Warren Mosler: Obama’s China Policy Will Destroy
U.S. Jobs and Create Inflation
Noted Economist and Senate Candidate: Forcing The Yuan Up and The Dollar Down Is The Worst Possible Option For Creating U.S. Jobs
Middletown, CT. – September 28, 2010 – Warren Mosler, internationally renowned financial and job creation expert and Connecticut’s Independent Party Candidate for the US Senate lashed out today at the Obama administration’s weak dollar policy in relation to China. “The first thing forcing China to revalue its currency will do is destroy US jobs, not create them,” said Mosler. “When China causes its currency to appreciate against the dollar, thus driving the value of the dollar down, it gives Chinese workers what amounts to a pay raise which will be passed along to U.S. consumers in the form of higher prices – in other words, inflation. These higher prices mean U.S. consumers can buy less, which results in fewer American jobs.”
According to available data, the U.S. lost approximately 8 million jobs two years ago because sales fell. When sales are restored, jobs will be restored. “A restaurant, department store, or any other business doesn’t lay off staff when they are filled with customers. So, giving Chinese workers a pay raise that will kill U.S. sales, cause inflation, and cut Americans’ spending power is not the way to bring this economy back from the brink or create the American jobs we desperately need!” asserted Mosler. In contrast, Mosler’s plan to create good-paying private sector jobs features a full payroll tax (FICA) holiday. That will make sure our consumers have enough spending power to be able to buy both whatever we can produce here at home with full employment, plus whatever the rest of the world wants to sell us, just like a decade ago when unemployment was under 4%, growth was strong, inflation low, and net imports were at record levels. Additionally, Mosler is concerned that Obama’s current inflationary policy can rapidly escalate into a debilitating trade war with China. In fact, in what amounts to a dangerous, high stakes international game of chicken, China has already announced it was placing a tariff on US poultry exports in retaliation for U.S. demands for currency revaluation.
Richard Blumenthal’s lock-step position with the Obama White House on China and Linda McMahon’s conspicuous silence on this critical issue vividly show that they are simply not qualified to create the 20 million new jobs we desperately need. “If you needed heart surgery, you wouldn’t let just anyone do it. In this time of economic emergency, I am the candidate that has the necessary knowledge, experience and in-depth understanding of our economy on a nuts and bolts level to make effective policy,” said Mosler. Quite simply, now is the time to take decisive action and Warren Mosler is the only candidate in this race who is qualified for the job.
About Warren Mosler
Warren Mosler is running as an Independent. His populist economic message features: 1) a full payroll tax (FICA) holiday so that people working for a living can afford to buy the goods and services they produce. 2) $500 per capita Federal revenue distribution for the states 3) An $8/hr federally funded job to anyone willing and able to work to facilitate the transition from unemployment to private sector employment. He has also pledged never to vote for cuts in Social Security payments or benefits. Warren is a native of Manchester, Conn., where his father worked in a small insurance office and his mother was a night-shift nurse. After graduating from the University of Connecticut (BA Economics, 1971), and working on financial trading desks in NYC and Chicago, Warren started his current investment firm in 1982. For the last twenty years, Warren has also been involved in the academic community, publishing numerous journal articles, and giving conference presentations around the globe. Mosler’s new book “The 7 Deadly Innocent Frauds of Economic Policy” is a non technical guide to the actual workings of the monetary system and exposes the most commonly held misconceptions. He also founded Mosler Automotive, which builds the Mosler MT900, the world’s top performance car that also gets 30 mpg at 55 mph.
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“When China causes its currency to appreciate against the dollar, thus driving the value of the dollar down, it gives Chinese workers what amounts to a pay raise which will be passed along to U.S. consumers in the form of higher prices – in other words, inflation. These higher prices mean U.S. consumers can buy less, which results in fewer American jobs.”
Warren, why should there be an inflation – more expensive Chinese goods should mean less import for US – the US consumers would spend less for Chinese products and services. The prices of all domestically produced US goods and services shouldn’t be changed. US doesn’t import oil from China or other raw materials. US businesses which export should be more competitive.
It looks to me like US government would like to push an export driven growth which is not sustainable anyway. Am I wrong?
to the extent cpi includes things bought from china and those prices go up cpi goes up, even with substitution, which comes only with a lag, if at all. what happens initially is the trade gap rises due to the higher dollar prices of imports. they used to call that the j curve effect.
the reval channel is making imports more expensive and we call rising prices inflation
What’s optimal inflation control under MMT? Grassroots? Consumers being aware of supply and holding off on a purchase until the price comes back down? Communicating “spending desires” up the supply chain to let suppliers know there’s a larger market at a lower price?
the current system to me looks fundamentally deflationary. what we call inflation always seems to come from external crude oil shocks. So the first thing i’d do is get long term contracts for crude at fixed prices from Canada and Mexico where we could probably get enough to not be subject to changes in spot prices anymore
Rodger Mitchell makes the case that recent inflation is oil-driven.
Rodger Malcolm MItchell, What will cause the next inflation and Is inflation too much money chasing too few goods?
China is buying up resources to hedge.
Fears of Chinese land grab as Beijing’s billions buy up resources
no comments on the pun- I still laugh every time I see it.
In fact, in what amounts to a dangerous, high stakes international game of chicken, China has already announced it was placing a tariff on US poultry exports in retaliation for U.S. demands for currency revaluation.
Trade wars unplucked! Wonder which egg-head in the administration managed to hatch such a bird-brained plot. Anyway, thanks for helping to keep those poultry in motion. Stock markets should react positively.
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