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November 17, 2009 (LPAC)— Just hours before Obama landed in Shanghai, for his first state visit to China, Liu Mingkang, the head of China's Banking Regulatory Commission, issued a broadside against the hyperinflationary theat of continuing the Ben Bernanke/Larry Summers "carry trade" in the dollar, with interest rates near zero. Speaking at the International Financial Forum in Beijing on Sunday, Nov. 15, Liu spoke bluntly, saying that low interest rates in the U.S. have "seriously affected global asset prices, fueled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies." Liu's remarks have received wide coverage, in the U.S. and internationally.

Bank of Japan Governor Masaaki Shirakawa added his voice to the sharp Chinese criticism with only slightly less harsh statements. Speaking in Tokyo this morning, at the Paris Europlace Financial Forum, Shirakawa cautioned, "There are ... risks involved in continued low rates," which will lead to a substantial increase in long-term interest rates by increasing inflation. "Monetary easing in advanced economies has stimulated capital inflows to emerging economies," and if emerging nations continue to recover at a faster pace than advanced ones, they "might overheat and experience financial turmoil, triggering a recession." Up until now, Japan has tacitly supported U.S. financial policy, at least publicly.

On the western side of the Pacific, however, monetarist idiocy still reigns, with both Paul Krugman and Niall Ferguson (with Moritz Shularick of Free University of Berlin) attacking China in a pair of op-eds, for taking advantage of poor, suffering U.S.A. by refusing to upvalue the renminbi. Krugman attacks fixing the yuan-dollar exchange rate as unfair; Ferguson says forcing China to revalue its currency will kill the monster he calls "Chimerica." These calls were echoed by IMF Managing Director Dominique Strauss-Kahn, who spoke in Beijing on Monday, where he "expressed support" for the dollar, and attacked the yuan/dollar peg by calling for a stronger yuan. Appreciation of yuan is part of "package of necessary reforms ... [and China] is facing much political pressure externally to appreciate," he said.

Uttering unlimited falsities, Ambrose Evans-Pritchard also denounces China in his Monday column for "exporting overcapacity to the rest of us on a grand scale, with deflationary consequences." By keeping the yuan pegged to the dollar, "Beijing is dumping its unemployment abroad," he says, meaning that "at some point, American workers will rebel." Clearly trying to get "you and him" to fight, he quotes some of Obama's ill-chosen words, and says "is that a threat?"