Re: he was right
"If, indeed, the Chinese dump $3 trillion in reserves. "
Well, it certainly didn't happen on Monday, as predicted, now did it? There is this nasty form of crime called "attempted market manipulation" that some may be aware of. One clue to recognize when someone is trying to manipulate a market is when you hear of "unidentified sources close to a government negotiating team" who are passing on "inside information" for people to take action on. Another clue is when you hear such things revealed on commercial radio and/or TV rather than from a bona fide news outlet. My guess is that the person who was trying to manipulate the market with these clearly inaccurate words was a gold peddler. Imagine that!
Currency markets, especially with respect to the dollar, are tricky things. The "big lever" that the US uses to attempt to control the strength or weakness of the US$ is short-term interest rates. That really is the ONLY "lever" the FED has to do so. Furthermore, I think the economists in China know what would be in store for their own economy if they suddenly dumped the dollar and caused it to tank. Not only would this serve to REDUCE the US trade deficit with them (because the dollar would drop in value), but it would idle a significant portion of their manufacturing base. Who would they sell all their consumer stuff to? The US and China are linked at the hip. As goes the US economy, so goes China. Don't believe me? Ask the Japanese. In the Reagan era the US had large trade deficits with Japan. And when those trade deficits even began to level off in the early to mid 90s, and Japan had made some bad real estate deals, all that was left for Japan to save its economy from disaster was to devalue the yen. And then came 1997 and the broad asian economic downturn. In my view, I think China knows the score. They need a market to sell the ever-increasing manufacturing base to. That market (the biggest market) is the USA.
"If, indeed, the Chinese dump $3 trillion in reserves. "
Well, it certainly didn't happen on Monday, as predicted, now did it? There is this nasty form of crime called "attempted market manipulation" that some may be aware of. One clue to recognize when someone is trying to manipulate a market is when you hear of "unidentified sources close to a government negotiating team" who are passing on "inside information" for people to take action on. Another clue is when you hear such things revealed on commercial radio and/or TV rather than from a bona fide news outlet. My guess is that the person who was trying to manipulate the market with these clearly inaccurate words was a gold peddler. Imagine that!
Currency markets, especially with respect to the dollar, are tricky things. The "big lever" that the US uses to attempt to control the strength or weakness of the US$ is short-term interest rates. That really is the ONLY "lever" the FED has to do so. Furthermore, I think the economists in China know what would be in store for their own economy if they suddenly dumped the dollar and caused it to tank. Not only would this serve to REDUCE the US trade deficit with them (because the dollar would drop in value), but it would idle a significant portion of their manufacturing base. Who would they sell all their consumer stuff to? The US and China are linked at the hip. As goes the US economy, so goes China. Don't believe me? Ask the Japanese. In the Reagan era the US had large trade deficits with Japan. And when those trade deficits even began to level off in the early to mid 90s, and Japan had made some bad real estate deals, all that was left for Japan to save its economy from disaster was to devalue the yen. And then came 1997 and the broad asian economic downturn. In my view, I think China knows the score. They need a market to sell the ever-increasing manufacturing base to. That market (the biggest market) is the USA.