Only in things of small value we usually are bold enough not to trust to appearances.

Chinese yuan is pegged to the US dollar. So is the Malaysian ringgit. So is the Kuwaiti dinar. So is the Saudi riyal and currencies of some other middle-eastern oil-producing states.

Consequently, the US, China, Saudi Arabia and some others constitute one economy, they are parts of the same country. It’s like the Eurozone, only without the freedom of movement for the people, not to mention labor, environmental or any other common standards. But who needs those.

I believe the cartel still has a bit of an account deficit, albeit a very small one. It’s manageable.

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3 Comments

  1. the thing is...
    Posted October 25, 2008 at 9:25 am | Permalink

    The Yuan has not been pegged to the dollar since ’05. Per Wikipedia:

    On 21 July 2005, the peg was finally lifted, which saw an immediate one-off RMB revaluation to 8.11 per USD.[16] The exchange rate against the Euro stood at 10.07060 yuan per Euro. The RMB is now moved to a managed floating exchange rate based on market supply and demand with reference to a basket of foreign currencies. The daily trading price of the U.S. dollar against the RMB in the inter-bank foreign exchange market would be allowed to float within a narrow band of 0.3% around the central parity published by the People’s Bank of China (PBC); in a later announcement published on 18 May 2007, the band was extended to 0.5%.[17] The PRC has stated that the basket is dominated by the U.S. dollar, euro, Japanese yen and South Korean won, with a smaller proportion made up of the British pound, Thai baht, Russian ruble, Australian dollar, Canadian dollar and Singapore dollar.

    The yuan in US $, year-to-date

  2. the thing is...
    Posted October 25, 2008 at 9:26 am | Permalink

    Whoops, munged up that link, sorry:
    Yuan (CNY) in US $ (USD) year-to-date

  3. abb11
    Posted October 25, 2008 at 10:24 am | Permalink

    Ah, dammit, there goes my brilliant theory…


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