

China Devalues Its Currency as Worries Rise About Economic Slowdown - bpolania
http://www.nytimes.com/2015/08/11/business/international/china-lowers-value-of-its-currency-as-economic-slowdown-raises-concerns.html?hp&action=click&pgtype=Homepage&module=first-column-region&region=top-news&WT.nav=top-news&_r=0

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ethanhunt_
Additional discussion:
[https://news.ycombinator.com/item?id=10038727](https://news.ycombinator.com/item?id=10038727)

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flexie
So, now we are going to hear a lot about how China should let the renminbi
float freely, let the market set the price etc.

Anyone here knows whether any of the western currencies truly float freely?
Don't all western central banks and/or governments intervene?

Does the dollar float freely? Euro?

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dageshi
The big currencies like the euro and dollar mostly do. That's not to say that
government and central bank policy doesn't have an effect, central banks
influence rates with interest rates and quantitive easing, during the Bush
presidency a law he passed regarding taxation levels on profits held outside
the US contributed to the dollar strengthening. But the degree to which the
dollar, euro and pound can fluctuate vs each other is massive compared to the
yuan.

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hacknat
I wish, wish, wish, wish, that the Fed would respond in kind. Inflation just
hasn't been an issue in this country. Everyone is so terrified of 4-5%
inflation, but they forget that we lived through a decade (the 70s) averaged
over 5%. We all survived. It's time to end this ridiculous liquidity trap and
punish the hoarders.

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trhway
>It's time to end this ridiculous liquidity trap and punish the hoarders.

actually, the low rates force the investment. The higher rates create
hoarders.

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sz4kerto
Inflation and base interest rates are not the same thing, though they usually
affect each other. If inflation is higher than the base rate, then people tend
to spend more as money is losing the purchasing power.

The problem is that inflation can't be simply 'set'.

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trhway
>then people tend to spend more as money is losing the purchasing power.

They spend on smaller things, and are losing the ability to spend on bigger,
long term things like cars, houses, education, starting their own business,
etc.. I lived though different levels of inflation - USSR and Russia of 199x -
and i can say no inflation is good. The inflation we have right now in US - 2
times in 10 years - is among the lowest i've experienced and about the best
economic environments.

