Paul Tudor Jones: Here's Why China's Currency Manipulation Is Like My Foot

PTJ back in the day

In his latest letter to investors, Paul Tudor Jones likens the failure of the Chinese to re-equilibrate the RMB/USD exchange rate to how a serious foot problem years ago required a chiropractic-like strategy called egoscue to re-align his spine and hips.The Chinese have set the RMB/USD peg artificially low, says Jones, and soon the US, the main buyer of China’s exported goods, will no longer be able to afford them.

The key similarity shared by all this and PTJ’s foot, says Jones, can be summed up by the creator of the Egoscue method, who said:

“The pain you feel in your left foot is just the symptom. If you treat it symptomatically and ignore the structural issue, you will never solve the problem.”

Paul Tudor JonesPTJ circa today

But China’s problem, of course, is much bigger than PTJ’s foot.PTJ explains, via Dealbreaker:

The lone serious attempt to impose a cost on China’s distortion of global financial markets this year was congressional action on the Currency Reform for Fair Trade Act, known as the Ryan Bill, which would allow US companies to file complaints against China’s currency policies with the Commerce Department, and would empower the Department to levy tariffs and countervailing duties on imports from China.

The Ryan Bill passed in the House of Representatives a few weeks ago by a vote of 348 to 79 but is stalled in the Senate. It drew immediate ire from the Chamber of Commerce as well as from eight former US Trade Representatives to China. But it was the very advocacy of the Chamber of Commerce and those Trade Representatives that led us to our current trade deficit. As Einstein said, “Problems cannot be solved by the same level of thinking that created them.”

That so many Americans continue to accept this suppression of a variety of exchange rates against the dollar is probably a function of the fact that for so long this suppression provided benefits such as cheap goods and cheap credit.

He goes into much more detail on how “like zombies, many Americans still cling to the naive belief that we can return to the good times.” Click here to read the full diatribe >

For more on PTJ, click here to see the amazing life of Paul Tudor Jones >

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