Number One Export Son: Inflation
From Jubak at MSN "Our Biggest Export: Inflation"
A rate of growth near 8% would be ideal, Beijing's planners said at the beginning of 2007...
because that is high enough to generate the jobs the country needs to stay even with its population growth and low enough to keep the economy from further overheating.
A 2% GDP growth rate in China would be regime suicide. Millions of jobless workers would riot in the streets of Chinese cities.
Without intervention, the huge influx of U.S. dollars into the Chinese economy due to China's trade surplus with the United States would have depressed the value of the U.S. dollar against the Chinese yuan.
Dollars would have been in such great supply relative to demand that the price of the currency would have dropped.
But the People's Bank of China, the country's central bank, took steps to make sure the drop was orderly and relatively minor.
The bank bought U.S. dollars in China for yuan, removing some of the huge supply of dollars and keeping the price of the yuan from rising too rapidly against the dollar.
By buying dollars for yuan, the People's Bank was injecting huge amounts of yuan into its domestic economy.
The bank tried to remove as much of that injection as it could -- central bankers call this operation "sterilization" -- by selling government bonds for yuan.
That had the effect of removing yuan from the economy. But it's just about impossible to run a completely successful sterilization; you never manage to sop up all the extra money.
And in China that extra money has contributed to runaway growth in China's money supply.
The Nattering One muses...and runaway money supply growth leads to hyperinflation.
Once again proving that central bankers like Benny & The Inkjets, truly are two faced liars.
They don't give a damm about inflation, because debauchery is their credo and main objective, thus robbing the poor to pay the rich.
A rate of growth near 8% would be ideal, Beijing's planners said at the beginning of 2007...
because that is high enough to generate the jobs the country needs to stay even with its population growth and low enough to keep the economy from further overheating.
A 2% GDP growth rate in China would be regime suicide. Millions of jobless workers would riot in the streets of Chinese cities.
Without intervention, the huge influx of U.S. dollars into the Chinese economy due to China's trade surplus with the United States would have depressed the value of the U.S. dollar against the Chinese yuan.
Dollars would have been in such great supply relative to demand that the price of the currency would have dropped.
But the People's Bank of China, the country's central bank, took steps to make sure the drop was orderly and relatively minor.
The bank bought U.S. dollars in China for yuan, removing some of the huge supply of dollars and keeping the price of the yuan from rising too rapidly against the dollar.
By buying dollars for yuan, the People's Bank was injecting huge amounts of yuan into its domestic economy.
The bank tried to remove as much of that injection as it could -- central bankers call this operation "sterilization" -- by selling government bonds for yuan.
That had the effect of removing yuan from the economy. But it's just about impossible to run a completely successful sterilization; you never manage to sop up all the extra money.
And in China that extra money has contributed to runaway growth in China's money supply.
The Nattering One muses...and runaway money supply growth leads to hyperinflation.
Once again proving that central bankers like Benny & The Inkjets, truly are two faced liars.
They don't give a damm about inflation, because debauchery is their credo and main objective, thus robbing the poor to pay the rich.
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