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China Is Already Doing Janet Yellen's Job for Her
A strong currency has created headwinds for the U.S. economy through a range of channels. Latest actions of the Chinese central bank will intensify the negative impact by fostering more dollar appreciation. The U.S. already runs a significant trade deficit with China, and a 1.9 percent yuan devaluation announced Tuesday will further exacerbate it. A stronger dollar weighs on U.S. growth through weaker exports, cheaper imports, devaluation of overseas profits and a sharp increase in domestic labor costs in non-dollar terms. It creates a more restrictive economic policy, thereby accomplishing the same goal as higher ... (full story)