In a speech Friday, Fed chief Ben Bernanke was unusually critical of China for its currency manipulation and trade surplus. Behind the war of words is a clash of civilizations: freedom vs. authoritarian control.
AFP PHOTO/Frederic J. BROWN/NEWSCOM
The world’s top central banker – not someone normally this direct – mentioned China by name in pointing a finger at those countries that undervalue their currencies in order to boost exports.
Speaking at the European Central Banking Conference in Germany, Mr. Bernanke even blamed China for about half of the $5 trillion in surplus money accumulated worldwide by such offending export-oriented countries.That surplus is causing an imbalance which is – and here’s the jab from the Fed chief – preventing a global economic recovery.
Unless China lets the value of its currency float on world markets, the US will need to take strong measures to boost its own economy. The Fed did just that last week by starting to buy $600 billion in US Treasury bonds, an act known as “quantitative easing” which lowers US interest rates.