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Right. Correct what I said at the top to
the only thinkthing that China might do is start borrowing dollars (whether the public or private sector does this is immaterial) to fund its economic or military activity, using its currency reserves to back that debt (basically, the Chinese central bank can safely allow the Chinese economy to accumulate an amount of dollar-denominated debt equal to its dollar reserve holdings


The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue Mar 16th, 2010 at 03:17:09 AM EST
[ Parent ]
But isn't that is a net capital inflow of foreign exchange, increasing demand for ¥RMB, putting upward pressure on exchange rates.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Tue Mar 16th, 2010 at 02:26:18 PM EST
[ Parent ]
You mean in addition to the existing upwards pressure from being a net exporter, which the policy of accumulating reserves is supposed to be offsetting?

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue Mar 16th, 2010 at 02:30:22 PM EST
[ Parent ]

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