Dec 29, 2011

In its semi-annual report to Congress, the US Treasury Department declined to name China as a currency manipulator, a move which would trigger a trade war. Bloomberg news quoted a former IMF fund specialist as saying that the “U.S. cannot afford a trade war with China at this juncture.”

Sanity.

Trade wars are always losing situations for both parties. As I have written before, I believe our best strategy is to balance the budget so we are no longer dependent on borrowing money from China, and then negotiate with China from a position of strength.

It’s hard to dictate demands to your biggest banker…