0 sats \ 3 replies \ @Undisciplined OP 18 Oct \ parent \ on: Chinese Authorities to Stop Economic Cleansing econ
It makes sense when you disaggregate. China isn't borrowing from China. The Chinese regime is devaluing the savings of the Chinese people, so that they can spend more on their ill-conceived projects.
Now that makes sense (in the sense that of inputs and outputs.)
I'm sure that was implied, I asked myself the questionand thought, why they don't write "China is devaluing / dilluting the Yuan?"
Other options to "borrow"
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The IMF/BIS has a bunch of Yuan (pretty sure they don't have much.) Obviously, a bad idea.
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PRC/PBoC sells FX, gold or other commodities into the openmarket. I haven't seen much gold changing hands from central banks lately. Just forex. I suppose this is the problem. you can have a football field filled with gold, undereground somewhere, some dude posing with the gold for photo ops, all it can do is sell an image of economic activity exchanged for a heavy, beautiful commodity that is never seen again and never moves (apart from as a statistic in the financial press.)
Or it doesn't borrow. If any national economy went through the bandaid problem, economic activity would recalibrate. Cash would maintain its PPP. Things would become affordable to 'the people'. It's so obvious.
Appreciate your answer.
reply
If anything, it seems like China's looking to increase their gold holdings. They've been gradually unwinding their position in US Treasuries for a while, but I'm pretty sure it's just been normal central bank "borrowing".
Things would become affordable to 'the people'. It's so obvious.
Unfortunately, it's not obvious enough.