Seems that US Treasury Secretary, Timothy Geithner is going to testify before a Senate committee that China has been manipulating the value of the Yuan against other currencies especially the dollar. There is a call to label China a ' currency manipulator ' which will allow the US government to apply trade sanctions against China. Predictably China has reacted with anger saying the value of their currency is a sovereign matter and, anyway, raising the value of the Yuan will not reduce balance of trade with the US. This really seems so childish. If China claims the right to set the value of the Yuan then surely the US has the right to set the value of the dollar. The US could set the value of one dollar at, say, 3 Yuan for all imports from China and there is nothing China could do about it. Hoist by its own petard, as it were. Maybe the US is unable to take any action because that would be inflationary and US companies, who have shifted to China to take advantage of low labor costs, will howl. Thus by artificially maintaining a low exchange value China is not only a creating trade imbalance but causing a huge transfer of american jobs to China. Meanwhile Japan is buying dollars to weaken the Yen, a maneuver destined to fail. Japan suffers from huge public debt and wasting money in the currency market seems silly. One would have expected the government to buy back its bonds. This would reduce its public debt, reduce interest payment and inject liquidity into the economy encouraging people to spend more. Are economists tempted to think of complicated solutions rather than common sense ones to appear more erudite? No wonder the world is in such a mess.