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发帖数: 344 | 1 From China's most recent actions on its financial regulation plans, we may
faithfully conclude Chinese government has turned its intention of
eliminating its reliance on dollars into one of the basic state policies.
Let me now take China's recent Yen-buying spree, which is an apparent sign
convincing it.
Japanese government data this week showed China's 2010 yen purchases
continued in July and now equal $27 billion, which was said more than six
times China's combined yen-buying in the previous five years. And then see
how Japan reacted, Tokyo raised the heat on Beijing for contributing to a
strong yen. Since China has successfully kept Yuan pegged to the dollar,
which is down by roughly 10% against yen this year, Yuan has fallen by a
similar percentage against yen. The strength of yen has been claimed as a
deep frustration to Japan as the largest trade partner of China.
Let's not focus on the mutual effects brought about by both sides,
because we definitely need to move our attention from the event itself to
figuring out how powerful our reserve is. See why Japan got such a severe
reaction towards China's yen-buying spree, why Japs viewed these actions
executed by China as a great threat to Japanese exporters. 10% fall against
Yen in a single year is not a puny number, the reason why the value of yen
is so sensitive to the purchases done by Chinese government is that China
just has such an incredible purchasing power based on its huge dollar
reserve. I bet throwing out $27 billion to buy some yen is merely a piece of
cake to China, comparing to the total amount of dollars it holds, 27
billion is ignorable. However, the effect on Japanese market will definitely
stick around for a certain period of time.
If you really look into the finance history dating back to 18th century,
when international bankers started reinforcing their political shares in
each central governments, you will find out there was a conventional way
they always used as a mean of imposing financial controls on the target
nations, the key point was to capture the right to issue paper money. After
achieving this progress, bankers would be able to do whatever they wanted
for earning profits. Sometimes, different family-owned banks collaborate
with each other, and sometimes they tried to set traps for the rivals who
made inroads in market for them. How could they do that? As we all know that
, countries are distinguished by circulating a particular currency differing
from those of others. In order to beat the rivals controlling other nations
' leadership, the aligned banks would seek a powerful currency that they
could use as a weapon or tool to sneak into other nations' markets, and then
start imposing financial policies which restricted those nations' freedom
on their currency usage. Once international bankers controlled these nations
' trading affairs by such a kind of so-called world currency, you can
confidently say they have controlled everything of this country.
US dollar is the one that has been backed for centuries, and the whole
international trading system is still highly relying on this tricky currency
. However, from the event of China's yen-buying spree, international bankers
seem to have overlooked the power of China's huge foreign reserve.
The strength of an intelligent group always centers on the way how it
properly exploits its wealth and potentials. In the Yen-buying matter, China
has effectively revealed its capability of navigating the value of a
certain currency. Why can't we do the same thing on dollars? Let's make an
assumption together my friends, what if Chinese government crazily
undersells US bonds in domestic market by allowing people to exchange for
some dollars from the foreign reserve to purchase US bonds? Here is my plan:
Central government sets up a platform paving the way for people to use US
dollars and buy US bonds sold by Chinese government, simultaneously, pumps a
part of the reserve as decentralized capitals into establishing oversee
credit mobiliers. In the first stage of the plan, government encourages its
people to snap up these bonds by imposing downward pressure on bond prices;
in the second stage, which is being quite a while from the first,
government starts to execute a bond-buying spree in order to create a
pricing incentive for domestic US bond holders to sell off their bonds in
hand, which puts a powerful upward pressure on bond prices. But you might
wonder whether there would be a problem that the bond holders want to lock
to the increasing bond price by keeping them in hand. Don’t worry,
government may simply make a policy ruling a deadline wrapping up all the
transactions, and this policy should be announced in the contracts signed by
individual investors and the central government at the very first day of
each transaction. Once the government gets the bonds back, it hands them
over to those oversee credit mobilier branches established in the early time
of the first stage, selling them to investors scattered all around the
world. Consequently, China will certainly earn huge profits from the
skyrocketed prices of US bonds, and again, US dollar bonds will inevitably
face another wave of painful slump. The lack of power in stabilizing US
dollars by the US government is definitely posing a negative sign to
investors’ faith on the value of their dollar bonds in hand. Many of them
will declare bankruptcy for not being able to bear such a severe wave on the
bond prices. Here, Chinese banks’ luck is coming, the mobiliers can use
their excessive dollars earned ahead to annex and merge the foreign banks
that are lacking effective business deals. This will be a historical
progress for China’s financial territories oversee expansion.
Now let me wrap up by concluding what China and Chinese people can be
benefitted from the plan introduced above. Firstly, from Chinese domestic
investors’ perspective, they will be benefitted from a steep rise in bonds
prices in the phase of sell-off, even though the profits could have been
slightly offset by a short term drop in US dollars when the government was
underselling these bonds to them at the early stage of the plan. Secondly,
China significantly reduces its reliance on US dollar system, while
reinforcing its oversee finance expansion. Moreover, a weak stabilizing
power reflected by US dollar will weaken confidence of bondholders in long
term, compared to the strength of Chinese government’s value control on RMB.
(Note: you might notice there’s a deadly flaw in this plan in terms of
domestic investors benefit issue. After selling off the US bonds to the
government with high prices, they will surely acquire more temporarily
overvalued dollars than they did before. Therefore, the market will confront
a huge exchange demand, investors who are holding the temporarily
overvalued dollars will be eager to get rid of them by switching them back
to Yuan, and then how are banks going to deal with this situation?(Volume of
US dollars holding=The amount of USD being exchanged with RMB by investors-
Amount of USD used for buying fed bonds+ the profits earned from selling
those bonds) Keeping printing RMBs? It’s being clear that an unprecedented
inflation will be created for such a large exchange demand within such a
short time period. What is that going to be? My friends, I’ll leave this
problem to you, let’s help perfect the plan together to contribute to a
brighter future for our great People’s Republic Of CHINA!!) |
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