> From: "Marvin Gandall" <marvgandall at videotron.ca>
>> Of course, it's the Western central banks which have been pushing this
>> "rebalancing" hardest in the interest of their exporters, but Western
>> retailers and manufacturers with subsidiaries and suppliers in China and
>> other low-cost countries have been resisting these pressures because
>> cheap
>> Asian currencies and prices boost their profits. The Chinese understand
>> the
>> need for more balanced growth, but are worry a sharp upward revaluation
>> would cause too drastic a falloff in exports and a social crisis.
>
> Marvin,
> A) is the balance of forces associated with these contradictions well
> documented by anyone?
Not that I know of. Maybe Doug or others more familiar with the primary and scholarly literature could help. You would expect Fed and ECB officials to push for Asian currencies to rise against their own rather than Chinese, Japanese, and other politicians, monetary officials, and exporters in the region, and that's been my impression based on the English-language financial press.
> B) are the Chinese worried about the asset deflation implicit in their own
> US holding?
That is reportedly a concern, but the larger one is the affect of exchange
rate movements on their exports. On the other hand, Chinese productivity
growth is and promises to continue offsetting any increase in the value of
the yuan.
>
>> I think it would require a profound economic crisis and a loss of
>> confidence
>> by global capital in the dollar as the reserve currency to trigger a more
>> abrupt realignment of the currencies.
>
> Around these parts (South Africa), people lick their lips at the thought.
> Last time was 1973-79, and gold went up to $850/oz.
Same in Canada.