Japan holds almost as much T-Bonds as China, yet they are not whinning?
- Thread starter crgarcia
- Start date
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you must get your news from US sources.
http://www.atimes.com/atimes/Japan/KK14Dh01.html
http://news.bbc.co.uk/2/hi/asia-pacific/8317656.stm
http://www.theaustralian.com.au/new...-to-stay-on-hold/story-e6frg6so-1225797092873
I spoke of all this years ago on elitetrader.
it is ridiculous to paint the exporting country as the victim in this. They could have sold products to us in dollars and instantly exchanged our currency into another. Of course that would cause the dollar to decline and the yuan to rise. Causing them to sell less product. That is how floating currencies are supposed to work.
Pegging is a predatory export policy and it became responsible for much of the problems we have today.
You can't screw with the invisible hand of economics.
The peg and their desire to keep it as long as possible caused them to lend money too cheaply to unqualified us homebuyers. excerbating the real estate bubble.
In summary no one forced them to hold on to devaluing dollars. It was done in their own self interest in an attempt to put off the consequences of their market distorting policies.
Calling them a victim of our dollar is just patently ridiculous.
Interesting post, thank you. - - I disagree with many of your points, but don't paint China as a 'victim'. I also don't see them as the root cause of our current economic problems either.
As I see it the cause comes down to the Federal Reserve and their overly expansive 'money printing'. They brought interest rates down to unsustainable low levels, sending a false signal which encouraged excessive consumer spending (on a lot of junk made in China, and imported by US corporations all too willing to outsource thus supporting Chinese factories so that manufacturing has been gutted stateside). The Chinese took their 'reserve currency' dollars and put them back in the U.S. as investments and those cheap dollars brought down long term rates and helped to drive the real estate bubble. Over the last 20 years the dollar has declined considerably in value due to Fed actions. (It has dropped in terms of its value within this country by at least 30% over the 10 years from 1998-2008 alone. After the last year of Fed secret money printing, who knows what the impact is ?) When you have the world's reserve currency, you have license to screw over your trading partners quite effectively.
I think it quite possible that the Chinese would define the 'predator' differently and would also feel that 'the invisible hand' of the Fed, not the market had been operating. - - Now I don't deny that China had operated out of their own self interests. But if you were in their position, what would you have done ? Maybe they should have just been good little boys and girls and go along with the 30% shafting. Maybe they should have imported all that U.S. inflation into their own economies like so many other nations in the past.
Again, IMO the Fed was the root cause of this, not China. If the Chinese held the peg in a stable uninflated dollar environment that would be a different matter. If the Fed hadn't run the presses the massive imbalance of trade with China likely never would have occurred. Regards, - - -
We here in the u.s have been screwed by the inflation caused by the Fed.
We are not responsible at all for China holding onto to a devaluing dollar.
They could have exchanged for Euros, gold, oil or anything else thirty seconds after they got paid - each and every time boat load. They did not have to wait for the dollar to devalue. it was part of their strategy.
It was a pay me now or a pay me later situation. They used what ever strategy they could to make as much money as they could as long as they could. Pegging with support was their strategy.
They were warned by bush numerous times we were going to inflate off their peg if they did not break the peg on their own. I predicted it here on elite trader at least twice.
They propped up our consumers buying power as long as they could. We got cheap products they got over valued dollars. But if they had broker the peg their economy would have not expanded as quickly as it had because we would have been able to purchase much less.
That was the choice they were making by pegging. Sell more now hold onto dollars and hope the dollar does not go down too much.
They held the dollars because they were trying to distort the market as long as possible. Like I said they could have gone to Euros within thirty seconds.
We are not responsible at all for China holding onto to a devaluing dollar.
They could have exchanged for Euros, gold, oil or anything else thirty seconds after they got paid - each and every time boat load. They did not have to wait for the dollar to devalue. it was part of their strategy.
It was a pay me now or a pay me later situation. They used what ever strategy they could to make as much money as they could as long as they could. Pegging with support was their strategy.
They were warned by bush numerous times we were going to inflate off their peg if they did not break the peg on their own. I predicted it here on elite trader at least twice.
They propped up our consumers buying power as long as they could. We got cheap products they got over valued dollars. But if they had broker the peg their economy would have not expanded as quickly as it had because we would have been able to purchase much less.
That was the choice they were making by pegging. Sell more now hold onto dollars and hope the dollar does not go down too much.
They held the dollars because they were trying to distort the market as long as possible. Like I said they could have gone to Euros within thirty seconds.