Author: 468259058

Was U.S. Dollar printed too much compare with Chinese RMB? [Copy link] 中文

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Post time 2011-4-26 03:46:06 |Display all floors
Originally posted by satsu_jin at 2011-4-25 11:33
I gave you both, the total M2 and M1 as well as the growth figures for 2010. Check it once again. Nobody is interested in old figures from 1990 except historians.
.
The original data in your data is not wrong. But it is misleading.


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Money Supply Growth (measured by M2) in Mainland China is calculated in Blue Line.
Money Supply Growth (measured by M2) in U.S.A is calculated in Red Line.
1.jpg

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Post time 2011-4-26 03:46:51 |Display all floors

To Satsu_Jin

#35 in the thread of
h ttp://bbs.chinadaily.com.cn/viewthread.php?gid=2&tid=690371&page=2&extra=page%3D2

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Post time 2011-4-26 19:03:28 |Display all floors
# 29

Nice graph but distorted. I give you a better graph which reflects American reality. Look at the rapid increase for M2 - starting around the year 2,000. Btw, it's around 10,000 billion of $$ as of 2010.


Enjoy it .
US - M2 and M1.png

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Post time 2011-4-26 20:27:18 |Display all floors
# 29


I did send you a reply and an actual graph about the real US - M2 .  Still waiting for the mods to approve it.

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Post time 2011-4-26 21:45:38 |Display all floors
pretty pics in #31. The data are exactly the same as #29.
If you added the M2 of Chinese yuan into the pic in #31 post, it would the pic in #29.


If you thought that M2 growth of US dollar have increased rapidly since 2000,
of course you would be shocked by M2 growth of Chinese yuan.
Please read the pic in #29 again, or you could also draw the pic by yourself - add the M2 of Chinese yuan into the pic in #31.

[ Last edited by 468259058 at 2011-4-26 10:02 PM ]

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Post time 2011-4-26 21:56:23 |Display all floors
Originally posted by satsu_jin at 2011-4-26 19:03
# 29

Nice graph but distorted.
.

Of course not distorted but you didn't read it carefully.

It's the same pic as in #31.
I drew red line with the data from Federal Reserve of U.S.
I drew blue line with the data from Central bank of China.

If the M2 growth of U.S dollar (red line) was rapid (in your definition),
the M2 growth of Chinese yuan would be called by "skyrocket".

[ Last edited by 468259058 at 2011-4-26 10:00 PM ]

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Post time 2011-4-26 22:00:39 |Display all floors
What the consequence of the huge inlfation?  a huge disaster?


That's of course an important question.
China is not facing a hyper-inflation and can NOT be compared with Zimbabwe by any means - so the Yuan as a currency isn't jeaopardized and I'm confident that our children will still buy their drinks in Yuan if they're in China.
However, there are of course negative consequences if you're having an inflation of around 10 percent p.a.:

- risk premiums hike: because you don't know whether your money still worthes the same tomorrow, you'll ask for higher interest rates. Thus, capital becomes more expensiv and as a result, less business opportunities pay off. Therefore, China's innovativity decreases due to the inflation.

- the cost structure changes: companies will spend a higher proportion of their incomes on interest rates and therefore won't increase salaries (or at least increas them slower than the prices are increasing). Finally, workers end up with less purchasing power. This might, according to the Chinese government, lead to social unrest, but I'm not an expert in this field and therefore can't judge how big the threat of social unrests really is.

- Wealth is redistributed towards the rich: this is probably the worst consequence of all! Savings of ordinary Chinese decrease in value, while asset prices hike (and might even end up in bubble). So those people who invested in businesses are profiting, while the already poor who can't afford running a company are loosing money.This is a huge problem, because there is neither a decent health care nor any reliable pension nor a sufficient social security system in China, so people need their savings if they grow old, lose their jobs or get sick.
This leads to two effects: on one hand, people get really unhappy with the government, which threatens again social stability in China. The government is trying to blame the inflation on higher commodity prices or greedy foreign companies, but this doesn't work as everyone knows about the huge stimulous package.
On the other hand, people can't do anything about it, (if they don't want to become violent), so they try to deal with the situation and save more money. Which means they save a higher proportion of their income. Which means they spend a smaller proportion of their income. Which harms the economy, especially small businesses - and they, in turn, safe again. A vicious circle.

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