China isn't the only currency manipulator

NEW YORK (CNNMoney) -- A newsflash to the legislators in Washington who suddenly want to act tough against China for currency manipulation: Have you looked in the mirror lately?

How can anyone with a straight face declare that China needs to be punished for keeping the yuan artificially low when the United States is also aggressively trying to devalue the dollar with its monetary and fiscal policies?

The righteous indignation and holier-than-thou attitude is comical at best. The Federal Reserve, through two rounds of quantitative easing and now Operation Twist, has helped push the dollar lower.

Simply put, buying up U.S. Treasuries as if they were Missoni apparel at Target leads to lower interest rates and a weaker currency.

The do-nothing Congress hasn't made matters any better. The debt ceiling debacle this summer didn't help the dollar either.

The short-term economic outlook is dismal. Focusing solely on longer-term deficit reduction at the expense of the current health of the cash-strapped/underwater on their house/nervous about their job American consumer also makes the U.S. dollar less attractive.

You may not agree with President Obama's latest jobs plan. But this economy needs some form of targeted and immediate stimulus to get it back on solid footing. Austerity isn't the answer. Just ask Greece.

Now don't get me wrong. I'm not endorsing China's policies per se. As much as China has opened itself up to the West and capitalist ideas, the government does not let the yuan trade as freely as it should. That's a huge problem.

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However, the U.S. does need to concede that China has taken baby steps to let the yuan appreciate. After all, it is up against both the dollar and the euro this year.

Should the yuan be even higher? Probably. But provoking China into a possible trade war is not the answer.

Are U.S. manufacturers hurt by the fact that an artificially low yuan makes Chinese exports cheaper? Of course.

Funk metal band Primus (at least I think they're funk metal?) wryly comments on this in a song called "Eternal Consumption Engine" on their new album. Lyric: "Every time I get a little bit bored. Head to the Wally-Mart store. Livin' high on the greasy hog. As long as they don't deport my job. Cause everything's made in China."

Still, we need to ask ourselves this. While trying to protect manufacturing jobs in the U.S., do we risk damaging the broader economy even more by antagonizing China?

Like it or not, China holds nearly $1.2 trillion in U.S. Treasury debt. The Chinese are already not thrilled that the same dollar-damaging policies I've written about have also withered away the yields on long-term bonds.