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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (103974)	12/12/2013 8:10:07 AM
From: Amelia Carhartt	Read Replies (1) \| Respond to of 219784

What good is gold if your world is turned into a Mad Maxx scenario ?

To: TobagoJack who wrote (103974)	12/13/2013 1:46:05 PM
From: carranza2	Read Replies (2) \| Respond to of 219784

my understanding of the case may be faulty Don't think so. A matter of a few years before things are seen for what they are.

To: TobagoJack who wrote (103974)	12/15/2013 1:18:21 AM
From: elmatador	Read Replies (1) \| Respond to of 219784

China is the biggest question mark when it comes to tapering QE. Perhaps it is just what has prevented a QE ending so far. Janet Yellen may have just been confirmed as chair at the US Federal Reserve, amid lots of speculation about when the QE tapering will take place – but a greater concern for the US may well turn out to be a Chinese taper – of buying US debt. A fleecing is too hard to resist. If did not yet happened is because the FED sees danger lurking out there. China’s reserves: enough is enough? Nov 21, 2013 4:53pm by Rob Minto The chart below says it all. From 5 years ago to today, China’s foreign exchange reserves have doubled, going from $1.8tn to $3.6tn. Unabated, and on current trend, it would hit $5tn by early 2017. Already, Chinese reserves are the equivalent size of Germany’s GDP. Time to stop accumulating? Maybe so. Source: Bloomberg Yi Gang, a deputy governor at China’s central bank, said in a speech this week at a forum that “It’s no longer in China’s favour to accumulate foreign-exchange reserves”, according to reports. Gang also was quoted as saying “The marginal cost of accumulating foreign exchange reserves has exceeded the marginal gains” – which is economist-speak for “it’s not worth it any more”. Why wouldn’t it be worth it? Well, forex reserves are often misunderstood. They aren’t like some rainy day fund you can just play around with. It’s more complicated than that, and is summed up well by the FT’s Paul Davies recently when addressing the question of whether China could use its reserves to pay down debt: To buy the dollars that China does not want sloshing around the economy, the central bank creates renminbi. However, in order to avoid a big money-printing exercise it also issues treasury notes into the market to soak up – or sterilise – the local currency created to buy the foreign currency. The vast majority of the foreign exchange reserve assets at the People’s Bank are matched by renminbi liabilities in China’s banks and other financial institutions. If it tries to spend dollars without repaying these liabilities it undoes its earlier sterlisation and prints money. If China wants to print money to soak up its bad debts – and take the risks that come with this policy – its foreign reserves are really irrelevant to that decision. The other problem with “spending” these reserves lies in the misconception that they are an asset of the country – something like its retained profits from its trade with the outside world. China has run a current account surplus of increasing size since the late 1990s. A good chunk of this is money paid for goods and services sold – but another good chunk is foreign direct investment. So the costs vs gains that Yi is talking about boil down to the fact that China is effectively buying dollars at artificially high prices and selling Rmb-denominated notes at a low price. At the same time, and as Yi also talked about this week, the Chinese authorities are looking at a more open (but still managed) exchange rate system. So what will be the effect of all this? It depends on how much the renminbi appreciates by – certainly, the so far endless purchasing of Chinese exporter’s dollars with renminbi will have to slow. There are also implications for US Treasuries too – China is the overwhelming buyer of US debt, with a stock of $1.2tn, and any diversification into other securities or a decrease of purchasing will have an impact on the US – and potentially on yields. Janet Yellen may have just been confirmed as chair at the US Federal Reserve, amid lots of speculation about when the QE tapering will take place – but a greater concern for the US may well turn out to be a Chinese taper – of buying US debt.