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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Rational who wrote (19596)	12/27/2004 1:48:37 PM
From: Rational	Respond to of 116555

In China, the effective rate of interest is negative. Why? Chinese authorities know that they are creating more fiat money in the private accounts of exporters than possible if yuan were to trade freely. Chinese authorities borrow exporters' private money kept in banks for development projects that are unlikely to generate the promised rates. The rate of interest promised on bank loans minus the expected default rate is very negative. This is why many small exporters are lending/borrowing sacks of yuan on Sanghai streets.