Should the US really keep blaming the exchange rate with China?

Bemoaning the Chinese exchange rate when talking about the structure of the US exchange rate is looking increasingly unreasonable.  I don’t think either country should be messing around with trade policy and intervention, and I think they are both doing irresponsible things.  But if we are just going to look at the exchange rate lets actually look at it (thanks FRED).

Take into account that inflation has been stronger in China than it has in the US, and you get a story where the real exchange rate is probably lower than it was in 1994!

China is buying up US bonds at an incredibly low rate of return, as long as US isn’t “pissing the money in the wind” I can only see this sort of action hurting China – not the United States.  If the US is going to criticise China for creating and now maintaining “imbalances” I would like a slightly more sophisticated argument than “look at the exchange rate”.

How about “look at the artificially low rates of return in the past due to excessive artificial savings” – you make that argument, and it becomes obvious that fighting against China loosening global monetary conditions during a period where the world is suffering from tight money (even with amazingly low interest rates – as the equilibrium real interest rate has dropped markedly) and the  developed economy’s central banks wont doesn’t really make sense …