Good Article

Re: [spiers] Good Article

Well, perhaps... here is the important point... we have no idea what
will happen next. One job as innovators is to minimize risk, if not
eliminate it. Currency is very risky. I am prepaying everything I buy
in China so they can convert the US$ into RMB and I lock in the price.

As I understand it, the Chinese merchants your banker friend mentions
are unloading their dollars because they are pretty sure the dollars
will lose much value vary fast. Certainly China's star is ascending,
and the USA's is descending, both trajectories based on govt policy.
They are betting the Chinese currency will do better than USA.

Some think there are two places to put USA dollars right now, in other
currencies or buying usa assets. The price of a house may fall, but
not as far as a piece of paper with a flimsy promise printed on it (USA
currency).

Certainly I stand by what I said about currency in the book, and beyond
that certainly consider owning foreign currency as any investment plan.
Who knows... if we have hyperinflation and a loaf of bread costs
$5000... then a few thousand swiss francs may buy a million USA
dollars, which you can use to pay off the mortgage on your million
dollar loan. Like I said who knows. Even Alan Greenspan has said
explicitly that he has no idea what he is doing. We live in
interesting times.

John



So after importing our products and collecting our money from
retailers, we
will be faced with a choice between holding the dollars or exchanging
them.
Into ...?

I was chatting with a man recently who works in commercial banking at
Cathay Bank in Seattle. He indicated that all of his ethnic Chinese
customers living here, are now immediately converting any dollar profit
from transactions, into renminbi. RMB are not well accepted at the
stores
around town, so that is a pretty bold position to take. Perhaps our
guidelines would be to keep enough RMB for the next business
transaction.
But after reading your article, perhaps we should be exchanging part of
our
personal assets into foreign currencies.

At 01:05 PM 9/15/2005 EDT, you wrote:
>Folks,
>
>At the below website is a very good article by Richebauer at bottom of
page...
>
>
>http://www.dailyreckoning.com/Issues/2005/DR091405.html
>
>
>One observation he makes...
>
>
>"In China, however, the specific components are real estate and
manufacturing
>investment, while in the United States, it is consumer-spending
excess. "
>
>
>Think about this... we have expensive (overpriced?) houses with big
mortgages
>and the Chinese have overpriced property that they own... USA has and
cool
>computers and cars and refrigerators... and the Chinese have world
class
>manufacturing capability. Who is in the better position?
>
>
>This is a result of Chinese policy taking advantage of USA policy.
The USA
>is the initiator, in the driver seat. We will not do what is necessary
to
end
>this situation (eliminate the fed), but it does not mean we cannot do
well
and
>do good as this scenario unfolds.
>
>John

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