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I don't see how it can. "Germany" doesn't make FX purchases in the open market, so far as I know. The ECBuBa might, but you can't distinguish a particular German FX flow in that. Also, the ECBuBa has some very valid reasons to buy USD, after it got caught with its pants down during the last almost-collapse of the eurodollar funds and had to be bailed out by the Fed. It would be irresponsible not to maintain a much larger prudential dollar reserve than it was doing pre-crisis.

None of which is to say that Germany isn't a currency manipulator, just that the definition doesn't really parse for individual members of a currency union. I'd argue that Germany in fact is a currency manipulator, and the whole point of the €-Mark, as the Germans saw it, was to be able to do such manipulations without buying foreign currency in the open market to support it, something the Germans have a sentimental aversion to.

But I also have very little sympathy for the Americans' whining about other countries' currency policies. The Americans are free to discount the dollar at any time; they do not need permission from the ECBuBa or the PBC to do so. But they don't want to do that, because the tribute they collect from the colonies is settled in USD, so doing the obvious, easy thing to counter BuBa or PBC shenanigans (real or perceived) would reduce the value of incoming tribute flows. So instead they posture and try to browbeat other people into subordinating their currency policy to the US (even further than is already the case).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 4th, 2017 at 11:09:59 AM EST
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