Essay: The China Currency Conflict Explained

People are pissed off about China’s exchange rate. The hubbub has gotten so pervasive that even those of us who couldn’t find China on a map of China are forced to read all about those Communist cheaters in our daily newspaper, or would be if we subscribed to one.

In order to save the rest of you from the headache of trying to keep up with what’s what and who’s Hu, I made a personal sacrifice in the way that only a free person living in a democratic society truly can, fired up my laptop, and learned everything worth knowing about the issue on Wikipedia. Here is the executive summary in condensed form.

An exchange rate is what you can get for a dollar, which these days is about three squares of Charmin. The problem is that in China you can get ten squares. The rice diet requiring one square max, the Chinese are able to save four squares and convert the remaining five squares into HP computer batteries, which are then sold to unwitting American college students for less than the sales tax on a sneeze. Bless you, by the way. That will be two laptop batteries.

The Chinese desire compensation for the aforementioned goods provided. They grudgingly accept pieces of paper with George Washington’s face on them, but what they really want is paper bearing a portrait of Mao Zedong, which no one outside of China is allowed to have because it might get democracy on it. Thus China is stuck holding dollars it doesn’t know what to do with. Though it may threaten to use them as toilet paper, we know this is an empty threat because a dollar bill is only one ply.

Congress growls that unless China lets us fairly trade Benjamins for Beijings it is going to tax the hell out of lithium battery imports, but it does so while looking for an outlet at which to charge its imported tablet PC, smart phone, mp3 player, Bluetooth headset, portable nose hair trimmer, noise-cancelling headphones, and Mickey Mouse nightlight.

China insists that the problem lies in the dollar being too thin. Treasury Secretary Tim Geithner says, hey, at least it floats. Using its electronic dictionary to translate, China says, “Happy friendship relxa the greatness!” Geithner asks what the hell is “relxa”, is that even a word? China says it’s right there on page 613 of the Amrican Hertigage Dictionary. Geithner asks to see the receipts from the royalty payments made to the American publisher. Hu Jintao says, “Hey, what is that fantastic thing right behind you?” Geithner turns around to look and Hu pegs him in the dollar with a yuan.

Meanwhile the U.S. economy is going down the toilet. The Federal Reserve throws a wad of dollars down there after it, clogging up the whole mess. President Obama knocks on China’s door and asks to borrow its plunger. China says, not until you give back the riding lawnmower you borrowed last summer and never returned. Obama says, I asked you first. China says, tough shit. Obama says, exactly, so do we have a deal? China says, sure, we have a deal. Obama says, okay, then can I have the plunger? China says, what plunger? And there you have it.

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