Saturday, October 22, 2011

Volume 3 Issue 43: Two-Cent Economics

Chuck Schumer, The Big Fat Bully

Another great piece from Scott Sumner. If you have been keeping up to date with the currency debate, Chuck Schumer would be a familiar name to you. He is one of the strongest proponents of China being a currency manipulator. He has brought it up so many times since 2004 that I can't even remember. It is always some lame excuse with no backing whatsoever.

Scott Sumner calls him the big bully in high school:
If only it were true. There really isn’t any “problem” at all, but the perception is that the yuan is getting increasingly undervalued. Back in 2005, Chuck Schumer said the yuan was 27.5% undervalued, and he demanded a revaluation. China has more than complied with this request; the yuan has increased by nearly 30% in nominal terms and more than 50% in real terms. So is Chuck Schumer happy now? Not quite. He now insists the yuan is 32.5% undervalued, and demands another massive revaluation. All this despite the fact that the previous revaluation didn’t reduce the deficit by 1 cent; indeed the deficit got bigger. 
Remember the high school bully that would pick on the nerdy kid? You know, the one that would promise to stop beating him up if he just did what the bully wanted. Then when the victim complied, the bully would just issue more demands, and keep picking on the poor boy. That’s Chuck Schumer.