How does mankiw comment on RMB

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Is it a wise decision to re-evaluate RMB? Is it a practical way to withhold so much greenbucks for the national benefits of China? This is really in doubt by many people, whoever they are and where they come from.

An article published by NewYork Times give us a simple and easy to understand answer. Everyone knows the concept of coin tax. It is not a really difficult terminology to learn. We do not need an Economics professor to convince us the plain fact. If they express their thought on this issue, the typical one is as follows,

 

Thursday, September 07, 2006

Cowen on the Yuan

In todays NY Times, economist Tyler Cowen argues:

The United States should not be spending its international political capital on yuan revaluation.
I agree.

Larry Lindsey put the economic logic well in a Wall Street Journal column last April:

America, however, benefits from this arrangement. The Chinese clearly undervalue their exchange rate. This means American consumers are able to buy goods at an artificially low price, making them winners.

In order to maintain this arrangement, the Peoples Bank of China must buy excess dollars, and has accumulated nearly $1 trillion of reserves. Since it has no domestic use for them, it turns around and lends them back to America in our Treasury, corporate and housing loan markets. This means that both Treasury borrowing costs and mortgage interest rates are lower than they otherwise would be. American homeowners and taxpayers are winners as a result.

There are losers, of course, most notably American producers of goods that are now made in China. Yet the losses to these producers are outweighed by the benefits from Chinese subsidies of our imports of consumer goods and the reductions in our borrowing costs from generous Chinese lending. Though correct, in politics these gains are now beside the point.

Once again, I agree.
The question is
The United States should not be spending its international political capital on yuan revaluation.
The answer goes straight and frankly, Yes, I agree.
 
Then some clarification can be read that,
 
 The Chinese clearly undervalue their exchange rate. This means American consumers are able to buy goods at an artificially low price, making them winners. There are losers, of course, most notably American producers of goods that are now made in China. Yet the losses to these producers are outweighed by the benefits from Chinese subsidies of our imports of consumer goods and the reductions in our borrowing costs from generous Chinese lending.
 
Yes, there are losers but they are not US producers, they are Chinese producers. The auther almost can not help to say that.
 
The experts of central bank of China need to learn how to manage wealth, not only act as a cashier or book-keeper to write down the figure of how many foreign currency has been obtained. With too much greenbucks we might not only lose wealth but also falling into a trap without bottom.