Ufo propu engine, closed loop

[ltseung888]

Tseung, I might have already helped the currency speculators.  I changed my RMB holdings to USDs.  My reasoning was that if the RMB did not devalue, I could always convert back with negligible loss.  If RMB devalues, I would not lose.  I believed in the daily news of gloom and doom of the RMB.  The RMB will not appreciate much because of the peg.  I thought that I was clever but now I knew that I already fell into the currency war trap.

One simple strategy China can take is forget about the RMB as the Settlement or Reserve Currency.  Just accept the present status like the Petro-Dollar and let the USD be the Reserve Currency.  China can take similar position as the Malaysia Ringgit and claim that the off-shore RMB trading is illegal.  There is no point in the attack by the Currency Manipulators or Speculators.

With the financial and currency controls, China reverts back to doing what it does best.  Learn and improve technology, technology and technology.  Be the factory of the World and keep the manufacturing jobs.  Print thin-air money to circulate internally and motivate its citizens.  Encourage innovation and keep increasing the standard of living.  Use the one-road-one-belt initiative to help other Nations rich.

In other words, China does not need to fight the Currency War at all. It is no fun to be the World Policeman.  It is no fun to be the World Banker.  Print thin-air money to get the goods from other Nations sounds good but the downside is loss of domestic jobs and work ethics.  It is no fun to be hated by the many terrorist groups.  One is more likely to be killed at McDonald's in New York than in any place in China.  Driving a car is great but stuck in traffic jam for hours is no fun.

China just needs to define Meaningful Economic Activities for itself.  There is no need to blindly copy the USA model.  Military power is meaningless if it cannot be used.  Nuclear wars will mean the end of the Human Race.  If the strategy of having the first Electromagnetic Pulse to blind all, followed by nuclear weapons to destroy cities, no star war defense can succeed.  The anti-missiles will be useless.  All will be destroyed.  It will mean mutual destruction.  There is no need for vast military build-up.  (Just enough to deter others from thinking of attacking is sufficient.) 

Have Competition to get poor Nations rich by the two Camps is a much better strategy to achieve World Peace and Prosperity.  Globalization with USD as the Settlement and Reserve Currency is fine.  The RMB, like the Ringgit, will have zero trading value outside China and its Mutual Credit, Currency Swap or Bilateral Agreement Partners.

Is this a possible strategy to be considered?  The top economists will consider many what-if scenarios.  Is this one of them???

[ltseung888]

Tseung, you are really stupid.  You do not understand the true reason behind the 1997 Asian Financial Crisis.  You do not know the reason for the present Currency War.

Think. If the USA Government were to buy the Thai Baht in 1997 at the Official pegged exchange rate, would there be a panic depreciation of the Baht?  Has the USA Government got USD or ability to print thin-air USD to support the Baht?  There were not that much Baht in the International Market.  The true reason was that USA Government was not interest in helping the Asian Countries rich.  They all had high GDP growth.  But an attack by hedge funds was sufficient to destroy their growth.

China is having high GDP growth.  China joined WTO and will follow the game of using its reserve to defend the exchange rate for "financial stability".  It has accumulated 4 trillion Foreign Reserve.  In the field of Foreign Exchange trading with a daily volume of over 5 trillion, that is peanuts.  A sustained attack by the Currency Speculators will drain all that 4 trillion. (In really, China has only 3 trillion now.  1 trillion was drained within last 12 months).

If USA Government wants, it can buy RMB at the pegged exchange rate and prevent any crisis.  But USA is not in the business of helping other Nations rich.  On the contrary, it wants to see a weaker China.  It may even be the "force" behind the "Currency War"!  It gets rid of the "debt" owed to China by simply standing by and watch the show (war).

The rules were set up by USA.  It had the top economists.  It had computers to play the what-if games. It has the best propaganda machine - USSR disintegrated without realizing that it lost the Economic War!

As George Soros said - he just followed the rules.  Every move he made was legal.  He and others like him can help USA Government to defeat any Nation without the USA Government firing a single shot or throwing a single bomb!

[ltseung888]

Tseung, you are really stupid.  You do not understand the true reason behind the 1997 Asian Financial Crisis.  You do not know the reason for the present Currency War.

Think. If the USA Government were to buy the Thai Baht in 1997 at the Official pegged exchange rate, would there be a panic depreciation of the Baht?  Has the USA Government got USD or ability to print thin-air USD to support the Baht?  There were not that much Baht in the International Market.  The true reason was that USA Government was not interest in helping the Asian Countries rich.  They all had high GDP growth.  But an attack by hedge funds was sufficient to destroy their growth.

China is having high GDP growth.  China joined WTO and will follow the game of using its reserve to defend the exchange rate for "financial stability".  It has accumulated 4 trillion Foreign Reserve.  In the field of Foreign Exchange trading with a daily volume of over 5 trillion, that is peanuts.  A sustained attack by the Currency Speculators will drain all that 4 trillion. (In really, China has only 3 trillion now.  1 trillion was drained within last 12 months).

If USA Government wants, it can buy RMB at the pegged exchange rate and prevent any crisis.  But USA is not in the business of helping other Nations rich.  On the contrary, it wants to see a weaker China.  It may even be the "force" behind the "Currency War"!  It gets rid of the "debt" owed to China by simply standing by and watch the show (war).

The rules were set up by USA.  It had the top economists.  It had computers to play the what-if games. It has the best propaganda machine - USSR disintegrated without realizing that it lost the Economic War!

As George Soros said - he just followed the rules.  Every move he made was legal.  He and others like him can help USA Government to defeat any Nation without the USA Government firing a single shot or throwing a single bomb!

Many Economists and Politicians know the above.  Malaysia and Hong Kong bitterly complained during the 1997 Asian Financial Crisis.  Malaysia took the position of making the trading of Ringgit "illegal" outside its borders.  Hong Kong escaped because Soros and team did the stupid move of shorting the stocks also. When the speculators shorted the stocks, they essentially exposed themselves to "infinite loss".  When stocks fell, they could buy back at a lower price and "returned the borrowed" stock.  But if the stock rose (from the buying by the Hong Kong Government with the backing of the Chinese Government), the speculators would have to buy back at a higher price and took a loss.  The higher the stock price, the higher would be the loss to the Speculators.

If the attack is against the Currency alone, the Speculators must find a way to borrow the Currency to sell.  The initial action from the Hong Kong and Shanghai Bank(HSBC) which was the largest holder of the Hong Kong Dollar (and an issuer of Hong Kong Dollar) was to lend the Hong Kong Dollar as a standard banking practice. Then Hong Kong and China Governments stepped in.  Essentially, they warned that if HSBC lent HKD to Soros, HSBC would be forced to close.  The crime would be "deliberate attempt to destroy Hong Kong."  HSBC essentially stopped the lending (by raising the interest to ridiculous levels) and Soros took the loss and retreated.

There is already a large quantity of RMB outside China.  There is much trading in the "off-shore" centers like Hong Kong, Singapore, London etc.  Some of these centers are not in the jurisdiction of China.  The Speculators essentially have much more ammunition to attack.  They can easily calculated how long and how large the attack they can mount to drain the 3 trillion USD Foreign Reserve of China.  They do not need to attack the Stock Market.

[ltseung888]

There is already a large quantity of RMB outside China.  There is much trading in the "off-shore" centers like Hong Kong, Singapore, London etc.  Some of these centers are not in the jurisdiction of China.  The Speculators essentially have much more ammunition to attack.  They can easily calculated how long and how large the attack they can mount to drain the 3 trillion USD Foreign Reserve of China.  They do not need to attack the Stock Market.

One strategy China can take is to apply similar action as Malaysia - declare trading of RMB as "illegal" outside China. That means China gives up the position of having RMB as the Settlement or Reserve Currency.

Another strategy is to get the support of USA.  Get the USA Government to buy RMB at the agreed official exchange rate.  UK, Europe and Japan will get the support as they are USA allies. 

I learned much from this exercise.  I now have some understanding of the "unwritten secret" of the Rule of the Game.  Foreign Exchange is supposed to facilitate the commercial trading of goods and services.  But the trading can be a "nuclear weapon" to destroy any unknowing or disobedient Nation.  Drain the Foreign Exchange Reserve; force the currency to devalue; cause panic in the population; result in the downfall of the government and win the war!

China can avoid the defeat via similar tactics used by Malaysia.  It gives up the attempt to be the Settlement or Reserve Currency.  Following the rules to protect the Currency Peg and drain all the Foreign Exchange Reserve will mean falling into the trap.  The war will be lost!  Have China got Economists who could see this clearly and even better - thought out an innovative winning strategy...

[ltseung888]

https://dailyreckoning.com/china-barreling-toward-economic-crisis/
Quote:
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One obvious threat to a banking crisis, weakening yuan and massive flight of capital from China is the negative impact on trade.  The not so obvious problem is that all of these could go off at once on a greater scale, causing economic tremors.

The actions from the Chinese government were meant to act as a floodgate in order to keep money domestically based and slow down the economic slump, but the history of preservation of wealth tends to extend beyond the rule of law.  Clampdowns and financial controls can only extend so far, confidence can only be regulated so much.

Jim Rickards offers his analysis that, "History shows that weak capital controls may be worse than no controls because they send a message of "no confidence" while not really stopping the outflows."

"The mother of all liquidity crises is coming to China sooner than most realize
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Many of the decision makers in China are like "frogs in slowly boiling water". They allowed the Foreign Reserve to dwindle from 4 trillion to 3 trillion defending the peg in some months. They still do not sense the danger. Someone should wake them up.

The attackers from the West would not mention the true Currency War. They gave all sorts of "explanations" to confuse and disguise the attack. They read the "art of war" from the ancient Chinese Military Thinker.