San Diego Housing Market News and Analysis
China's Currency is undervalued also
User Forum Topic
Submitted by powayseller on May 13, 2006 - 8:45pm
What is the big deal about our currency losing value? China's currency is undervalued by about 40%, according to Treasury Secretary Snow. This makes their imports cheaper for us.
Likewise, when our currency loses value, our exports are cheaper to other countries. That is one reason our exports were up the last 2 months. Economist Thornberg said the benefit of a falling dollar is increasing exports.
So I'm wondering if it's good enough for China, why isn't it good enough for us?
Yes, China is doing it on purpose, to keep their exports going. Could it be that the Fed is seeing a benefit to devaluing the dollar? It makes our debt cheaper to pay back, increases exports.
Bill Gross from PIMCO said that "the way a reserve currency nation gets out from under the burden of excessive liabilities is to inflate, devalue, and tax.... Higher inflation, higher personal and corporate taxes, and a lower dollar point U.S. and global investors away from U.S. assets and toward more competitive economies less burdened by health and pension liabilities – those personified by higher savings rates and investment as a percentage of GDP. Need I say more than to sell U.S. assets and buy Asian ones denominated in their local currencies; or if necessary to hire a global asset manager with sufficient flexibility and proper foresight to thrive in an increasing difficult investment environment?"
This is the US strategy: inflate, devalue, and tax. Are you ready?
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