What is currency manipulation and how can a country engage in it.
In: Economics
I mean, when you think about it: literally all monetary policy is currency manipulation, it can just be more or less agreeable to different segments of the population. The ideal for western society in how we see economic growth ought to behave is that income will always grow faster than inflation, and that enough money is printed to create a net inflationary pressure in the economy amid all other inflationary and deflationary pressures.
Disagreeable currency manipulation can be said to be any combination of monetary and fiscal policy which creates an inflationary pressure significantly greater or less than two percent per year. It can also be said to be manipulative if it is made to have an artificial exchange rate set above or below where the market would set it. The market sets it based on the supply of the currency and the value of the size of the fraction of the economy of the country it enables entitlement to, and how that compares with the supply of another currency and the value of the size of the fraction of the economy of the country it enables entitlement to. Like, if we have a GDP of $20T this year, then $2 is equal to “one trillionth of the productive capacity of The United States in 2020.” Because our economy tends to be much more valuable than any other economy, one trillionth of their economy would be far less valuable, so it would trade for less than a trillionth of The United States economy. And since The United States keeps a uniquely low supply of quantas of currency for the size of its economy, a single dollar is worth more than a single quanta of most other currencies.
But countries like China can make deals which encourages a more solid trade partnership. Basically, Yuan, in a free market would be worth a bit more than what the government wants for it: the free market would trade fewer Yaun for 1 dollar if it had to. But China basically gives us a bonus in order to entice continued trade with us, and, ultimately, it is a very good deal for us, from a material standpoint. But, if you live under a brutal capitalist economy who will let go of and piss on obsolete cogs in its machine without a second thought, it can have a bad overall social effect, because exporting Chinese Labor can become more favorable more quickly because you can buy more Yuan to pay Chinese laborers than you could without the artificially cheap currency.
Under reasonable social democracy, we could just create variable redistribution programs to move that imported labor from the hands of the rich to the poor. But we don’t live in a reasonable social democracy because our citizens, especially the ones that our shitty form of government gives extra influence to, are stupid, so they don’t vote for social democracy, and, instead, just keep voting for incoherent personal responsibility memes, and get super pissy when they don’t bear the results they were promised.
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