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Why this time dollar goes up while Fed signal further cut?; entered at 2007-12-02 12:55:42

Gmak
Posts: 10179
Registered: 2007-07-27 Re-inventing the future at the speed of time.

"Bozonian" wrote..

the Chinese government can just give its citizens vouchers that can only be used to purchase domestic goods. This will keep the factories humming though the little blinking statues of Santa Claus might have to become statues of Confucious.

Those vouchers already exist. They are called Yuan. If China hands them out willy-nilly, then producers will demand more of them in exchange for goods and services (=inflation).

Inflation is what brought down the last non-Communist rulers of China, and it would bring down this cadre as well. Social unrest is a distinct possibility.

China is trying to find an easier path that will permit growth but no inflation. This is not possible with the pegged currency. It will soon be no longer possible due to financial system distress, and a contracting global economy.

Last modified: 2007-12-02 12:56:03 by gmak

2007-12-02 12:55:42


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