#26
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Re: Nice Bet China
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That is implying they will balance not by selling dollars and buying Euros and other "strong currencies", but rather by reducing their dollar reserves by inveting them. So it would be incorrect to assume (as it seems much of the public has done because they didn't take time to understand the statements and instead jumped to the conclusion that it meant China selling $ and buying other currencies) that "balancing" necessarily means swaping reserves in one currency for another. It could just mean (and reading the actual statements it likely does mean) that they will be holding less dollars, but they will do so by investing them. [/ QUOTE ] This makes sense. [ QUOTE ] Also, I think it actually is very good for the dollar to do this. The more dollars invested in the Chinese system means the more dependent their system becomes on the dollar (thus dumping it would hurt them even more). [/ QUOTE ] This doesn't make sense. If the Chinese invest dollars into their economy they will do so buy buying things which aren't dollars. Whether its steel and lumbar for factories, paying for mineral rights, buying existing companies in europe or the states there will be more dollars on the market and a major buying pulling out. This is a decoupling of their economy to the dollar and there is no way around it. |
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