When Japan’s finance minister complained last week about recent Chinese purchases of Japanese bonds, it “made me want to bang my head against the wall in frustration,” writes Paul Krugman of the New York Times. See, the US has repeatedly refused to do anything about China’s constant currency manipulation, afraid China would stop lending to us. But “Chinese purchases of our bonds don’t help us—they hurt us. The Japanese understand that. Why don’t we?”
China artificially depresses its currency, creating a huge trade surplus that costs everyone else sales and jobs. The US should impose a tariff—but won’t, because it fears China will stop buying US bonds. But so what if they did? The dollar would fall, but that would just boost American exports. The only other reason to hold back: fear of reprisals against US-owned corporations in China. “This is a good time to remember that what’s good for multinational companies is often bad for America,” writes Krugman, “especially its workers.” For more from Krugman, click here.