… as the letters section often does. The Journal deserves some respect for printing stuff like this even though they lean statist in a big way.
monetary policy shifts by the Federal Reserve the essence of currency manipulation?
May 18, 2015
Sen. Rob Portman has a curious way of looking at changes in exchange rates (Letters, May 13). If they result indirectly from monetary policy shifts by central banks, including our own Federal Reserve, they are legitimate. If they result from the direct intervention in the foreign-exchange market by foreign central banks, they are currency manipulation. Somehow, the U.S. Treasury is supposed to know the difference.
The semiannual Treasury reports Sen. Portman cites have never identified the U.S. as a currency manipulator. Yet in a world in which flexible exchange rates cover a great deal of international trade and in which international capital is highly mobile, monetary policy shifts by the Federal Reserve (or any central bank) to boost domestic economic activity do so primarily through the foreign trade sector by depreciating the dollar, thereby encouraging exports and discouraging imports. In so doing, the U.S. and other countries pursuing such an expansionary policy export their unemployment abroad. Isn’t this the essence of currency manipulation?