SAME STORY, SAME LIES
If you read economic news long enough you will start to see the same tired story spun the same way over and over and over again with little variation. This is especially true when listening to the President, CONgress, the Fed, and the US Treasury. It is not surprising to see this because people (leadership) tend to give the people what they want to hear rather than what they need to hear.
Think about it. We have an government that is spending in an out of control fashion like a shopaholic, we have a deficit that is greater than $1 Trillion more than we take in, we have hit the demarcation point where Social Security and Medicare are spending more than they take in, we have a Federal Reserve that is buying our own debt keeping rates so low older people can't earn enough, we have exceeded our self-imposed government debt limit, and we have a banking system that is really insolvent. Have you heard any of this stuff really discussed in an open forum or seen the leadership come forward and propose a real plan that is thoughtfully considered?
The answer is no. Even President Obama has completely ignored every single recommendation that his own budget deficit reduction panel provided.
TWO GOOD ONES THAT EVERYONE LOVES TO HEAR
So, it is odd to see someone other than fellow bloggers generate a post or article that states something other than the normal bilge of conventional wisdom or sound bites. Today, I found one piece that actually stuck out, because it flies directly in the face of what we hear from Treasury Secretary Timothy Geithner. In fact, recall that every single time Tim Geithner speaks he states several lies over and over again. Here they are;
1) The USA believes in a strong dollar policy! HAHAHA! Remember when he said this in Beijing and the Chinese business students simply laughed out loud in his face? That was one of the funniest common lies. We Americans are either too polite or too stupid to do anything but nod our heads when he says this to us.
(Totally unrelated video, but really funny considering these are the folks that are laughing at our Treasury Secretary! Oh and by the way, don't click the video when it gets going, I have no idea where it will take you)
2) Mr. Geithner also is fond of telling us that China is bad and that their currency is undervalued. In other words, we are looking for a scape goat to complain about our trade deficit and this one has been an easy one to throw out there, because Americans are all about "Good Guys" and "Bad Guys". (Don't get me wrong, those Communist Chinese are bad guys, but that is not the point of this post). When Geithner says, "Chinese are bad", we all pile on and clap and howl and scream, and CONgress does the same thing too.
WHO LET THESE GUYS WRITE THIS STUFF?
Given that Geithner loves to throw these two out, I found it remarkable that the St. Louis Fed wrote a one page note stating that in fact, that perhaps it wouldn't be a great thing if China did actually revalue their currency higher. They mentioned that the yuan had actually increased in value by almost 25% since 2005 and yet it did nothing to stall the increasing trade deficit with the most populous nation in the world. Further, if we did have a Chinese currency that was valued higher, WE IN THE USA would have a HIGHER INFLATION RATE! In other words, things would be much more expensive if the garbage we buy from China cost more (via an appreciated and more expensive yuan).
http://research.stlouisfed.org/publications/mt/20110601/cover.pdf?utm_source=Twitter&utm_medium=SM&utm_campaign=Twitter
(Go ahead and read it, it's 1 page!- make sure that you right-click and open in a new window though!)
Yes, that is the take away, while we've simply swallowed the trash that our leaders provide to us, we often never question the extent of their understanding or their ability to actually tell the truth. The St. Louis Fed says that we'd have more inflation here. But beyond that, you know what would really happen. If China appreciated their currency we'd have importers and businesses going to Thailand, Malaysia, Vietnam, and every other 3rd world poverty stricken country looking for cheap labor to replace the suddenly more expensive junk from China. I guess that then Geithner could complain about those countries and their terrible trade policies and deficits huh?
Ultimately, Mr. Geithner, The US Treasury, The Fed, CONgress, and the President don't want to address the real issues, we want to point fingers at others and sink our heads in the sand. The St. Louis Fed document is interesting, but certainly is something that won't be repeated in interviews or Sunday morning talk shows. It is far easier to blame others and refuse to address real issues.
WHO WROTE THIS? - NICE DISCLAIMER!
Oh yes, it didn't escape me that the authors of the paper just happen to have interesting sir names, perhaps these folks went off the reservation or we'll soon find that Chinese spies have even infiltrated the highest ranks of the Federal Reserve system.
(
Mingyu Chen and Yi Wen were the authors).
Finally, you have to love the disclaimer at the end - Perhaps I'll start adding that same disclosure to everything that Goatmug writes as well..... so here goes.
"Views expressed do not necessarily reflect official positions of the Federal Reserve System".
GOATMUG
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