Quote:
Originally Posted by J. Abizeid  Is it just a coincidence that the dollar went up by 5% to bring up the Chinese Yuan by 5% just when the Chinese Olympics started? That translates into 5% more spending by the foreign tourists during the Olympic Games in China. The question is, for how long China wants its exported products to cost 5% more than usual? Is such a surge in its best interest? |
I agreed with your previous post, but this one I don't understand: if the Chinese government is buying up dollars massively, then wouldn't that result in the fall of the Yuan?
On the other hand, this reminds me on something we have seen in an economics course about the currency games the US played in the 1980, with many Latin American countries, but also and more specifically with Japan: Japan exported massively to the US, and loaned the money it got to the US, 1- to help it pay what it is importing, 2- to stabilize the $. The $ was stable in an artificial way, because there was a massive trade balance deficit. The $ was overvalued! At a certain point, the US finally decided to de-value the $, which brought great misery to Japan, 1- because the money it lent to the US was overvalued, and it would get much less in return, 2- it is now one of the most indebted countries in the world!
I have a feeling the US is doing the same thing now with China! It is not astonishing since the Bush and Republican administration have followed the line of Reagan...