Thursday, November 18, 2010

Republicans stand with China, against Ben


China has a Big Mac problem. A Big Mac hamburger only costs $2.17 in China. But it costs $3.71 in the United States. If you don't understand Economics, you don't have a clue why this single point is probably THE most critical issue that needs attention in our world economy.

Economists like to use the Big Mac index as a quick look at the relative value of currencies across the world. In theory, if currency exchange rates were freely trading, then the value of a Big Mac, expressed in US Dollars, would be the same in every country in the world. If they're not the same, then one currency is under or over valued relative to another. China's currency is vastly undervalued relative to the US Dollar. There are a myriad, and a very complex set of reasons why currencies would differ in value. But, in China's case, it's clearly evident. China manipulates their currency.

China's blatant and continual currency manipulation is causing massive problems across the world. It enables China's products to be cheaper relative to every other product in the world. China winds up exporting up the wazoo. As a country, they make huge export profits. To recycle these profits and keep their currency cheap, it is necessary for them to use the profits and buy foreign assets. In the case of the United States, China buys our nation's debt (Treasury Securities) in order to keep this scheme going strong. If this cycle isn't broken soon, then China will wind up owning just about every asset in the world, and everyone else will be poor.

Ask Senator Burr if he's aware of China's Big Mac problem. I suspect you'll be met with a blank stare. Our Senator is clueless when it comes to basic economics. Clueless people do stupid things. And right now, the damn dumbest thing coming out of Washington DC is that Republicans are standing with China in fighting Ben Bernanke, our Federal Reserve Chairman. Ben is the only American who is trying to fight China and solve the China Big Mac problem. But, if the ignorant Republican politicians in Washington DC had their way, China would own the world.

North Carolina deserves better than Republican Senator Richard Burr.

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