Last Friday, we had a spirited discussion about the US Senate’s currency appreciation bill. Here’s the hit.
Yesterday, the US Undersecretary for International Affairs (who is charged with formulating US dollar policy), Lael Brainard, stated ” Renminbi appreciation on its own will not erase our trade deficit.” While it’s unusual to get a direct refutation of this theory by the administration, the comments reflect what is well known at the US Treasury: a stronger currency doesn’t solve the issue of the US-China trade imbalance. The experience of the massive appreciation of the Japanese yen and its failure to significantly reduce … …READ MORE
Tag Archives: US Treasury
Money in Motion makes the call on Yuan:
China…..Ntg Yet!
Here’s the US Treasury’s terse statement on the Geithner visit to Beijing:
This evening in Beijing, U.S. Treasury Secretary Tim Geithner, President Barack Obama’s special representative, met with his counterpart Vice Premier Wang Qishan of the State Council and special representative of Chinese President Hu Jintao.
The two sides exchanged views on U.S.-China economic relations, the global economic situation and issues relating to the upcoming economic track dialogue of the second U.S.-China Strategic and Economic Dialogue, to be held in Beijing in late May.
Here are my major takeaways:
US Treasury Tim Geithner met with Vice Premier Wang Qishan and … …READ MORE
Clash of the Trade Titans a Disappointing Sequel
As most know by now, the US Treasury Department has put off releasing their bi-annual currency manipulation report. As you may remember from the Bush administration, this behavior is nothing new.
First, a bit of background. With the help of the IMF, the Treasury is instructed to analyze and report by mid-April on who is unfairly manipulating their currency. The term manipulation is narrowly defined as “for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.”
When I was acting as an outside advisor to both US Treasury Secretary John Snow and Hank … …READ MORE
How The Treasury Can Sell So Much Debt For So Little For Now…..
It’s called carry, but not like currency carry. As most know, banks can fund themselves at 0.1%-0.25% as the Federal Reserve keeps Fed Funds at 0.0%-0.25%. Then banks are incentivized to find the safest, highest return they can with this cash.
Now, the US Treasury and the Federal Reserve hope that this low cost of funding to banks would make lending more attractive and incent banks to make new loans. As the Fed loan surveys show, this is now occurring and new lending is not being generated. This is a phenomenon that is not only occurring in the United States, … …READ MORE
Treasury to Increase Duration?
Bloomberg carries an interesting analysis of the looming shift of US Treasury issuance for 2010. “After selling $1.9 trillion of short-term securities to finance President Barack Obama’s efforts to end the worst recession since the 1930s, the Treasury plans to lengthen the average due date of its outstanding debt to 72 months from a 26- year low of 49 months. That may mean boosting sales of 10- and 30-year bonds by 40 percent over the next year to $600 billion…”.
As everyone knows, this week ends the Federal Reserve’s $300 billion QE program of monetizing the US government debt by … …READ MORE
China and the New US Treasury Nominee
In an essay released Monday in Beijing, Chinese central bank governor Zhou Xiaochuan called for a creation of a new currency to eventually replace the US dollar as the main global reserve currency. This joins Russia in making a call to shift the global economic fulcrum away from the policies of the United States and wealthy nations. The currency impact was immediate as the Chinese Yuan dramatically strengthened in off-shore (NDF) trading.
As the world’s largest holder of US dollars as a reserve currency and US Treasury securities, China appears to be growing more and more assertive over it’s rights. … …READ MORE
