Gresham's law, extended by force

A few weeks ago, a man by the name of Bernard von NotHaus was in the news. If you Google the phrase "unique form of terrorism", you can read all about him. In short, he minted coins in a variety of metals and offered to "exchange" them for Federal Reserve Notes -- those pieces of paper you carry around in your wallet, usually referred to as "money". (His original site is here, but Wikipedia is probably the best place to start if you want to know more.) In 2007, the government arrested Mr. von NotHaus and charged him with a number of crimes amounting to "counterfeiting". He wasn't actually minting pennies, nickels, etc.; he was simply minting coins in denominations similar to U.S. currency that the government claims bears too close of a resemblance to official U.S curency. The government accused him of trying to "replace" the official currency of the U.S. He was eventually convicted of these "crimes", with the government going so far as to declare him a terrorist, and his case is now on appeal.

This whole episode seemed to me to be an interesting application of Gresham's law. Gresham's law is the idea that "bad" money chases out "good" money. What that means is that if there are both "bad" and "good" money in an economy, the good money will eventually disappear from that economy. Since anything could be money (as Lew Rockwell points out: shoes, shells, flash drives, or books) and people can assign whatever value they want to that money, how do we define good vs. bad? That's where the government comes in. Instead of the people assigning value to their money, the government has assumed that role (and the authority to occupy that role). Thus, Gresham's law is more accurately stated as (looking again to Wikipedia): bad money drives out good if their exchange rate is set by law.

Let me give you a personal example of how this is so. Just last week, I was cleaning up one of the bedrooms in my home when I came upon a container full of coins. They weren't particularly special in any way; it was just the type of accumulation that occurs when you come home at the end of the night and toss the change in your pocket into a jar. Thinking I might come across some rare coins -- I was hoping for some old pre-1964 silver coins -- I decided to sort through them. I happened to know that pennies used to be made of copper and nickels, of all things, of nickel and copper. A quick Internet search turned up the fact that pennies were made out of copper up until 1982 and that nickels are still made out of copper and nickel. It also revealed that copper pennies are currently worth approximately 3 cents each and nickels about 6 cents. These coins are worth more as metal than the value given to them on their face. You can probably guess what happened next. I put all of the nickels and pre-1982 pennies into a separate pile. The rest are slated to go off to the local Coinstar machine.

Let me give you another, more obvious example. Let's say the government issues two one ounce coins, one in silver and one in gold, and stamps $50 on their respective faces so that each can be exchanged for $50 in goods. Would you spend the silver coin or the gold coin? Hopefully, you answered, "silver". At current spot prices, an ounce of silver is worth just under $40 while an ounce of gold is a bit over $1,400. When a monetary unit's face value exceeds its intrinsic value, as the silver does in the example, it is "bad" money. It will be spent, i.e. stay in circulation, as the spender believes he/she is getting a "deal" since the seller is forced by law to value the unit greater than the worth that would otherwise be assigned to it by the "market". Gold, whose intrinsic value exceeds its face value in the example, would leave circulation as people would hoard it and/or try to sell it for its intrinsic worth (i.e. they could obtain it for $50 but sell it for almost 30 times as much). This would likely remain true so long as the gold's intrinsic worth exceeds the face value, no matter how slight that excess might be. Even if gold was intrinsically worth less than its face value but still more than the silver, you would still find the silver to be in much greater circulation than the gold for the reasons explained previously.

So, what does all of this have to do with Mr. von NotHaus's situation? Let's first (try to) understand exactly what it was he was doing. To the best of my understanding, a silver Liberty Dollar one-ounce coin would be minted with some denomination on it, let's say $10. It would be produced so long as the intrinsic value of the silver in the coin remained under $10 as denominated in official U.S. currency and sold/exchanged for $10 in official U.S. currency. When the intrinsic value of the coin exceeded $10 (in U.S. currency, due to inflation of the U.S. dollar), Mr. von NotHaus would mint one-ounce silver coins with $20 stamped on their faces (and sell them for the $20 in U.S. currency). He would also exchange existing $10 coins for $20 coins. Based on the previous paragraph and definition(s), Mr. von NotHaus was actually creating his own form of "bad" money, with one important difference. There was a limit to how bad his money would get.

Let me explain this with another example. Let's say that you have a $10 bill (official U.S. currency) and a $10 Liberty Dollar which, for the sake of argument, is accepted at the stores at which you shop. Let's further assume that the food you'll eat today costs $10. Now, let's say that you stick both the coin and the bill under your mattress and wait some amount of time, during which the dollar inflates due to the Federal Reserve's money printing processes. You dig your coin and your bill out from under the mattress and go to the store only to find that the $10 worth of food you want to buy now costs $20. The $10 bill will only buy you half of what you want. On the other hand, Mr. von NotHaus will exchange your $10 Liberty Dollar coin for a $20 version, and you can buy all of your food.

As I mentioned before, Mr. von NotHaus's Liberty Dollar is still "bad" money since its face value would always exceed its intrinsic worth. However, at the point at which it becomes "good" money, the holder would actually be able to exchange it for more "bad" money, i.e. when a $10 piece's intrinsic worth becomes worth, say, $12, it could be exchanged for a $20 piece, a much better option than selling the coin for $12. In this way, while "bad" by our earlier definition, this money is a "better" option than the official U.S. currency which always loses value over time.

If the Liberty Dollar was "better", wouldn't it have eventually been naturally forced out by the market via Gresham's law? It's hard to say; that's (unfortunately) the way markets are. Markets are made up of individual actors, or people. People may have seen the Liberty Dollar as a better preserver of their wealth since it could be exchanged for greater denominations as the U.S. dollar fell in value. Had that been the case, the Liberty Dollar may have taken off. And this would not necessarily have been a violation of Gresham's law. It turns out that "good" and "bad" money (under Gresham's law) can only be compared when their values are both fixed by (the same) law. While von NotHaus may be creating "bad" money in an absolute sense, it would likely have been viewed as "better" than the current U.S. currency. Since the exchange rates of both monetary units are not set/fixed by (the same) law, it may have been possible for the "better/good" money to chase out the "bad".

Thus, the U.S. government extended Gresham's law by force. If another monetary system -- one not controlled by the federal government -- took off, the federal government's ability to print money to pay off its debt and fund its operations would have been severely limited, if not outright destroyed. I'm not sure exactly how to sum up the idea that challenges to a government-created fiat money system will be put down with force in a neat "law" like Gresham's, but if you have any ideas, feel free to share them in the comments.

***

Lew Rockwell wrote about this particular issue and had a few choice quotes:

A nation that is confident about its money’s future would not fear currency competition. A nation with a dying money uses every possible means to crush the competition.

and

[...] when the dollar became all paper, there has been a sense that its viability needs the backing of federal guns in order to thrive. This attitude is inconsistent with freedom. The right of private coinage is an essential part of free enterprise. Currency competition, especially in a digital age, is something that every country needs.

***

Bill Rounds also wrote about this issue. I think he makes a good case that Mr. von NotHaus drew the ire of the federal government, not necessarily by competing with the government, but by making his coins look a little too similar to real U.S. currency. He points out:

There are all kinds of alternate currencies in circulation in the US. Ithaca Hours, Potomacs, gift certificates, and Chuck E. Cheese tokens can all be used to barter and transact instead of legal tender coins and bills.

None of those coins have been or are being forced out of existence by the federal government. Arguably, they aren't trying to compete with the government, either, though.

It's not clear to me, from what I've read, that Mr. von NotHaus intended to defraud people or imply that his coins were legal tender or official U.S. currency. From what I can tell, he was simply trying to give them the same value as U.S. currency to make them easy to understand and trade. In the end, I have to agree with Lew Rockwell when he points out that the U.S. Constitution nowhere prohibits private coinage and even points out that it was commonplace during the settling of the West. Mr. Rounds even acknowledges that the law is, at best, nonsensical:

[...] the state of monetary law is almost nonsensical. Court opinions, federal statutes and the Constitution are logically inconsistent with one another.

***

Finally, I hope that the example I gave of a $10 Liberty Dollar round being exchangeable for a $20 round as the U.S. dollar depreciates drives home the idea of the inflation tax. By depreciating the dollar, the government is essentially stealing money from people who hold cash. This is why our economy is driven by consumption instead of saving. If your dollar is worth less tomorrow than today, then it makes sense to spend it instead of saving it.

"Saving" capitalism

[I wrote the following in response to a friend who posted this article on his Facebook page. I apologize for the lack of annotated links in this post.]

The article starts by blaming Bush for a declining market. That's not really fair. Obama is doing exactly what Bush was doing when he left office (stimulus/bailouts). That is, if Bush had been President for two more years, the economy would likely be in the exact same place it is today. 9/11, coupled with the bursting tech bubble, is what originally sank the economy. Greenspan then held interest rates down, and the Dow Jones was back up to around 14,000 in late 2007. (How's that for one-sided reporting on the author's part... only pointing to the Dow at 8,500 on Bush's last day.) Greenspan's plan backfired, though. The low interest rates created a bubble in the housing market leading to all kinds of crazy gimmicks on the banks' parts. These fell apart in late 2007, and the market tanked again.

In response, the government began bailing out banks, the auto industry, anyone who could get get their hands into the proverbial cookie jar. Bush and Obama both did it, and it was a bad idea both times. Neither of them "saved" capitalism. The problem is that neither of them (or anyone in the government) has the backbone to let capitalism do its job. Capitalism means failure for those who can't compete and for those who do it fraudulently. The bailed out auto companies fall into the first category; the banks and insurance companies subsidizing their schemes fall into the second. Of course GM and Chrysler are making cars again! The government gave them the money to do it, and the government did it because it was politically better to try to save jobs (or at least that was the thinking at the time). Nothing about that investment other than the perceived political upside was a good thing at the time. To argue now that the fact that the government made (or possibly will make) money means the investment was a good one is to argue that the ends justify the means. That is the last argument anyone should apply to the state in any of its dealings.

The problem with the economy now is that Bernanke is making the same mistake(s) that Greenspan made. He's holding interest rates down at zero. (Remember the housing bubble? Why does no one see that Bernanke's cure is actually more of the poison?) Bernanke's got huge problem, though. The low interest rates aren't working. Banks are hoarding the cash because they still have more toxic assets on their books. What's his solution? He's turned on the printing presses and is using the new money to buy U.S. Treasuries in the hopes of bringing down long term interest rates. He claims he can do this because inflation is tame. That's because banks are hording the cash he's printing. Gold is continuing to rise in price, though; the market knows what is going on. Look also at other commodities like cotton, oil, etc. They're fairly stable now, but that's because producers hedge their bets by buying futures. Come Spring/Summer of next year, prices of those items are going to skyrocket (the same effect could probably be achieved by banks finally beginning to lend again all at once), and Bernanke won't be able to stop it. He can't raise interest rates like Volcker did, because unemployment is already high. (Volcker had the luxury of being able to drive unemployment up with interest rates so he could tame inflation.) The other alternative is that China stops buying up U.S. Treasuries (it's already making noises about doing that very thing) or the entire market just loses faith in the entire system (i.e. the government's ability or intention to repay its debt). When, not if, one of those things happens, the economy is going to collapse, not just tank. Think hyperinflation like in Chile in the 70's.

Yes, it would have been bad if the government had not intervened in the economy, but the government's "saving" of capitalism makes each attempt by the market to flush out the bad stuff even worse than the previous one because it (the government) won't actually let the bad stuff be flushed out. The government isn't saving capitalism. It is destroying it by making everyone think that what we have is capitalism.

[Here are some other witticisms that I sprinkled later on in the thread.]

In response to a comment that Democrats lost the midterms because Obama/they failed to get the message out:

Getting the message out is not leadership. It's politics. And we don't need either.

And in response to a comment that Americans "got it right" in this most recent election:

Americans never get it right in any election. The government keeps getting elected.

Just... hold on a second

I came across a number of weird/wacky news stories this morning, and since I didn't really feel like writing very much, I was going to just post a few links with some commentary to accompany them. Then a friend of mine posted a link to an opinion piece entitled "Just Stop" over on the Mesa Democratic Club's website. Well, I loves me some politics, so I went over to read it. The article started out well enough (read: I agreed with it), but then it lost me. Since this friend of mine and I have agreed not to discuss politics over our social network of choice, I decided to write this post.

The article starts out pointing out that Sarah Palin is not a "political outsider", that the Tea Party is not an independent group, and that John McCain no longer has any discernible political positions outside of whatever it takes to get elected. These are all excellent points with which I could not agree more. It's at this point that our respective positions diverge.

Stop pretending that the deficit we’re all facing is the fault of President Obama and the Democratic Congress. During the Bush administration, we went from a surplus to a massive deficit, largely thanks to two wars that were never (until Obama) added to the federal budget—wars, in other words, fought entirely on credit. We compounded the problem with tax cuts that largely benefited the wealthy, and a huge Medicare increase, and all those were also on credit. When the economy tanked in fall 2008, Bush quickly pushed through the TARP bailout, adding to the deficit (but pulling the economy back from the cliff).

President Obama is not entirely responsible for the deficit. He is quickly adding to it, though. Yes, Obama added the wars to the federal budget, but that does not change the fact that they (along with the much of the rest of the budget) are still paid for on credit. And while Bush may have pulled the economy back from the cliff, he did not change it's direction; it is still headed that way under Obama.

Stop pretending that the near-ruinous economic crash that we’re still reeling from was Obama’s fault, too. The root causes stretch back decades, to a continued process of deregulating financial institutions, allowing them ever more leeway to prey on the vulnerable, to sell mortgages to people who couldn’t afford them, and to manipulate financial products that were ultimately guaranteed to fall apart.

And stop pretending that Obama and the current Congress should have been able to fix the two above problems in 18 months, when it took eight years to create the first one and literally decades of foxes guarding financial henhouses to create the second.

Again, the author is correct that the economic crash was not caused by Obama, and that it is unrealistic to think that the government would be able to fix it (I would argue, in any amount of time). The author implicitly places the blame on the private sector, however, when he talks about mortgages and financial products. Those mortgages that people couldn't afford were promoted and backed by the government in the form of Fannie and Freddie and FHA and VA loans. Obama has continued this process with the homebuyer tax credit and the HAFA and HAMP programs. For non-mortgage related financial instruments, look no further than the Federal Reserve serving as the "lender of last resort". Even though the Fed is nominally a private entity, it's ludicrous to think that they really are, and when banks get into trouble, the Fed bails them out via the power of "printing" money, a power that Congress abdicated to it long ago.

Stop pretending that saying “No” is the same as governing. We pay our legislators good money to go to Washington and make difficult decisions that keep the country moving. By voting “No” on every bill, by refusing to negotiate in good faith, by deciding that short-term political advantage was more important than the everyday lives of Americans, the Republicans set back our recovery, made needed reforms fall short, and put our lives and our economy at unnecessary risk.

I hate the idea that governing means "doing something". Saying "no" is a legitimate act, one in which all politicians engage because nobody can agree on the exact role of government. In this way, saying "no" is doing something. That is not to say that Republicans are not being obstructionist for political gains; however, the author would be better advised to point out Republican hypocrisy on things like expanding Medicare under Bush but railing against the PPACA, now.

Stop pretending that the economy is magic. You can’t continue to give millionaires and billionaires huge tax cuts, make tiny, cosmetic cuts at the margins of things, and still reduce the deficit. You can’t create jobs without spending money. Tax cuts for millionaires and up are not stimulative because those people don’t spend the money from the cut—it’s not like you’re giving them a wad of cash and sending them to the store. When you put an unemployed person to work or give a tax cut to a poor or middle class family, that’s exactly what it’s like—they go buy things they need and those dollars flow through the economy, creating jobs and wealth everywhere they go.

I'm not sure anyone is pretending that the economy is magic; however it is far more complex than most imagine. Not only that, but the government via regulation or the Fed often arbitrarily moves the market in ways that could only be predicted by magic. The author is correct that tax cuts (to anyone) won't balance the budget. He is mistaken, though, if he thinks that tax increases will do the job, either. Federal spending is out of control, and the only way to save this country's economy, over the long term, is to start cutting Social Security, Medicare, the military, everything.

And stop talking about stimulus. It's too bad that people believe that Keynesian economics preaches deficit spending. Keynes, mistaken as I believe his theories to be, spoke of stimulative spending out of savings. Yes, it takes money to create jobs, but it also takes money to keep those jobs. To think that the government (or anyone) can throw a one-time bucket of cash at the economy to "unstick" it is ridiculous. It will only lead to the government having to throw ever increasing amounts of money at the economy. It's amazing to me that most people agree that easy credit was the proximate cause of the economic conditions in which we all now live and at the same time believe that if the government just borrows more from China that that will fix the problem. We will end up back in this very situation again, only it will be much, much worse.

The things that Pelosi and Reid have supported these past 18 months have been programs that will help America move into the 21st century. Health care reform, in spite of great efforts at pretending, is not a “government takeover” of health care—it institutionalizes, in law, the presence of the health insurance industry, and gives that industry millions of new clients.

Whoa! Stop right there! Did you catch that? The government, under Democratic control, via the coercion of law, just delivered millions of customers to the health insurance industry. It's not just the Republicans that are in bed with big business.

It will, in the long run, reduce the deficit and create a healthier nation, by allowing more people to get preventive care and long-term care and keeping the sick and impoverished from turning to emergency rooms when there’s a crisis.

This entire problem was created by the government in the first place, though.

Stop pretending that “lifelong politician” is some kind of curse. Most people who hold public office do so because they genuinely want to help people, they genuinely want to make government responsive to the needs of their fellow Americans, and they’re willing to put themselves on the line every few years to get the chance to do so.

Here's a thought experiment: If "most" people who hold public office genuinely want to help people and make government better, why hasn't it happened?

Stop pretending that “big government” is the problem. When’s the last time you were seriously inconvenienced or injured by something that big government did?

Gay rights, TSA body scanners, highway checkpoints, the PATRIOT Act, warrantless wiretaps, extra-judicial assassinations, indefinite detentions, inflation, etc. Don't tell me that (some of) these don't affect me. When one person's rights are trampled, everybody's are, and that's just at the federal level. Not only that, but all of this ignores the fact that every year I have to fill out a number of forms figuring out, on the government's behalf, how much money they want from me, and then send them that amount under the threat of force if I either figure wrong or don't send the right amount.

Stop pretending that anybody’s going to come and take your guns away. [...] There’s no truth to it, there’s never been any truth to it, and if you actually believe it, you just might be so simple-minded that you shouldn’t be trusted with a firearm.

They may not be trying to take them away, per se, but the laws (at least in CA) are clearly not conducive to gun purchases or ownership. One must wait 10 days to purchase any gun, even if one already owns one or one hundred of them. AB962, once in effect, will make the mail-ordering of handgun ammunition illegal and require fingerprints be taken of law-abiding citizens when they do purchase ammunition. It is illegal to actually carry one's gun in a manner that would actually allow it to be used effectively in self-defense, and many counties around the state deny CCW applications to all but the wealthy and connected.

Perhaps the author can explain to me why the BATFE and the state of CA keep records of gun sales if not to retain the possibility of rounding up guns in the future. I realize that that has a bit of a "tin foil hat" sound to it, but it is a legitimate question.

The author goes off the rails at this point with a lot of name calling. He tries to bring it home at the end, though.

Finally, stop pretending that voting doesn’t matter, and don’t let the 2010 Class of Crazy take office and convince you otherwise.

A variation on the previous thought experiment I proposed is apropos here: If voting mattered, why is government the way that it is? Perhaps it's because we've gotten the very government for which we voted. Voting doesn't matter and arguably does more harm than good. A voter is statistically more likely to be killed going to or coming from his/her polling place than to cast the deciding vote in an election. I refer the reader my previous posts on voting and the nature of government.

Government bailout turns a profit

According to Bloomberg news:

The U.S. government’s bailout of financial firms through the Troubled Asset Relief Program provided taxpayers with higher returns than they could have made buying 30-year Treasury bonds

I'll be honest; my first reaction to this was, "Oh no, I'm going to be forced to admit that the government did something right". Indeed, according to the article, the government invested $309 billion in Wall Street bailouts via the so-called TARP program, of which, about $200 billion has been repaid. Not only that, though. The government has also earned $25 billion on its investment. What's not to like?

How about the fact that the bailouts didn't actually work? Unemployment actually skyrocketed while the government was supposedly making this profit. These unemployment numbers are "official" ones, by the way. "Real" unemployment is actually nearly twice as high, and even that number doesn't paint a totally accurate picture of the economy. It fails to account for falling wages, part time workers who had and/or want full time work, and those who simply are no longer looking.

Here's the real reason to be upset about the bailout, though, and Bloomberg, to its credit, points it out.

One of those subsidies [to the banks] is the $350 billion that savers forgo each year because the Fed keeps interest rates near zero, according to Petzel’s calculations. While banks can borrow at close to zero from the Fed, they lend to consumers and corporations at almost 5 percent, or to the Treasury at 2.5 percent, and they get to keep the difference.

Take a second to do the math. The American taxpayers have given up over $700 billion (so far). That is more than double what the government originally invested and gained via that investment. So, we have the taxpayers, the government, and the banks. Government comes out $25 billion ahead. Banks come out $700 billion ahead. (This is debatable since the banks also took losses. However, those losses are mitigated by this $700 billion). Taxpayers come out $700 billion behind plus the wrecked economy.

It doesn't end there, though.

According to Prins’s tally, the money plowed into the financial system to prop it up peaked at $19.4 trillion. Banks have benefited from that cash, which helped keep prices of mortgage securities, house prices and other assets overvalued, Prins said in an interview. Even though some of the support has been withdrawn, part of it will likely be lost, such as the hundreds of billions of dollars put into Fannie Mae and Freddie Mac, she said.

"These are all indirect subsidies the banks got," Prins said. "So the TARP gains touted by the Treasury are only true if you ignore all the other costs."

Keep these other costs in mind the next time someone tries to tell you that the bailouts worked or that the government (and supposedly, by extension, the taxpayers) actually made money on the deal.

Empire and its imminent demise

Glenn Greenwald writes today that the U.S is a collapsing empire. As evidence, he points to a number of surveys and studies showing the rapid decline in life expectancy, infant mortality, literacy in math and science, and the "soundness" of our banks and, by extension, financial system. He wrote a column a few months back on the same topic, though the examples provided there were more direct. On the bright side, though, he points out in the current column that the U.S. is only fifth in the world in executions and continues to best all comers in incarceration rates.

In addition, a few days ago, Ron Paul said that he thinks that a collapse of the U.S. currency system is "95% likely" and that a war with Iran would only hasten its demise. This all has a very "the sky is falling!" ring to it, but look back at the bank "soundness" rankings, mentioned earlier. The U.S. ranks 108th in the world, out of 133 countries on the list. That puts it 63 places behind Greece, a country that just received a 146 billion dollar bailout from the EU.

Peter Schiff, on a related subject, writes about the massive inflationary expedition on which the Federal Reserve is about to embark. Even I wrote about this a week or so ago. Unlike me, Mr. Schiff researches and writes about this stuff for a living (and does quite well at it), so when he speaks, it's probably a good idea to listen. Aside from the normal, "gold, silver, and commodities are rising; the dollar is falling" talk, he explains why bonds are currently acting the way they are:

A confounding factor is the strong performance of US dollar-denominated bonds. When the Fed creates inflation, that erodes the value of fixed-asset investments like bonds, which can't adjust their returns to the new price level. So many commentators are pointing to the record low bond yields as evidence that inflation is not a threat. But this is a misreading of the situation.

What is overlooked is that when the Fed prints more dollars, it typically uses them to buy bonds. Traders know this, so they are stocking up on bonds at ridiculous prices just to flip them to the Fed. They don't care that, in the long run, the Fed's policies will destroy the bonds' value because in the short run, the weak dollar policy serves as a tremendous subsidy to bond sellers.

I'll leave you with this quote, attributed to George Washington, and let you draw your own conclusion(s) about where our government is headed:

The last official act of any government is to loot the treasury.

Currency wars

I hear a lot on the radio and in the news lately about the U.S. and other central banks' grumbling about China's refusal to let its currency rise. I have (what I think is) a pretty good understanding of inflation and deflation and how central banks' policies affect their currency, but I had never really put much thought into why China refusing to let their currency rise was a bad thing. This morning NPR did a story about possible coming currency wars, and finally spoon fed me the information that I was too lazy or apathetic to discover for myself.

The U.S. Federal Reserve wants to inflate the dollar, or in the parlance of the previous paragraph, make it fall. Make sure you really take that in; the Fed wants to devalue the dollar. It wants to do that because when the dollar is weak, then U.S. exports become cheaper overseas. This is because foreign currency, in relation to the dollar, rises. Therefore, that foreign currency can buy more of a given U.S. good than it could have previously. The thinking over at the Fed is that if our exports rise, then businesses will begin producing more which will require them to hire more which will eventually start the economy growing again.

The reason the U.S. is upset at China is that it is doing the exact same thing. By refusing to let its currency rise, China is making its exports cheap for foreign buyers. So, the U.S. is mad at China for doing the very thing that it is trying to do.

This is yet another case of "its okay when we do it but not when they do it", but it's so much worse than that. There's no guarantee that China will play along. There is no guarantee that the Fed will inflate the currency just enough to "goose" the economy but no so much that it creates hyperinflation. There's no guarantee that the Fed will "revalue" the dollar if the economy starts moving again; in fact, it's more likely that that value will be forever lost. Even more basic that that, does it concern anyone that twelve people at the Federal Reserve can take money out of everyone's pockets in the U.S. whenever they want by devaluing the dollar?