PBOC Adviser Says Obama Wrong to Urge Yuan Gains to Curb Surplus

(Bloomberg) Chinese central bank adviser Li Daokui said U.S. President Barack Obama is wrong to urge yuan appreciation to reduce China’s trade surplus with the U.S.

Overly rapid gains in the yuan will hurt both China and the U.S., Li said in an interview with state broadcaster China Central Television today. Overly rapid yuan gains would hurt Chinese employment and it would hurt U.S. consumers as exports become more expensive, Li said.

In other words, he’s maybe telling us “it’s for our own good, so stop trying to kill the goose that’s laying your golden eggs, stupid yankee monetarist. Just enjoy while it lasts and stop acting the fool.” ???

China rolls out measures to fight inflation

(Xinhua) The State Council, China’s Cabinet, announced Sunday a slew of measures to rein in rising commodity prices to ease the economic pressures on the people. Local governments and departments are required to boost agricultural production and stabilize supply of agricultural products and fertilizer while reducing the cost of agricultural products and ensuring coal, power, oil and gas supplies, the State Council said in a seven-page circular. Local governments must also temporarily disburse subsidies, the circular added. Local authorities were also ordered to establish coordinated social-security mechanisms that promise a gradual rise in basic pensions, unemployment insurance and minimum wages. China’s consumer price index (CPI), the main gauge of inflation, rose to a 25-month high of 4.4 percent in the 12 months to the end of October. The hike was mainly due to a 10.1-percent surge in food prices. Food prices have a one-third weighting in China’s CPI calculation.

When food prices go up, the old guard looks to supply side measure to bring them down.

The western educated kids use the ‘monetary policy’ they learned in school- hike rates, etc. and somehow cool demand by adding interest income, etc- so inflation expectations don’t rise while markets are allocating and adjusting via by price.

Apart from the fact that the currency is a public monopoly and inflation expectations don’t particularly matter, what the old guard knows for a fact is that market forces have no qualms about allocating you out of office.