The currency may well be undervalued, but a significant rise in the RMB, especially if it is countered domestically by an increase in credit at lower real rates, might actually make the global imbalances worse and, more worryingly, cause China’s debt burden and capital misallocation to rise.
One clearly important factor is the extension in July of 2010 of unemployment insurance to cover workers who have been out of work for 99 weeks instead of having their payments end after 6 months of unemployment.
Economics is at the start of a revolution that is traceable to an unexpected source: medical schools and their research facilities. Neuroscience – the science of how the brain works – is beginning to change the way we think about how people make decisions.
The most effective way for the US to reduce overall inequality that will help the largest number of young persons is by finding ways to bring American high school and college graduation rates up to the levels achieved by the other nations.