He seems to take the same "aim and effect" (as Julia referred to it) approach to the issue that I do:
In various comments and other places I keep seeing people compare European complaints about the weak dollar to American complaints about the undervalued renminbi. It’s a false equivalence, which should be obvious if you think about the basics of the situation.
What the United States is doing is an expansionary monetary policy in the face of a depressed economy and threats of deflation; what else do you expect us to do? Now, one effect of that policy, if it isn’t matched abroad, is a weaker dollar — but that’s not the goal of the policy.
Beyond that, the overall effect of quantitative easing in America is expansionary for the world economy as a whole: expansionary in the United States, and ambiguous for the rest of the world. (It’s ambiguous because there are two effects: the weaker dollar tends to reduce the US trade deficit, but a stronger US economy tends to increase the deficit, with the net effect uncertain.)
Now compare this with China’s situation. China isn’t fighting deflation — it’s fighting inflation, so the undervaluation of the yuan has to be accompanied by restrictive credit policies domestically. (China can separate exchange rate policy from domestic monetary policy because it has capital controls). The overall effect of the policy is therefore to reduce, not increase, world demand — and the effect on foreign economies is clearly negative.
The policies, then, aren’t at all equivalent.
I'm not sure I support some of his related points, but at least on the narrow issue of whether a currency peg at an undervalued exchange rate is equivalent to quantitative easing, I agree. However, I would add that they can have similar effects, and at a certain point a very strong "effect" starts to make the absence of "aim" seem less important. But I'm not sure where that point is.
