China and Currency

Re: [spiers] China and Currency


On Mon, 13 Feb 2006 23:43:52 -0000, "mgranich" wrote :

> I read an article "White House urges China to loosen currency system"
> on yahoo news today. But the article didn't say what "loosening
> currency" means. What does China have to do to "loosen" it's currency?
> And How does China's currency policy effect the trade deficit?
>

USA rules the world in part by being banker of last resort. There is more US
currency in
circulation overseas than in usa, I believe 3 times as much.

USA wants china to manipulate its currency so Chinese items cost americans more,
and
american items cost chinese less. Why our government wants americans to pay
more for
things, and get less for what we sell is hard to understand, but we'll leave
that alone. One has
to assume american monetary theory is valid to believe the wish could come true,
but let's set
that aside, too.

for the last several decades the world was more or less happy to let USA be the
banker of last
resort. That is changing as world trade patterns change. I believe USA policy
is to complain
about China so as the usa economic situation worsens, due to usa govt policy, we
can blame
the Chinese (instead of correct ourselves).

Syria today switch to euros for its int'l banking, no more accepting USA
dollars. Malaysia and
several other moslem contries have intgroduced the gold dinarii back into
circulation, aka
"hard money". the Russiand have to, the chervonetz, although only for int'l
trade payments.

Saddam Husseien threatened to price oil in euros, which may have partially
invited the US
invasion, and Iran is currently making a similar threat. The last thing USA
want is for all
those dollars to come home.

Currency arbitrage is a esoteric area of int'l trade, something that made Geo
Soros a
billionaire. He bet the british govt was ignorant of the reality of currency
and money and it
paid off spectacularly for Soros. Later, as the malaysian prime minister said,
Soros set back
malaysian development 40 years when he took advantage of Malay government
financial
ignorance in 1997. I suspect in reintroducing gold currency the malays have
learned their
lesson.

Also, Argentina is buying gold heavily...suppose they learned something too?

I think what is happening is something of a judo match... big bad usa is
undisputed
champion, and sets all the rules... I think China is lettng usa push its weight
around, waiting
for USA to make a big mistake, one in which usa will take itself down, and
lessen the threat to
China.

John

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