ALL countries manipulate their currency to their perceived advantage. ALL COUNTRIES. End Of Story.....

Many elitist economists, with far too many initials behind their name, are using the same old, tired excuse that some emerging countries (namely China) are manipulating their currency, and should allow it to ‘float’ in the open market.

They want China to allow their currency to rise, just as they insisted Japan do under the Plaza Accord in the 1990's. However, Chinese citizens (not just the government) have suffered enough under western mandates, and are tired of ‘kowtowing’ to western demands.

Yet the bigger truth is, the US is the one who has always manipulated their currency. It is the US who wrote the book on manipulating currency that everyone on the planet has read and now follows.... When the Fed raises or lowers interest rates, either to control inflation or to encourage more borrowing to stimulate the economy, it is in fact manipulating the currency. (See Economics 101 blog entry). When banks are allowed to create money (see Banking 101 blog entry), they are manipulating the currency.

See also a great article by Robert McTeer, published in Forbes: http://bx.businessweek.com/manipulation-of-currency/view?url=http%3A%2F%2Fc.moreover.com%2Fclick%2Fhere.pl%3Fr2679046982%26f%3D9791 (just copy and paste into your browser).

In a recent Reuters story Glenn Somerville and Simon Rabinovitch ask:
“WHAT WOULD HAPPEN IF CHINA LET ITS CURRENCY APPRECIATE?”
“Theoretically, the cost of Chinese-made products would rise for consumers around the world. If prices rise sufficiently, other countries' goods might be substituted for those China now makes.... If Chinese consumers were empowered with a stronger currency, they might become more aggressive importers, perhaps even swinging China's trade surplus to deficit.” (emphasis added)

These writers, who have probably never been to China, ask “What would happen if China let its currency appreciate? I’ll tell you.... There would be massive unemployment, that would surpass even the Great Depression. With the US Labor Force, estimated at 153.7 million in 2007, an unemployment rate of 10% equals 15 - 16 million unemployed. A 10% unemployment figure in China equates to nearly 100 million unemployed. Lets all say that number again. 100 MILLION.

What these writers, and many other so called China experts fail to recognize is that the spending habits of Chinese citizens were formed thousands of years ago, not by the current regime in Beijing. When the ancestors of these authors were guarding against demons by wearing a garlic necklace and still hiding out in caves, Chinese traders were already practicing their economics along the original 'silk road', and these johnny-come-lately Keynesian's (and/or supply-siders also) don't have a clue....
Additionally, the Chinese are not stupid, and they have witnessed the economic problems that occurred in Japan since BOJ allowed its currency to appreciate, and as mentioned they really aren’t interested in reliving these same disastrous problems.

Everyone wants the Chinese consumer to increase their consumption rate, including the bosses in Beijing, but allowing the RMB to appreciate overnight would cause much more harm than any perceived good that may come in 30 years.
Many people in China want to be more like the west. Many elitist US economists want China to be more like the west.... I ask “why?”   Is it so that China can experience all the same economic problems that prevail in the west. Which currently include financial meltdowns, high unemployment (which BTW is going to get much, much higher in the US) with the long term potential for growth gloomy at best.

So who manipulates their currency? Every country.... and frankly, this is one time I am hoping the Chinese do NOT "want to be like Mike"....