Regards.. English wise.. I don't know.. I hope Magi can answer.. Thanks ======= S1000+ =======
--- On Tue, 1/26/10, xi <[email protected]> wrote: From: xi <[email protected]> Subject: Re: Why China's About to End Dollar-Peg To: "World-thread" <[email protected]> Date: Tuesday, January 26, 2010, 6:05 AM It is always interesting to find a Western economist that is not severily brainwashed. Thanks a lot for your post Sumerian. Questions: I use to call those parrot-economists "inapt" while this athor call them "inept", which is the right word? Also, I call those brainwashed Westerners "China-haters" while this author calls them "China-bashers", which is the right word?. Peace and best wishes. Xi On 26 ene, 11:11, "Sumerian.." <[email protected]> wrote: > Instead of these depreciating dollars being used again and > again, in that back-and-forth flow of trade, those dollars have been removed > from global markets – and replaced with renminbi. > > > http://seekingalpha.com/article/ 184229-why- china-s-about- to-end-dollar- > peg > > Why China's About to End Dollar-Peg > by: Jeff Nielson January 25, > 2010 | about: UDN / UUP / CYB / CNY > > Jeff > Nielson > > > Having received several comments and questions from readers about the future > of China's monetary policy, which “pegs” the price of the renminbi to the U.S. > dollar, that usually serves as a good indicator that this is a topic worthy > of a > more detailed discussion. > > The general attitude I have encountered (which is obviously fueled by how the > mainstream media chooses to report this issue) is that China's government is > likely to retain the dollar-peg either because a) that has been its policy > throughout the last decade; or b) that China is somehow “trapped” into > maintaining the “peg”. I firmly believe the exact opposite: that China's > government is very close to abandoning the dollar-peg, and (in fact) has made > a > multitude of preparations to do so. > > Obviously, the first and more simpler basis for believing the dollar-peg will > continue is easiest to address, so I will begin with that. While it can always > be seen as simplistic to conclude that some trend will continue, simply due to > some form of “inertia” (or just habit), we live in a universe where inertia is > one of the most dominant forces. > > Thus, the “inertia” argument must always be considered carefully. I would > argue that the appropriate way to conduct such an analysis is to look at what > caused a particular event/trend (in the first place), and whether those > causative factors still exist. Once any particular trend (especially an > economic > trend) is no longer being driven by anything other than “past practice”, than > the probability that such a trend is about to end rises considerably. > > Looking back to when China first chose to link its currency to the U.S. > dollar in this manner, in April of > 1994, there are several obvious factors to list. First of all, China had a > much less-mature economy. It was a smaller economy, in absolute terms. It was > much earlier in the major transition from a primarily agricultural, peasant > population to a much more urbanized, 21st century society. > > Because of this, it lacked the population centers and distribution networks > which must be present before a stronger, more consumer-oriented domestic > economy > can take hold. In turn, lacking a large domestic economy, its rapid industrial > expansion was inevitably dependent on continued strength with its exports. > > What China already did have was a population with rapidly rising incomes, > large pools of savings, and a manufacturing base that has clearly established > it > as the new, global leader in many categories of production. In other words, > China possesses many of the same characteristics today as were seen in the > U.S. > economy – just before it became a global, consumption- juggernaut. > > While dogmatic idealogues may choke on the notion that China is “following in > America's footsteps”, China has long since stopped being a “communist” nation > in > any remotely literal sense. Unfortunately, many of the people who insist on > using labels, use the wrong ones, time and time again. > > “Communism” and the sort of breath-taking industrial expansion currently > taking place in China are simply not compatible. While “communism” may not > prevent the leading Communists from setting aside a larger piece of the pie > for > themselves, it has always prevented the amassing of large personal fortunes > through open commerce – which is officially anathema in any true, communist > society. > > Obviously, the China of the late-20th and 21st centuries has engaged in a > complete ideological reversal, and officially endorsed the concept of > individuals seeking to prosper through their own efforts – something which we > “capitalists” have always considered a trait which separated us from all > “communists”. It is important to be clear about this point, since one must > assume that the endless rants of the China-bashers are fueled (for the most > part) by their failure to understand the changes which have taken place in > both > its economy – and its society. > > Clearly, many of the factors which existed at the beginning of China's > dollar-peg have changed considerably. China is now the world's second-largest > economy – having leapfrogged nations such as Japan, and the world's other > exporting-powerhous e: Germany. With this economic growth being largely based > upon manufacturing, this means that there has been a great deal of additional > wealth created in China's economy, further boosting both incomes and savings > (i.e. cash-flow, and investment capital). > While many myopic observers of China continue to conclude that China lacks > enough domestic demand to reduce its reliance upon exports, not only is it the > second-largest economy, but its domestic economy has been exploding. An > analysis > of China's economy published by the Harvard Business School (.pdf) in > October of 2008 is highly illuminating. > > In 2007, the last year in which China's economy was supposedly being driven > by exports, China's 11% growth was achieved through contributions of 5% growth > from domestic consumption, 4% growth from investment, and a puny 2% growth > from > exports. That's right, in the year before China began to seriously move away > from “export dependence”, those exports accounted for less than 20% of China's > growth. > Furthermore, even when Chinese exports were at their peak, the “dependence” > on mature (and sagging) Western economies was never what is pretended by the > China-bashers. Together, exports to the U.S. and Europe accounted for less > than > half of China's total exports. > > Yes, those levels are falling further – and that is great news for China's > economy. Less and less of China's goods are being paid for with Western IOU's > (of highly dubious worth), while a greater and greater percentage of Chinese > exports are being paid for with cash: the trade surpluses of other developing > economies. Only the warped minds of the China-bashers could construe this > shift > to paying customers as being “bad” for China's economy. > > I could go on and on about China's domestic economic strength, but there is > much more material to cover. Those interested in more reading on this area > could > refer to a couple of previous commentaries (“China's > Problem: Too Much Money”, “Soaring > retail sales in China demonstrate economic shift”). > > Just as China's government has rapidly (and admirably) prepared China's > domestic economy to replace some of the demand for its exports through > increased > domestic consumption, so too has China been rapidly preparing the renminbi to > take over as “reserve currency” from the U.S. dollar. This has taken the form > of > reducing the use of U.S. dollars in global trade, combined with shoring-up the > “reserves” with which it backs its own currency. > > The move to reduce the use of U.S. dollars in trade has been a two-part > process. While China has engaged in a long series of bilateral trade > agreements > to boost its share of global trade, it has simultaneously inked numerous > “currency swaps”, supplying its trade partners with renminbi to use in their > future trading – and permanently excluding the U.S. dollar from those > bilateral > relationships. > > Indeed, inept Western analysts point to the large hoard of U.S. dollars still > in China's possession, and conclude (erroneously) that the Chinese government > is > still increasing its holdings of U.S. IOU's through “buying” its debt. In > fact, > such accumulation has almost stopped. > > China is willing to take whatever “hit” that it must on the U.S. dollars > which it is holding (through currency swaps), because it is effectively > “sterilizing” global trade from the cancerous effect of the biggest flood of > greenbacks in history (and the horrific inflation they would cause). Instead > of > these depreciating dollars being used again and again, in that back-and-forth > flow of trade, those dollars have been removed from global markets – and > replaced with renminbi. > > The second aspect of China's monetary campaign is to improve the “backing” of > the renminbi through a “hard asset”: gold – instead of the worthless paper of > Western bankers. Indeed, this is clearly the favorite means of China's > government to rid itself of dollars – by swapping them for gold. Now, every > time > the anti-gold cabal drives down the price of gold a few percent, the Chinese > government steps in, buys the cheap gold, and rids itself of unwanted > dollars. > > The only problem with this program (from the perspective of China's > government) is that it is holding at least one hundred excess U.S. dollars for > every dollar of bullion which the cabal still has left to dump onto the > market. > More generally, with other central banks taking the “cue” from China (and > India) > to accumulate gold reserves, China must now compete for limited gold > stockpiles > with several other central banks (and, soon, dozens of them). > > Having detailed China's thorough preparations to abandon the dollar-peg, it's > time to illustrate why it will be forced to act on those plans – most likely > this year. For those who have actually been paying attention to the financial > picture of the U.S. (as opposed to simply listening to the propaganda), 2010 > can > be seen as the year where the U.S. government is forced into an open choice. > > With large numbers of jobs being lost, and large numbers of > defaults/bankruptci es/foreclosures being piled atop the world's largest > mountain > of debt; with government revenues plummeting downward at the fastest rate in > history and with 40 states already experiencing serious solvency problems; and > with consumer credit (the fuel for this consumer economy) plummeting downward > at > the fastest rate in history, this is an economy which is still rapidly moving > toward a Soviet Union-like debt-implosion. > Meanwhile, with U.S. deficits already larger than those of the rest of the > world combined (see “Treasury > Department Stalls Budget Report”), and with the U.S. government having > already exhausted its borrowing capacity, now the U.S. government must > choose. > Will it allow this house-of-cards of debt to implode, or will it nakedly > print trillions of new dollars – to pretend to “pay its bills”? No one has a > better feel for the “pulse” of the U.S. economy than JohnWilliams, the eminent > economist, and founder of Shadowstats. com. For several years, > Williams has been predicting a “hyperinflationary depression” in the U.S., at > some point in the future. > > Like many (including myself), Williams believes the “depression” has already > begun. However, he has recently revised his forecast of U.S. hyperinflation: > suggesting that it could now arrive as early as 2010. > > Clearly, with 20% of the world's population, and average incomes which are > still modest, by Western standards, China cannot and will not tolerate > “importing” U.S. inflation/hyperinfl ation through maintaining the “peg”. > Clueless critics continue to insist that this will be a traumatic event to > China's economy, ignoring the fact that China has already taken all the > measures > necessary to immunize itself from the U.S. “cancer”. > Inflation inside the U.S., and inflation in commodity prices expressed in > U.S. dollars means little when China has neither trade-dependence nor > currency-dependence on the U.S. With the renminbi taking over as “reserve > currency” and with it rising in value against other currencies, suddenly the > renminbi becomes the vehicle for all economies to rid themselves of > U.S.-imported inflation (through the use of the U.S. dollar). > > While many can/could validly argue that the world is not prepared for such an > important transition, the win/win benefits of dumping the use of dollars and > embracing the renminbi are so large that this will quickly turn into a > powerful > (and self-fueling) dynamic. > > Remember that every dollar replaced with renminbi in trade is one more excess > dollar permanently dumped upon this already-oversaturat ed market for dollars. > Those nations/economies who delay abandoning the dollar will be punished by > crippling inflation (and the political consequences of crippling inflation) – > and through the value of those dollars they are holding rapidly moving toward > zero due to non-existent demand. > It is entirely moot (at this point) to debate whether China “should” dump the > dollar-peg. The facts are obvious: China must dump the peg, and both China and > the rest of the world will benefit enormously from it doing > so. > > ======= > S1000+ > ======= > > --- On Mon, 1/25/10, Vigilius Haufniensis <[email protected]> wrote: > > > > big_pic.png > 38 KVerDescargar -- You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/world-thread?hl=en. -- You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/world-thread?hl=en.
