Monday, May 14, 2007

China can afford a dollar drop

Further to our last, Chuck Butler in The Daily Reckoning points out that China's trade balance with America doubled last month, and the Renminbi has already risen 8% against the dollar since de-pegging 2 years ago.

The exchange rate could alter far more before China lost its pricing edge - just Google up the phrase "China price". Besides, Western industry is getting to the point where it couldn't take up the slack. We have a shortage of skilled labour, and even our factories are being shipped abroad.

China's US trade surplus was slightly over $16 bn in April - oddly enough, just about the same as the increase in Federal Reserve credit.

2 comments:

David Wozney said...

A “Federal Reserve Note” is not a U.S.A. dollar. In 1973, Public Law 93-110 defined the U.S.A. dollar as consisting of 1/42.2222 fine troy ounces of gold.

Rolf Norfolk said...

Thanks for your comment, David. I have read the opinion of more than one financial expert, that a fiat currency is unconstitutional. Is anybody out there able to give a constitutional lawyer's opinion?