Discussion in 'Economics' started by Wallace, Dec 27, 2008.

    'China and U.S. bound themselves with linked addictions'

    " "For consumers, this was a net benefit because of the availability of
    cheaper goods" said Lawrence Meyer a former Fed governor.
    "There's no question that China put downward pressure on inflation rates."

    But in classical economics, that trade gap could not have persisted for
    long without bankrupting the American economy. Except that China
    recycled its trade profits right back into the United States.

    As foreign trade surged, this hoard of dollars became enormous.
    In 2000, the reserves were less than $200 billion; today they are
    about $2 trillion."
  2. harkm


    Very good article. Thanks for posting. I have always believed the Yuan/USD peg was a major problem and will be a nightmare when corrected.