By John Tamny of Forbes
It’s regularly said that the Chinese yuan is cheap, but since the yuan is defined in dollar terms, the Chinese currency is only cheap because the dollar is. As for the suggestion that its economic strength necessitates a stronger currency, no economically powerful country would ever follow such a policy because it mistakes the sole purpose of money which is for it to serve as a stable measure of value much as the foot is an unchangeable measure of length. The various establishment economic types who suggest the yuan is too weak show a misunderstanding of what capital is, the purpose of money as the value-assigner for actual product exchange, the major importance of the debtor/creditor relationship, and exchange itself.
