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.

1 comment:

  1. Sackerson14 May 2007 at 17:52

    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?

    ReplyDelete

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