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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (19357)10/4/2004 6:38:58 AM
From: Wyätt Gwyön  Read Replies (1) of 110194
 
Accumulation of gold and silver over time to back the RMB up with them when they float. What they lose on the US$ they will make on the price of metals

i don't think the Chinese are trying to "back up the RMB"--instead, they have been and will continue in following the Japanese mercantilist model, which is predicated on a huge trade surplus with Western economies, especially the US. since the US trade deficit is predicated on these same mercantilists' propping-up of the USD, the Chinese have no interest in a strong RMB that would be damaging to their export economy.

this doesn't mean that the RMB won't appreciate against USD, but rather that it will do so despite the very best RMB devaluation efforts of China. the Chinese do not enjoy the same amount of capital surplus as the Japanese (due to the intense need for infrastructure-building in China), so they cannot waste as much capital propping up the USD. this is analogous to the Japanese situation in the 1950s and 1960s, and into the 1970s. by the mid-1980s, they of course had less need for infrastructure-building, so they focused on creating domestic bubbles, which funded the idiotic overseas investments and USD-propping that have been their bailiwick ever since.

i don't really understand this wacky idea of the RMB becoming the next Swiss Franc--who started this, Russell? an expensive coin is OK if you only want to export expensive chocolates and watches, but if you are trying to create export-driven factory employment for 100 million migrant workers making a dollar a day, and all your goods sell in Wal-Mart, you do not want the CHF for your currency.
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