The US and currency war

Comments on Shiro Armstrong “Using the G20 to avoid currency war”, 18/10/2010, http://www.eastasiaforum.org/2010/10/18/using-the-g20-to-avoid-currency-war
For the US to justify its use of currency manipulation by China, the word manipulation must have a special meaning, given that China has largely pegged its currency to the $US and the rmb moved up and down with the $US as it moved up or down against other currencies in the past.

The argument by US politicians and some economists like Krugman that China steal US jobs especially in the wake of the GFC sounds very hollow, given that it was the US that was the epicentre of the GFC and together with the reduction in imports from those GFC severe countries that threatened the whole world.

The argument for a flexible exchange rate regime as adjusting to trade imbalance has both merits and fallacy.

It is not different from using deliberate depreciation to export one's own problems with the disguise of a market determination of exchange rate. That is no different from the "beggar thy neighbor" policy, albeit with the name of flexibility, or market mechanism.

But we all know markets can generate serious problems like bubbles. Who can say that trouble does not occur in the exchange rate markets?

The US has been in this situation for a while.