In December 2006, just weeks before the outbreak of “unforeseen” crisis, then-federal reserve Chairman Ben Bernanke discussed the breathtaking advance of China's economy. He was in Beijing for a monetary conference, and the unofficial theme of his speech, as I read it, was “you can do better.” While economic gains were substantial, he said, they were uneven.

To keep China going down the same path of rapid growth, Bernanke advised, as all Economists do, to stop undervaluing their currency. According to the mainstream view, the one taken from his “global savings glut”, CNY's trade-weighted effective real exchange value had declined about 10% in about five years to that point.

Even though the PBOC had finally allowed a limited float for the value, Bernanke and Western Economists always wanted more. Not just for Western interests, but for the Chinese, as well.

Greater scope for market forces to determine the value of the RMB would also reduce an important distortion in the Chinese economy, namely, the effective subsidy that an undervalued currency provides for Chinese firms that focus on exporting rather than producing for the domestic market. A decrease in this effective subsidy would induce more firms to gear production toward the home market, benefiting domestic consumers and firms.

In other words, if Communist officials would just let CNY rise to its presumed equilibrium, voila, economic rebalancing and harmony around the entire global economy. He even counseled the Chinese people to save less, Economists hating savings in favor of unrestrained spending every time.

Over the next seven years, the first part happened or at least started to. CNY did rise, but not because of trade mechanics or some newfound spirit of fairness. It was that “global savings glut”, really eurodollar “hot money”, that pushed the exchange value upward against the dollar. Even in late 2013 when it finally peaked, there was practically no one who saw any danger of a reverse; and therefore the dangers arising from going in reverse.