Hello Earlie and DAK, I guess
1. given the size of the USD pile outside the US, everybody will be a bag holder to some extent
2. China is more on the short end of debt term, and so easier to get out, but tougher on the folks needing to refinance, unless FED monetize, which it will, presumably
3. i do not see RMB going up anywhere fast, and it may come down just as well for all the reasons to do with fundamentals and stages of development
4. the currencies are just rubbing against each other, each taking turns to devalue against the others, so it seems
5. commodities are actually still cheap, relative to highs adjusted for inflation, and take oil, so far at least, no big deal
6. the recent and coming deregulations making it easier for RMB based wealth to be exchanged for USD for offshore investment purpose by domestic public and private institutions and private citizens, along with the continuing encouragement (measured) to support state-owned enterprise to do same is part of strategy to get from under the USD pile
7. should the machination work, China officialdom can (a) keep printing RMB, (b) reduce its pension/social obligations, (c) fund domestic infrastructure buildout, (d) reduce USD pile, and (e) aggregate control of overseas assets by its institutions and individuals and fund all until ... well, it is a big China, with 300 years pent-up demand, and a big world, with lots to buy.
Just guessing.
The reason the above schema can work is because operating factories is not the same as running software houses, and China invented both the paper money as well as the printing press, and had lots of experience/practice in blowing up currency regimes, with success each and every time :0)
Chugs, J |
