TechTicker: "The idea they don't have anywhere else to go or would shoot themselves in the foot if there were a steep decline in the dollar or appreciation of their currency
reassures many people in Washington ‘we can relax'," he says. "An appreciation of the renminbi may reduce value of their international reserves but increases the value of every other asset the Chinese own," most notably the commodity assets they have been buying all over the world.
China's "current strategy is to diversify out of dollars and into commodities," Ferguson says. Furthermore, China's recent pact with Brazil to conduct trade in their local currencies is a "sign of the times."
Perhaps most importantly, China's massive stimulus program is helping to generate internal consumption in the People's Republic, meaning local manufacturers are less dependent on exports. Because of the "rapid growth" of Chinese domestic consumption, Ferguson predicts China's international trade surplus could be gone by next year.
Quantitative easing is a kind of counterfeiting. My estimate so far is that 1 out of every 20 dollars in calculation or being held by banks is just so much printed paper.
ReplyDeleteMoney based on a fiat system, to be of any value, has to be earned, meaning it has to represent someone’s labor, either actual time spent earning the money or revenue from the sale of a product that has been exchanged for money.
A government can obtain real money from taxing its citizens and those investing in its economy or by borrowing it. They can also lease government lands and change fees for various licenses and services.
For a government to blatantly just start counterfeiting money is scurrilous and a crime. That government is diluting (stealing) the real money that has been earned by its citizens. This is criminal enterprise.