Author: abramicus

China Must Let the Yuan Devalue to 6.50 As Soon As Possible. [Copy link] 中文

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Post time 2014-12-14 05:05:33 |Display all floors
This post was edited by abramicus at 2014-12-14 05:12
futsanglung Post time: 2014-12-12 17:04
Better still why not do as the majority of the worlds currencies do and let it find its own value. w ...

Ideally, that is the way the exchange rate should be set, is by the free market.  But you know the players in the currency market are big boys who can sway the market, especially by ganging together, at times, such as during the 1997 Asian Currency Crisis that netted them a cool $1 Trillion Dollars of profits, not by making the market more efficient in seeking the true clearing price of the various Asian Currencies, but by causing the normal market mechanism to break down through targeted, relentless shorting of various currencies, such as the Thai Baht, and later, the Hong Kong dollar, that DISTORTED the clearing price because of an avalanche of sell orders, using Hong Kong dollars borrowed by the speculators from Hong Kong banks, chief of which was the bank that did not pay royalty to use Hong Kong and Shanghai as part of its name.

Currency manipulation is the rule, not the exception, and therefore, to ask China to allow the "market" to set the exchange rate of the Yuan, is like giving the keys of St. Peter to the devil.

On the other hand, there is at any one moment an ideal clearing price for every currency that satisfies the real supply and demand for it, which we can call the Ideal Market Price, that is different from the Actual Market Price.

For China, if the foreign speculators can be stopped from speculating (which is impossible), if China allows the market to determine the equilibrium price for the Renminbi, the exchange rate should be beteween 6.50 to 7.00 Yuan/Dollar, and because the PBOC is preventing the Yuan from devaluing it, in the mistaken notion that devaluation means "failure" of the current administration, China is paying through the nose for this pursuit of political vanity, if not outright economic treason, as the lost income to Chinese manufacturers, in the international and in the domestic market, largely becomes the extra undeserved income of the Japanese manufacturers, in the same markets.   It is one thing to give BOJ one trillion dollars as a check, which is treason and illegal.  It is another thing to give up the chance to earn one trillion dollars, and let Japan pick it up, which is legal.  But over the course of the past two years, the net effects of both are EXACTLY THE SAME.  

In finance, when two transactions result in the same exact outcome, they are considered "arbitrage-free", and by this principle it can be demonstrated beyond the shadow of a doubt that the PBOC has transferred probably hundreds of billions of dollar of lost income to Japan, and by the principle of logic, that if two events are identical, if one is illegal, then both are equally illegal.

This is why the PBOC must be banned from buying Yuans with China's hard earned dollar reserves, immediately.  And, all foreign-currency-denominated loans to Chinese banks, businesses, and individuals, as well as government agencies, must also be banned, because by deferring loan repayment into the future, these are all equivalent to buying Yuans with China's hard earned dollar reserves, and have the same net effect, and thus, by "arbitrage-free" criteria, borrowing loans denominated in dollars that have to be paid back in dollars ultimately, is the equivalent of buying Yuans with Dollars on an installment basis.

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Post time 2014-12-14 05:39:14 From mobile |Display all floors
latest news has the RMB at 6.1 to the mighty US dollar , yes the mighty USA which is 17 trillion in debt
Playing Mahjong in Hangzhou world competition.

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Post time 2014-12-14 05:41:42 From mobile |Display all floors
forgot to say that the U.S. owns the IMF and does set value of any currency around the world
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Post time 2014-12-14 06:37:53 |Display all floors
This post was edited by abramicus at 2014-12-14 06:45
idorun Post time: 2014-12-14 05:39
latest news has the RMB at 6.1 to the mighty US dollar , yes the mighty USA which is 17 trillion in  ...

Having a high exchange rate is not a sign of economic strength.  The only time when a high exchange rate is a sign of strength is when foreigners are buying up your currency with their currencies.  China's 6.10 yuan/dollar exchange rate of September 2014, due to China's own central bank buying up its own yuans with hard-earned US dollars is not a sign of strength.  It is a sign of stupidity and vanity.  It is also futile because such a "high exchange rate" can only be maintained by China continuing to throw away hard-earned dollars for yuans that cost it peanuts to create, in print or in bytes.  And 4.1 Trillion dollars is very easy to spend.  One way that the PBOC has allowed China's dollar reserves to disappear is by allowing Chinese businesses, banks and government agencies to borrow dollar-denominated loans, which have to be paid in dollars.  These loans are serviced through earning Yuans in China, and converting them through the PBOC into dollars, which are then sent back abroad (both the principal and interests).  Overnight in the past 2 years, China's practically non-existent dollar-denominated loans borrowed from foreign banks has ballooned to a staggering 1.5 Trillion Dollars!  All of these have to be paid by the PBOC as dollars to the borrowers so that they can pay their foreign lenders, i.e., they all end up with China having to pay in dollars in order to service these loans to maturity, and that is $1.5 trillion dollars in present value.  Over the life of the loan, these amount easily to 3.0 to 4.0 trillion dollars!  And so, China's 4.1 trillion dollar reserve, shaved by nearly 200 billion dollars due to capital flight between September to October 2014 to 3.9 trillion dollars is now BARELY ABLE TO SERVICE THIS GIGANTIC DOLLAR-DENOMINATED DEBT that the PBOC allowed Chinese banks, businesses, government agencies and individuals to assume, each of which is in effect a lien on China's dollar reserves, which by this very mechanism, is now insolvent, and therefore China's banking system is on the verge of becoming insolvent, and in debt to, guess who -- the guys who printed the dollar for peanuts.

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Post time 2014-12-14 06:40:51 |Display all floors
This post was edited by abramicus at 2014-12-14 06:51

China's piggy bank may be ALREADY be stuffed with worthless yuans that cost it peanuts to print, with all the dollars gone out the window, the door and the elevators.  

Who is responsible for watching over the hard-earned savings of five generations of Chinese men and women?

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Post time 2014-12-14 06:49:18 |Display all floors
This post was edited by abramicus at 2014-12-14 06:53

THE LATEST NEWS IS THAT THE YUAN EXCHANGE RATE IS A BIT BETTER AT 6.18 YUAN/DOLLAR COMPARED TO THE CHOKEHOLD THE PBOC PUT ON CHINA'S MANUFACTURING SECTOR WITH ITS DEADLY 6.10 YUAN/DOLLAR EXCHANGE RATE THAT PUSHED THE MANUFACTURER'S PMI DOWN TO 50.0 AND THE ANNUAL GDP GROWTH RATE TO 7.3%.

THERE IS NO REPENTANCE AND REMORSE AT THE PBOC HOWEVER, AS IT TRIES TO FIGHT THE NATURAL DEVALUATION OF THE YUAN IN THE NAME OF MAINTAINING "STABILITY" EVEN IF THE STATUS QUO BEFORE THE MARKET CORRECTION WAS A CHOKEHOLD ON CHINA'S MANUFACTURING SECTOR - TRANSFERRING WOULD-BE INCOME FROM CHINESE FACTORIES TO JAPANESE FACTORIES INSTEAD BY THE TENS OF BILLIONS AND HUNDREDS OF BILLIONS.

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Post time 2014-12-14 07:05:02 |Display all floors
This post was edited by abramicus at 2014-12-14 07:06

HISTORICAL LESSON FOR THE YOUNGER GENERATION OF CHINESE MEN AND WOMEN IN CHARGE.

CHINA'S ANNUAL GDP GROWTH RATE WAS A STELLAR 11.0% IN 1988.  THEN, OF COURSE, LIKE THE "OCCUPY CENTRAL", TAM WAS OCCUPIED BY FOREIGN STOOGES, AND CHINA'S ANNUAL GDP GROWTH RATE DROPPED TO 4.1% AND 3.9% FOR 1989 AND 1990.  CHINA DEVALUED THE YUAN FROM 4.94 IN 1989TO 5.74 IN 1991, WHEREUPON THE ANNUAL GDP GROWTH RATE JUMPED FROM 3.9% TO 9.2%.

LEARNING QUICKLY THE NATURE OF THE BEAST, DENG AND HIS HELPERS SEIZED THE MOMENT, AND DEVALUED THE YUAN FROM 5.74 TO 6.37 IN 1992.  REMEMBER THIS NUMBER!  6.37 YUAN/DOLLAR!  

AND THE ANNUAL GDP GROWTH RATE SHOT UP TO A HISTORIC 14.2%, WHICH HE SUSTAINED TO 1993 AT 14.0%.

CHINA MUST BREAK THROUGH THE CHOKEHOLD OF THE PBOC'S EXCHANGE RATE BEING KEPT ARTIFICIALLY OVERVALUED AT LESS THAN 6.30, AND HISTORY HAS PROVEN THAT IF CHINA'S YUAN EXCHANGE RATE BREAKS OUT AT 6.50, ITS ANNUAL GDP GROWTH RATE WILL RECOVER OVERNIGHT, AND ITS FOREIGN CURRENCY RESERVES WILL AGAIN RISE DRAMATICALLY.

MORE IMPORTANTLY, IT WILL END THE ILLEGAL TRANSFER OF ARBITRAGE-FREE FUTURE TRADE REVENUES FROM CHINA TO JAPAN, WHICH HAS ADOPTED A YEN DEVALUATION POLICY IN TANDEM WITH CHINA'S YUAN REVALUATION POLICY.  ON THE SURFACE, THEY MAY LOOK LIKE COINCIDENCES.  IN FINANCE, COINCIDENCES ARE RARE INDEED.

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