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Technology & Innovation

U.S.-China Currency Standoff

"China holds all those dollars while the US holds the key to what they will be worth. It is a Mexican stand-off in which we could all be hurt." The Guardian reports.

Washington has long suggested—not formally; that would be really serious—that Beijing is keeping the renminbi cheap to boost exports. All those dollars are piling up in China, except when the state goes on its version of a shopping spree, buying up key foreign firms. The U.S. response has been to print more dollars in the name of quantitative easing—QEII as the next $600bn round is being called—to maintain liquidity by having the Federal Reserve buy U.S. government debt. This is risky and controversial. The Republicans don’t like it and nor do the Chinese or Germans.


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