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Credit Is Too Tight, Except When It's Too Loose

Below (and here) is a letter that I sent this morning to the Washington Post.  Can anyone tell me why more people don't pick up on this obvious inconsistency?

Treasury Secretary nominee
Timothy Geithner sides with those who worry, as you put it, that
"Beijing has kept its currency artificially low to keep the prices of
its goods cheap and generate trade surpluses. That has led to a global
capital imbalance, as American consumers borrowed and spent and China
became the United States' largest foreign creditor" ("Geithner Says
China Manipulates Its Currency
," January 23).  And he threatens to act
"aggressively" to stop this alleged wrongdoing.

Overlook the
reality that the only way Beijing can push the price of the yuan lower
is through inflation or other policies that weaken the Chinese
economy.  Instead ask: why should the Obama administration be so upset
by Beijing pumping easy credit into markets at a time when this same
administration is deeply worried that credit has become too tight?

Donald J. Boudreaux


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