Economic historian Niall Ferguson warns that China's love affair with the dollar is fading faster than anyone realizes.
TechTicker: "The idea they don't have anywhere else to go or would shoot themselves in the foot if there were a steep decline in the dollar or appreciation of their currency reassures many people in Washington ‘we can relax'," he says. "An appreciation of the renminbi may reduce value of their international reserves but increases the value of every other asset the Chinese own," most notably the commodity assets they have been buying all over the world.
China's "current strategy is to diversify out of dollars and into commodities," Ferguson says. Furthermore, China's recent pact with Brazil to conduct trade in their local currencies is a "sign of the times."
Perhaps most importantly, China's massive stimulus program is helping to generate internal consumption in the People's Republic, meaning local manufacturers are less dependent on exports. Because of the "rapid growth" of Chinese domestic consumption, Ferguson predicts China's international trade surplus could be gone by next year.
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Oh well the Chinese deserve their good times. It is well overdue for them. Last time I checked hard work should be rewarded and the slob spoiled lifestyle leads to failure.
ReplyDeleteWe fail. They rise up.
True. Problem is those of who work and pay our bills are going to suffer because of the others.
ReplyDeleteThough I'm not in favor of a communist regime like China, they have a sound strategy to help their country's economy grown and make themselves more powerful. They also are encouraging their citizens to be prepared and grow in a healthy way. I can't fault that.
ReplyDeleteCommunism has nothing to do with regimes. China is not in any way communist now or ever, it is a state capitalist system just like we have here in the United States. This is not communism which is a society of cooperatives and people's councils and no centralized government. Communism is just a buzz word the Chinese used to dupe people into supporting Mao the way the United States tricks people into thinking there is actual democracy. The solution is to overthrow the elite and set up a cooperative society, it should be easy theres not very many of them just lots of drones who carry out their repressive measures. Remember that anarchy and socialism go hand in hand any "socialist state" is a lie because in socialism there is no state.
ReplyDeleteThe FED says that a good percentage of T-bills are being purchased by foreigners. That's what we want to hear if we are to beleive China and Japan are continuing to purchase our debt.
ReplyDeleteThe truth of the matter is a little bit different. What is happening is the FED is performing 'currency swaps to assist liquidity' with foreign central banks. Not Chinese and Japanese central banks but European Economic Union ones: England, Germany, Spain , etc.
Then , these foreign banks are using the freshly printed US currency we gave them to purchase our T-bills and hold them. Likewise, we are using the freshly printed currencies they are giving us to purchase their T-bills.
In this way, all the participating countries are able to sell their T-bill offerings and inject freshly printed money into their own systems without looking like they just purchased their own T-bills outright although effectively that is what they just did.
So now you know how the FED is able to report that foreigners are buying our debt.
It isn't easy because the State owns control of the medi and education, which equates to opinion, indocrination, and learning. If the people knew how free and happy they really COULD BE, they would be going along with these sucky schemes to empower the rich while we lowly toil in the mud.
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