Nobel economist Mundell Says U.S. Action on Yuan Rate Would Be a ‘Disaster’

[ASusilovic]

Sept. 27 (Bloomberg) -- Nobel-Prize winning economist Robert Mundell said U.S. legislation to press China to raise the value of the yuan would be a “disaster” and fail to narrow the trade deficit between the two nations.

“This is not going to help Americans,” Mundell said in a Bloomberg Television interview in Hong Kong. “This is not going to create jobs for Americans. It’s just going to create a disaster.”

U.S. lawmakers will vote in two days on legislation that would let American companies petition for higher duties on imports from China to compensate for the effect of a weak currency. The yuan has appreciated about 2 percent against the dollar since June 19, when China’s central bank said it would pursue a more flexible exchange rate after keeping the currency at about 6.83 versus the U.S. currency for almost two years.

The bill “would create a very damaging thing to the world economy and the stability of Asia,” Mundell said. “This would have a wounding effect on the stability of international relations. There’s never been any precedent in economic history where a country through any legal system was forced to appreciate its currency relative to another country.”

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aF_ocLndWcME&pos=5

Damage, damage, damage...

 

[hoodooman]

I would like to hear what he has to say about removing the trade imbalance.

 

[trefoil]

Ah yes, the "father of the euro". His analyses are usually excellent, his policy prescriptions, not so much. Huge disconnect between the two for some reason.

 

[Tsing Tao]

Quote from trefoil:

Ah yes, the "father of the euro". His analyses are usually excellent, his policy prescriptions, not so much. Huge disconnect between the two for some reason.

+1