On January 19, the Wall Street Journal published a letter that was a condensed version of my response to an article by Edward Lazear on January 8. My complete response follows. Edward Lazear argues that China’s massive government intervention in the currency markets—more than $3 trillion in the past 10 years—has caused no significant harm to the world economy. If true, this would be an astonishing endorsement of bureaucratic meddling in free markets. Of course, it is not true. Lazear acknowledges that China manipulates its exchange rate, but he claims that exchange rates have essentially no effect on trade. He bases ... (full story)