40% appreciation of the Chinese Yuan - Wooo Hooo

[silliporean]

Let us imagine this very possible scenario and the "mechanism" within can be used on different scenarios.....

Let's say I am Johnny B. Goode from the USA and I have planned to have a long retirement tour and I have set eyes on China. I have decided to immerse into her oriental beauty for 12 months.

Johnny withdrew USD 100,000 from his bank account in the US and went to the money changer to exchange it for Chinese Yuan (RMB) at the rate of USD 1 to RMB 8.6 hence simple maths worked that out to be 100,000 x 8.6 = RMB 860,000.

Johnny and wife spent RMB 25,000 per month in China for food and lodging plus some souvenirs for people at home, hence in 12 months they would have spent RMB 300,000.

On the week of their return, the Chinese Government have yielded to the pressure from the west to appreciate the RMB by 40% hence the old rate of the foreign exchange will look like that :

1 USD = RMB 8.6 (before)
1 USD = RMB 5.16 (after)

They initially had RMB 860,000 less RMB 300,00 spent, leaves them the balance of RMB 560,000.

Upon return to the US soil, they went to the money changer again to change RMB for US Dollars

RMB 560,000 divided by 5.16 = USD 108,527
Their initial withdrawal was = USD 100,000

WOW!! the couple got the entire trip for a year plus souvenirs for free and after coming home they made for themselves another 8 1/2 grand.

Damn, the chinks are really stupid, we gotta to this again next year...ha hahaaa

Do you think, that the chinks would buy your idea white boy??:oIo:

 

[silverfox@]

High appreciation will make investors move away. Will be too expensive to be Made in China. Isn't that US's motive?:o

 

[silliporean]

High appreciation will make investors move away. Will be too expensive to be Made in China. Isn't that US's motive?:o

Its obvious that the US and the Europeans wants a 40% discount on their sovereign debts - Those treasury bonds that the printed and sold as "IOU", they wanna half the debts by a simple political move that makes it looks legitimate.

By doing so, they will "kill' everyone else, including themselves economically.

 

[Cestbon]

Unlikely RMB will up by more than 10%/year. Expected to rice about 2~5%max in a year.

 

[annexa]

All these knn number playing is sabo the rest of us.

 

[Jah_rastafar_I]

silliporean what sort of nonsense are you writing. Yeah of course if the yuan appreciated that much that would be good news for the americans but it won't happen so what nonsense are you writing?


Anyway let's imagine another scenerio where money Euros started raining down from the sky in 3rd world countries. Now poor farmers and ppl have enough money to buy cars, houses in the city area and are rich Woo hoo.


You get my point? Stop creating imaginary scenerios that won't come true.

 

[longbow]

1) It is politics. Politicians can show that they are doing something. On the other side, china will never bow to foreigners telling them what to do. Unlike Japan or german who were occupied by US, China is not beholden to anyone.

2) Reality - as Chinese consumption increases, pegging to US $ causes internal inflation. So they will allow for orderly increase in Yuan. and it makes sense too. The Chinese economy is strong, it has a huge reserves so Yuan should reflect that strength. But increases will be orderly.

1st world nations have mega debt and they want an Argentinian type hair cut - devaluation of their currency. If you devalue by 20% in effect your debt just cut by 20%. US$ in many cases already gone down by 20%.