Author: abramicus

DENG MOVED CHINA FORWARD WITH HISTORIC DEVALUATION FROM 5.74 TO 6.37 IN 1992 [Copy link] 中文

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Post time 2015-3-1 23:53:12 |Display all floors
abramicus Post time: 2015-3-1 19:10
Deng felt the need for China to grow its GDP in order to lift up the standard of living of its peo ...

Year 1986 approx 3.75 Yuan to 1 dollar ==>1 bowl of noodle is 1 Yuan

Year 1994 approx 8.75 Yuan to 1 dollar ==> 1 bowl of noodle is 5 Yuan

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So you think weaker Yuan is a good thing.  Have you thought of high inflation that comes with weaker Yuan. What will poor people in the cities eat if there are high inflation.

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Post time 2015-3-2 04:51:09 |Display all floors
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Post time 2015-3-2 04:59:03 |Display all floors
Could you stop the shell game long enough to show the audience which shell the nut is under?
The nut being bushier
If capitalism promotes innovation and creativity then why aren't scientists and artists the richest people in a capitalist nation?

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Post time 2015-3-2 08:20:28 |Display all floors
bushier Post time: 2015-3-1 23:53
Year 1986 approx 3.75 Yuan to 1 dollar ==>1 bowl of noodle is 1 Yuan

Year 1994 approx 8.75 Yuan t ...

On the contrary, a weaker Yuan allows the price of wages to rise faster than the price of consumer items, and the standard of living rises, rather than falls.  It also speeds up the velocity of money in the economy, generating more jobs, and higher paying ones.  An overvalued Yuan makes it more expensive for consumers, for employers, and for manufacturers to make a living.  An overvalued Yuan causes economic activity, and more fundamentally, manufacturing activity to come to a stand still, as China-manufactured products become too expensive abroad when priced in dollars, and too expensive domestically, when priced in Yuans.  This pincer effect has resulted in the PMI Manufacturing Index of China to fall into recessionary territory for 3 consecutive months now.  It has forced businesses to borrow in dollars while the exchange rate is high, parking these dollar-denominated loans abroad, using their failing factories as collaterals, denominated in Yuans.  This is the only way they can free up their equity from inevitable bankruptcy, at the rate the PBOC is revaluing the Yuan far beyond the willingness of foreign and domestic buyers to buy Chinese products.

Using the 1 bowl of noodle 1 yuan analogy fails to capture the fact that at 8.75 yuans per bowl of noodle, each person in China was able to afford to eat 8 bowls of noodle for every one bowl that he used to be able to afford, because with the devaluation, wages increased even more, and jobs also became more plentiful, such that those who used to earn practically nothing, are now earning ten times more in purchasing power.

Bushier's "logic" needs to be paid attention to.  This is precisely the kind of "Economic Hit Man's Advice" that seems to have hijacked China's stellar GDP growth rate to a "New Normal" of collapsing growth rate, and in the case of the PMI manufacturing index, to an overall trend of factory failures and insolvencies.  All the while, the PBOC leaves hundreds of billions of dollars of forfeited export earnings on the table of international trade for Japan to pick up for free, as Japan devalues the Yen while China overvalues the Yuan.  This is grand larceny on a historic scale.

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Post time 2015-3-5 14:59:35 |Display all floors
CHINA'S ECONOMIC OUTLOOK GETS DIMMER BY THE DAY . . . AS FAILURE IS INSTITUTIONALIZED AS THE "NEW NORMAL" . . . EXPECT CHINA TO LOSE ALL HER FOREIGN CURRENCY RESERVES TRYING TO PROP UP THE RENMINBI (OR, RATHER, THE EGO OF THEIR ECONOMIC CZARS).

REFUSING TO ADMIT THAT THE CAUSE OF CHINA'S RECESSION IS NOTHING ELSE THAT ITS SELF-IMPOSED REVALUATION OF THE YUAN, CHINA'S ECONOMIC CZARS ARE THROWING GOOD MONEY AFTER BAD TO SAVE THEIR "FACE".

GUARANTEED DEVALUATION AFTER THE FOREIGN CURRENCY RESERVE IS DEPLETED BY COUNTERBALANCING DOLLAR-DENOMINATED DEBT BEING ACQUIRED BY CHINESE BUSINESSES AND BANKS AT AN UNPRECENDENTED RATE, SEEN ONLY IN TIMES OF WAR.

THIS TIME, CHINA IS LOSING THE ECONOMIC WAR . . . BY SELF-SABOTAGE.



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Post time 2015-3-9 09:35:49 |Display all floors
China should not play the fool as the international reserve currency high roller, attempting to break the monopoly of the house, the simple reason that no matter how many trillion chips it has in its pocket to stake at any game, the house has an INFINITE number of chips to raise the stakes with, until China makes a mistake and lose a huge chunk if not most of its foreign currency reserves.  3.8 Trillion Dollars is not a lot of money when compared to the money supply of the dollar.  It barely nudges the dollar.  Be realistic.  Reject the siren calls of the Economic Hit Men who want to see China lose its manufacturing clout and its hard-earned foreign currency reserves trying to achieve international reserve status for the Yuan, which any historian can tell his economics colleagues, cannot be achieved, or if achieved, cannot be sustained without the capacity to exercise political and military fiat over the oil producing countries, and another 50% of the world, at the least, besides.  

Fiat currency is not called "fiat" for nothing.  Fiat is backed by raw, unadulterated, force.  And China can only try to buy the status, but cannot hold on to it for any meaningful length of time.

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Post time 2015-3-29 23:11:55 |Display all floors
In 1994 (one USD = 8.75 yuan) USD 1 million invested in China will be equal 8.75 million Yuan

In 2014 (one USD = 6.5 yuan) your  8.75 milllion Yuan invested in China, will be equal to USD 1.346 million

So having very low US dollar to yuan exchange rate benefit the foreigners ie Americans, Japanese, etc.

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