Author: deananash

Why China should revalue the Yuan against the US Dollar, and how... [Copy link] 中文

Rank: 4

Post time 2005-6-6 02:40:26 |Display all floors

Deanash speaks of economic revolution!

The suggestion that we turn back the clock and scrap our present econmic system is very rebellious Mr. deanash...I hope you have all your doors locked!

Our present system , designed in Bretton woods by world leaders and economists ,such as Keynes, is a  global one and every country that has a real economy  is subject to its ravages in the stock markets and in the board rooms of the world bank etc.

In a world where a currency of any nation can go up or down every minute,24-7, how can Gold accurately reflect these rapid changes??

remember that capital,money, flows to the path of least resistance...so it will end up where it will. ..even debt and credit is not a reliable indicator of true wealth..as things swing back and forwards.
Perhaps its not the plus and the minus dollar value that matters but who has the power to influence that flow most.

Today the US is a borower, tomorow they will be the lender...and so on

So think, what is the real goal of changing the system? and to who's advantage??

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Post time 2005-6-6 11:50:06 |Display all floors

Returning to Bretton Woods....

leijierong, you are confused.  The Bretton Woods  agreement was abandoned more than 30 years ago.  I'm actually proposing that we return to something similar.  Don't trust me (or anyone), see for yourself.  You can start here (first the website, then a quote from it):

http://en.wikipedia.org/wiki/Bretton_Woods_Conference  

"The chief features of the Bretton Woods system were, first, an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold; .... In face of increasing strain, the system eventually collapsed in 1971, following the United States' suspension of convertibility from dollars to gold."

The only revolutionary idea that I'm proposing is that China be the country that backs its paper money with GOLD.

muzeseeker, first, thanks for your maturity.  You've set a fine example for others.  Second, I agree with you, when a country's currency is fixed to gold, there is little the country can do to manipulate the system.  That is exactly the reason that President Nixon took America off of the gold standard.

HOWEVER, the benefits to the country that maintains the GOLD standard far outweigh the limitations.  The lack of manipulation is exactly what attracts others to buy that currency as their 'reserve' currency - and this is the real benefit.

If the Yuan is pegged to GOLD, then oil will be priced using the Yuan - because it will be the same as pricing it in GOLD.  The first major country that returns to the GOLD standard will find that their currency becomes the world's reserve currency.    The benefits of this are enormous.  

The advantages of being the world's reserve currency are primarily that A.  foreigners will accumulate your currency (with their savings), thus 'loaning' you their money, and B. if/when all Hell breaks loose, your currency is the least affected.

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Post time 2005-6-6 13:37:59 |Display all floors

The institutional flaws are critical

I have been trying to convince you that the time of China has not yet come, in fact, far far away.

Or never.

China is a country that has more problems than advantages. No matter what you heard in China, there is still more under the quiet water. The most dangerous thing is that the banking system, which is as fragile as a piece of glass. (Don't argue about this, I know it is right.The loans that are not performing are larger than any statistic.) You can never build a glass house without too much concern.

Strengthening or renovating the system is something beyond the government's ability, I assure you. the reason is rough like these: One of the problems of Communism and Socialism is that the government is too strong and too big.

Being strong means the authority is so "too much over the people" that "the common" have little choices in social life. The elite decide everything.

That is what people see in their daily life. You can do little according to your own will: you can not move to work in Beijing or Shanghai easily, and you have to be very careful in Guangzhou, in case you might be beaten to death, if you are not decently dressed.

This system is too strong to be defeated, and too big to be swift and flexible. So is with the banking system.

Sure you know, RMB can not be exchanged freely?
Do you know why? You don't have enough power to keep the balance of international trade or exchange.

If what you are dreaming of has come true in ten years to come, the system would collaps in two hours.

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Post time 2005-6-6 21:36:11 |Display all floors

muzeseeker, everytime you write about these problems....

I think that you are agreeing with me.  

Tying the Yuan to GOLD will force the government to do the right thing - they will have no choice - regarding the banking mess in China.

As for your other comments, now I'm curious if you are in China.  Do you mind to tell me?  There was a horrible case a year or so ago of an immigrant being beaten (to death?), here in GuangDong Province.  Principally because he lacked certain documents, etc...

HOWEVER, the government responded swiftly - and admirably - by changing the laws and punishing the corrupted policemen.  

The fact that China is underdeveloped (financially) is the BEST reason to do it now.  As China further develops, interested parties will seek to protect their own interests and it will be next to impossible to implement.

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Post time 2005-6-7 16:05:44 |Display all floors

I didn't know...

1. I didn't knew I was always agreeing  with you, which I would have been very delighted to be, if that had been the case.

2. I didn't know you are so attached to Chinese government, especially I learnt that you used to stay in the states.

3.  Some two thousand years ago, Han dynasty, Wang-mang used to reform on the money system. The expence of his policy was that he lost his New Dynasty.  Tow hundred years ago, China was the biggest gold absorbing machin. The inbalance of foreign trade led to a hundred years humiliating wars. By the way, before  the wars against western countries, China government, Qing, did have difficult time in civil wars.

The richness of China did not save the people.

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