The empty posturing of the US Congress and its ultimate capitulation to the Treasury, The Federal Reserve, the IMF, the WTO, and finally the Chinese government left little to the imagination as to who was really in charge of the ballooning US trade and budget deficits and balance of payments. And five years later we find the same stage management and actors on the same set, Lindsey Graham and Charles Schumer engaging in the same stale and tired posturing. Little mentioned is the obvious fact that any devaluation of the Yuan/Renminbi runs headlong into economic complexities which disallow any so simple a solution as a mere currency revaluation. First of all, as one commentator recently averred, "the Chinese own the United States" and there will most likely be no appreciable revaluation of the Chinese currency due as well to the endemic Chinese propensity for resisting foreign pressure and influence in its domestic affairs, especially when it holds all the trump cards, mostly in the way of $2.27 T in foreign reserves , a majority of which are in the form of US Treasuries. Secondly as spoken of above, according to 1979 IMF article IV, the IMF itself is the enforcer on any issue of exchange rates through the mechanism of its SDR (Special Drawing Rights). Any IMF country is bound to seek IMF approval if the country in question desires to change par value compared to the US$ with the establishment of SDR "freely" determined exchange rates.
Of course the now rapidly deflating US housing bubble could not have been effected without the intervention by Mr. Greenspan and the Federal Reserve in the way of the now infamous Greenspan Put and aggressive loose monetary policies accomplished by the Maestro during his tenure at the Federal Reserve but most dramatically from the dawning of the new millennium onwards with the critical participation of the Chinese and their massive purchase of US Treasury bonds and the "vast recycling of insupportable US deficits by China and other creditor nations" In effect Greenspan exported US inflationary policies into the international markets and in the process fueled globalization and helped create the new economic engine in China and SouthEast Asia. Without the acquisition by China of US$ through US securities, higher interest rates would be inevitable and with that the end of the Greeenspan housing bubble. It has been suggested that Greenspan and Federal Reserve's interest rate manipulation concommittant with massive injections of liquidity have radically disrupted the natural K-Wave cycles, artificially extending the summer cycle with drastic and dire consequences for the US and World economies which are now plunging headlong into a grotesquely exaggerated and horrendously distorted K-Wave winter cycle. See Prophets, Profits and Loss on Kushmonster.
In the present US/Sino totentanz, which seems to be entering into a fast paced crescendo begging for an ultimate denouément, the Chinese have once again parlayed their previous 2+% "revaluation" and once again have promised further and significant revaluations in the future. They, along with the Japanese, have pared their purchases of US Treasuries, requiring further vast monetization of the US debt by the Federal Reserve and a host of back door and shadowy buyers. Schemer and Graham's Punch and Judy show going on in Washington regarding Yuan revaluation is, as in 2005, just so much window dressing designed to impress a credulous American populace that there really is somebody at the wheel and rudder of the ship of state in control of economic policy. In reality the US government long ago ceded any authority or responsibility for credible economic policy to an international economic order predicated on the exportation of american industry and intellectual property, the subsequent decimation of its productive employment base, the devaluation and elimination of its world reserve currency in service to impossible and unsustainable levels of debt, and the employment of its endemic chauvinistic military adventurism as a mercenary police force in service to international drug cartels and global corporate interests. Trade war? The bad actors in Washington could only hope for such a sanguine outcome to what can only properly be described as an already accomplished national capitulation.