[TGoldman]

China's currency, the Yuan being pegged to the American dollar has been a topic of debate lately. I'm doing my best to understand the currency markets, but I fear the topic may be over my head so please correct me if I'm wrong anywhere. The basic idea is that the Chinese government purchases enough US T-Bills to control the supply and demand such that the currency markets maintain the peg of approximately 8.23 yuans to 1 dollar conversion. Alan Greenspan and other economists have been critical of this policy, and have been calling for the People's Republic of China to end this practice and let their currency float.

Okay.

Well, why doesn't the Fed stop talking and actually do something about it by buying up Chinese Yuan in order to force them into submission? If the Yuan's peg to the American dollar is causing the Chinese Yuan to remain artificially undervalued, why doesn't the government take advantage of the "cheap" yuans. This would be getting a great deal on the Chinese currency while putting the pressure on the Chinese to continue the peg at their own disasater. Is this logical, or would it be equivalent to an economic act of war?

From an individual perspective, does buying a small amount of Chinese Yuan make sense in the hopes that the currency may float eventually? This seems to have little risk if the peg is maintained, but high potential upside. Assuming of course that the currency is indeed being artificially undervalued by China's monetary policy as many believe.