There is a much better alternative. Finally, the Chinese want to buy products and services from the United States, travel as tourists to their shores and acquire shops and real estate. By encouraging the expansion of domestic trade and consumption, China`s compensation would increase in US dollars, which would achieve the objectives of both maintaining exchange rate stability and gradually resolving balance of payments problems, while a yuan is unlikely to register25, pending monetary appreciation, Chinese employers are less likely to expect higher compensation, as they would expect them to be compensated. less to export. On the other hand, increasing China`s dollar income would achieve this and many other goals.26 To achieve such high incomes, a properly negotiated and stabilized yuan/dollar rate – as part of a new Bretton Woods agreement – must be part of resolving international trade issues, which are now at the top of the new government`s agenda. The Bretton Woods system, which fixed the main currencies (the franc, pound, mark and yen) on the dollar, while the US dollar was pebbed to gold (price set at $35, set since Roosevelt`s devaluation in 1934), worked well as long as the gold anchor corresponded to a very strong American economy. The market expected and demanded from the United States a solid fiscal base – essentially guarantees – to support its obligations, as well as a commitment by the parties to the agreement to expand trade and commerce “equitably”. The solution for the United States, For Europe and for many other countries, including China, strengthens the negotiation of a credible variant of the Bretton Woods agreement and the stabilization of exchange rates. Such an agreement would allow for rare and occasional devaluations if certain countries` guarantees are severely affected. At the same time, it would also impose sanctions on countries that accumulate reserves. However, this system only makes sense if it is seen as part of a long-term expansion of trade around the world and if it is a system that would contribute to the maintenance of such an objective. Countries that insist on the centralization of economic activity could not be part of such an agreement35 In the meantime, countries that insist on the accumulation of reserves would be penalized. Although some argue that Germany should now accept the communitarisation of the debt of the EU28 Member States, I see no chance that Germany will accept communitarisation as a solution – and neither should it.
The best solution would be to take up the neglected second clause of the Bretton Woods agreement and allow countries that behave badly to withdraw, devalue once and perhaps be admitted again after years of disciplined behavior. . . .