RMB appreciation won't solve global imbalance
Updated: 2010-10-06 15:51
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Large Medium Small NEW YORK - Appreciation of the Renminbi (RMB) won't solve the global imbalance, because in any case the United States will continue to have large trade deficit, Nobel economics laureate Joseph Stiglitz said here Tuesday.
"We may start to import textile from Bangladesh and Sri Lanka, but we will not start to produce textile ourselves. We will continue import from other countries," he told reporters at a conference in Columbia University.
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"The basic problem in our macro-economy is that the United States saves too little," he said. "Our household saving rate went down to zero, now our household saving is increasing, but our government, national saving rate did not change, because the increasing deficit." "Even China consumes more, most of the consumption will not go to the importing from the United States," said the economist.
He also criticized the current monetary policy in the United States and the European Union, and decried its impact on global growth.
"There is lots of instability caused in part by the flood of liquidity from the Fed (US Federal Reserve) and the ECB (European Central Bank). The irony is that the Fed is creating all this liquidity with the hope that it will revive the U.S. economy. It is doing nothing for the US economy and causing chaos for the rest of the world," he said.