US to China: Do As I Say; Russia Loses Admired Politician‏

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The United States in its preachy way has been trying for some time to convince the Chinese to stop making so much money or acquiring so many US dollars or acting like some heartless, capitalist nation with no thought for the plight of others. Instead, the US argues (and pretty vehemently so), the Chinese should run their economy in a manner more suitable to US interests.

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Interestingly, the Chinese haven’t shown a mighty interest in bolstering the American economy, which is why the US government, much surprised, has tried to come up with some innovative ideas to point China in the right direction.

First suggestion of US officials to their slow-thinking Chinese counterparts: appreciate the renminbi by oh, say, 20 percent, so that the next time Americans shop at Walmart, they won’t get quite the deal on fake leather coats they were expecting. But the Chinese are a resistant bunch, and however inspired the US government’s notions for reducing foreign exports, President Hu Jintao hasn’t jumped at the chance.

Also, he may well be wondering: Do slightly higher prices on cheap exports from China mean that American consumers will henceforth switch back to Yankee goods out of abiding patriotism or renewed respect for homegrown craftsmanship? Should China lend an ear to American pleas because the US sets such a glorious example of steady nerves in the face of crisis?

For answer, here’s what Ben Bernanke, chairman of the Federal Reserve, did last week: dumped $600 billion into the American economy. Actually, that’s not exactly the way Bernanke described his move: he called it buying Treasury securities. (Guido Mantega, who is Brazil’s finance minister, had a different technical term for the measure: “Throwing money out of a helicopter.”)

In any event, it’s obvious Bernanke hopes that the helicopter will actually be a crop duster, strewing cash across the land. This kind of activity will likely have the same effect on the US economy as a case of Red Bull on a teenager: a hot dose of energy, followed by manic activity, while everyone scrambles to pick up the bucks. In economic terms this could easily translate into a sizable splash of inflation months or years down the road, along with, yes, the devaluation of the dollar.

In other words, as Germany’s finance minister, Wolfgang Schäuble, puts it: “What the U.S. accuses China of doing, the USA is doing by different means.”

When the Chinese president pays Washington a visit, as he intends to in January, I wonder if he’ll mention to his host the remarkable similarities between the two countries. So very many delectable dollars. Only one nation spends them. And the other hoards them.

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