E DeSousa wrote: > I explained in my note with supporting evidence (links) > that in reality the opposite is true i.e. the Chinese > currency is undervalued about 40% wrt the USD.
I see where you are coming from. If you live in the US, the perception/description is that the Chinese currency is undervalued. That is, the Chinese govt artificially maintains the Yuan so as to get an economic advantage. I am in agreement with this. Since both currencies are foreign to me, I am used to different colloquial to describe the same thing. I will cede, though, that your description is very accurate in the above case. > Can you explain why minimum wage(current levels may > be somewhat different and I am not providing any links > or tables since you do not appreciate them) in China > is $0.80 USD /hour, $0.12 USD/hour in India and $7.00 > /hour in the US? This is because people are willing to work for that wage. Here in Toronto, the minimum wage is US$10.44 per hour. > All the Multi Nationals Corporations (MNCs) > want to operate out of the lowest wage country and this > impacts employment. So when all the jobs go from high > wage regions to low wage regions millions of people are > unemployed in the high wage country (read US), as a > result less taxes are collected, huge budget deficits > come in play and Monetary policy (read printing money) > is the resulting outcome. The nature of capitalism is that the entrepreneur has to find the most efficient combination of land, labour and capital. Businesses that are labour intensive are forced to locate in areas where labour is cheap and plentiful. It is bad enough when a capitalist uses US capital to create jobs in China. It becomes really interesting when the US govt gives the US company a tax break for creating jobs in China. > This money printing activity would ordinarily close the > wage gap but as you probably know, the other countries > intervene quickly in the currency markets with their own > money printing (example Japan did so last week) in order > to maintain the status quo. > So with all this money printing going on, astute individuals > invested in Gold (gold at $1700????) must celebrate. Any one buying gold at today's prices is paying for the profits of those who bought earlier this century. The only reason to buy gold now is if one is convinced that govts are going to take a long time to balance their budgets and instead of taking the bitter medicine, resort to the easier method of just printing more money. Mervyn1750Lobo BTW, The Bank of Canada sold all its gold a few years ago since there were expenses associated with holding gold while US treasury bills earned an income every year. Needless to say, the BOC sold when gold was at its lowest points. To their credit, the BOC then decided to rent out the strong rooms in the Canadian Mint to anyone interested in storing gold. The quantity and value of gold now stored at the Canadian mint is at record levels.
