Mike Norman, anchor, HardAssetsInvestor.com (HAI): Hello; welcome back to the second half of my interview with Win Thin, senior currency strategist from Brown Brothers Harriman. You know, Win, one could argue that over the last several years … let's say going back to like 2005 … there was a subtle shift in U.S. policy regarding several of our trading partners, where the U.S. wanted to see a stronger counterparty currency - let's say for example with China - and a weaker dollar.

We talked earlier in the first interview about how there's no decoupling, how actually, everybody's coupled.

If that's the case, and if the U.S. still is the engine of growth as a result of our big consumption, by changing that policy, by in effect making the U.S. an exporter when other nations still had to rely on that, that sort of set the stage for maybe some of the problems we're seeing right now.

Win Thin, senior currency strategist, Brown Brothers Harriman (Thin): To be honest, I was always surprised why the U.S. was expending so much energy on this whole thing with China. As you point out, they are a major trading partner. We just happen to consume a huge amount of goods, imported goods, and I'm not sure if you can really adjust that or tweak that with exchange rate policies. So at this point, I think it's on the back burner. Obviously [U.S. Treasury] Secretary Paulson has other things to worry about right now. In fact, China has kept its currency pretty much steady during this whole crisis.

Norman: It has.

Thin: Yes. Instead of the steady appreciation it [had] been doing [previously].

Norman: The other thing, one could think that because China - and certainly the People's Bank of China, the central bank over there - has huge assets denominated in dollars. I think it seems like it's in our interest as well as their interest to make sure that those assets retain a value, a good value, OK? And again, if the global economic order is such that yes, we consume what China produces, it's beneficial for American consumers, because it keeps inflation down, and it helps the Chinese economy: It helps their central bank and their institutions that hold dollar assets. It seems odd that we would want to turn that policy around.

Thin: I agree, and as I said, I'm glad it's kind of on the back burner now, because to me, it was almost a no-win situation. You don't really want to upset people who are holding such huge amounts of dollars and Treasuries and agencies.

Norman: You know, a lot of people say throughout this whole entire crisis, the credit crisis and everything, that we should have left our hands off … this sort of laissez-faire approach, let the markets take care of it. It's interesting, because when I look at what's happening now with the dollar - such a strong rebound - it's almost as if the foreign exchange markets are turning around this policy with a vengeance violently, going back to the order where the U.S. is the engine of growth, [and] others are very reliant upon us to the extent now that the dollar is much stronger and a lot of these other currencies are weaker. Is it going to help those economies?

Thin: At the margins, sure. I do think that, for instance, the emerging markets - they're facing the global recession risk. Face it; they're export-dependent economies, so they need not only a strong U.S. economy but weaker currencies on the margin to help out. I think that's why Japan is so worried: they've got a strong yen problem right now. Much of the growth that Japan has seen in recent years has been from the export sector, and we're looking at global slowdown plus the strong yen. So in Japan, they're particularly worried about that.