Tuesday, November 23, 2010

Need an excellent, concise explanation of why we have such a large trade imbalance with China? No, I did not write it, that is why it is excellent and concise...

Here is an excellent, concise explanation on one of the principle reasons we have such a large trade imbalance with China--a fixed versus flexible exchange rate regime.  It will go a long way in helping you understand the issues surrounding this hot political and economic issue...I particularly like the last paragraph---it says alot in just a few words:

""...Put more simply, China has exported goods and services to America, while America has exported ownership of its real and financial assets to China. This is a major area of concern for US policy makers, who would like to see a more balanced current account between the two countries, since it is the export of goods and services that creates jobs for American workers, not the sale of bonds, stocks and real estate."" ---Welkerswikinomics
I recommend you read the whole blog entry. It will be well worth your time!

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