other’s “exorbitant privilege.” The US would like to have the Chinese jobs, and the Chinese would like to have better investment opportunities. Neither side is budging, although either could easily break the impasse. 

The Chinese could abolish capital controls and let the renminbi’s exchange rate float. But the US could easily end China’s privilege by restricting sales of Treasury (and other US) debt to the Chinese monetary authorities. In doing so, the US would break no international commitments and would not start a trade war. Such a move is likely to be effective, given the sheer size of Chinese interventions (hundreds of billions of US dollars annually), which could not easily be recycled through offshore banks without exposing the China’s central bank to many other risks. 

Prohibiting the Chinese authorities from buying US debt would, of course, be tantamount to imposing capital controls, thereby breaking China’s monopoly on such instruments. But it might also mean an end to America’s position at the center of the world’s financial system – and thus an end to its own “exorbitant privilege.”


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