Posted: 18 Dec 2014 12:10 AM PST
Yves
here. This important post by Michael Pettis addresses whether the
efforts of the Chinese to diversify their foreign investments away from
the dollar will be a negative for the US. Pettis is skeptical of that
thesis, and some of his reasons are intriguing. Like quite a few
experts, he doubts that China's role in sponsoring an infrastructure
bank will be a game changer, and he also points out, as we have
regularly, that the Chinese cannot deploy their foreign exchange
reserves domestically without driving the renminbi to the moon (via
selling foreign currencies to buy RMB), which is the last thing they
want to have happen. A more surprising, but well argued thesis is that
reduced Chinese purchases of US bonds would be a net plus for the US.
Get a cup of coffee. This is a meaty, important article.http://www.nakedcapitalism.com/2014/12/michael-pettis-china-really-turning-away-dollar.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
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