The biggest currency manipulator on the planet

US Dollar Index, 1973 to 2012

Here is an interesting one: everyone “knows” that China is the biggest currency manipulator on the planet. After all, the US press almost constantly drives the message home, blaming all of America’s woes on China who, they claim, has kept the yuan artificially low.


The reality is a little different. The chart above shows the US Dollar index (DTWEXM, blue line); essentially an average of the US Dollar compared to six of our most important trading partners. You can easily observe that since 1985 the US Dollar has been sharply declining in value, off from a high of 148.12 (Feb 25th 1985) to 75.39 (June 8th) – a loss of some 49%. Even since The Great Recession ended the US Dollar has declined some 3.53%.

And don’t be fooled by Washington’s protests, America has far more control over the US Dollar’s strength or weakness than many might think. Is the decline in value of the US Dollar compared to other currencies a magical event or engineered? Curious America won’t formally designate China as a manipulator but, then again, who is paying America’s bills? Of course those bashing China conveniently forget one very simple fact: the yuan TRACKS the US Dollar. Which, due to American profligacy, has been declining in value.

So who is the biggest currency manipulator?

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