Econo-Girl noted Greenspan's remark that the Chinese peg to the dollar will result in inflationary pressures to their economy. True. The question is: what does that mean? The spector of inflation means something different to them than it does to us.
In the US, inflation means political suicide. So it is embraced like the Black Death. You know, the plague that killed 30% of Europe?
But what is the Chinese experience with inflation? Do they feel they have measures in place to restrain it? You can guarantee that their people feel smarter than ours, because everyone thinks they are smarter than everyone else. And when they succeed, it is due to brilliance. And when they fail, bad luck. The Chinese, being human, are the same. To them, it will be different because they feel smarter than us. Not the same because they are just like us. The Chinese have not had political reversals from bouts of inflation. That doesn't mean they won't. It just means they haven't yet.
Until then, don't project our terror into their eyes. We are really looking at ourselves, then. Not a way to win at poker.
The Chinese will not revalue their currency.