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When a Butterfly Tries to Fly Like a Bird, Its Wings Can Only End Up Broken - Until China Can Station Troops Around the World to Effect Regime Change on Countries that Refuse to Hold Yuans as Reserve Currency, It Has No Business Trying to Imitate America - It Becomes a Joke, Were the Cost Not so Catastrophic on the Chinese People.|
China cannot do what America does, for the simple reason that China cannot pay its dollar-denominated debts of nearly 3 trillion dollars by simply printing dollars to equal the principal plus interest. But China is acting as if it could, through overvaluing the Yuan, and allowing private and government groups to keep borrowing in dollars, that the PBOC would end up paying through reducing its foreign currency reserves, now less than 3.65 Trillion dollars worth. China is blowing through more than 40 billion dollars a month pretending it can keep the Yuan overvalued against the dollar. All the Fed has to do is raise the interest rate, which it has to do not in order to sink China, but because otherwise inflation in America would become a serious problem next year if it does not raise rates this year, and China's products overpriced as they already are at 6.40 CNY/USD, would be ever more overpriced in dollars abroad, and in yuans at home, making Chinese manufacturers suffer losses of revenue, profit margins, and eventually, suffer inability to service their own debts in Yuans and in Dollars, resulting in factory closures, mass layoffs and social uprisings. The culprit is not the Fed, having to raise interest rates, which it has no choice but to raise or Americans will soon find food and rents go over the roof if it does not. The culprit is the PBOC and its backers at the top who see their political stature reflected in the value of the Yuan, regardless of its adverse consequences on the livelihood of the factory owners and workers, who stand to lose their investments and their jobs all in one swoop.
And, if all indicators are right, the US economy is heating up right now. Sales are going up everywhere. People are buying. If interest rates don't go up soon, inflation will take off. And once the expectation of inflation is built into the valuation of investments and savings, it becomes a self-fulfilling vicious cycle. The Yellen administration is unlike the Bernanke and Greenspan crowd who cater to Wall Street wishes, putting the stock market ahead of the real market. Yellen will raise rates because otherwise the standard of living of Main Street will be eroded by inflation. And printing money into an inflation is like adding fuel to the fire, so fiat does not work here, only raising interest rates will work. Yellen will raise rates, Wall Street will tank, and the Chinese economy plus stock market, will also tank. In the end, the dollar will be left standing, but still able to buy whatever the American economy needs, which is what in the end matters.