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  Trashing the dollar to save the economy
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ContributorPatrick 
Last EditedPatrick  Sep 27, 2010 03:11pm
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CategoryOpinion
MediaNewspaper - Los Angeles Times
News DateSaturday, September 25, 2010 09:00:00 PM UTC0:0
DescriptionMost Americans have never traveled abroad. U.S. economic policy may guarantee that your dream trip remains deferred.

If something's got to be sacrificed to put the domestic economy on the road to a sustainable recovery, the dollar's value against other currencies seems a good candidate.

That's what the Federal Reserve signaled this week — and what Congress, in no uncertain terms, is telling the Chinese.

A new devaluation of the buck carries risks. Always high on any Wall Street list of potential calamities is the idea of a sudden collapse of the dollar. That still seems remote, though perhaps less so than in the past.

Fed policymakers seem prepared to take their chances: They strongly hinted in their post-meeting statement Tuesday that they're ready to flood the financial system with more dollars to try to push longer-term interest rates lower.

That helped drive the greenback's value to the lowest level since March against a basket of six other major currencies, including the euro and the yen.

Meanwhile, Congress made clear that it's running out of patience with China over that nation's policy of holding its currency, the yuan, artificially low against the dollar to keep Chinese export prices cheap. The U.S. House Ways and Means Committee on Friday approved a bill that could boost tariffs on China's exports to the U.S. if Beijing fails to agree to let the yuan rise in value.
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