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China tells state banks to prepare for dollar dump and yuan buying spree

• ohiovr 4y ago
  Would these dollars come home? Last Saturday I had stacks of price increases to post for my employer's store. What would the federal reserve do? Raise rates to try to get these dollars into bank accounts? I don't think that would work because these dollars are leaving the Chinese banking system and US savings accounts are still a useless place to keep money safe from inflation.
• stevespang 4y ago
• simonblack 4y ago
  Of course, the Dollar Dump might be a way of reducing the huge quantity of foreign currency reserves (US treasuries) that China holds. China wouldn't want its huge reserves confiscated just like the Russian ones were. There's a limit to the amount of commodities that can be stockpiled by buying them up with excess foreign reserves. And the way that US Dollars are declining due to inflation (well over 10% a year) the longer you hold them the more they evaporate away. That trillion Dollars in Chinese reserves will only be worth 900 billion in 12 months - effectively a loss of 100 billion in buying power. It's the old, old story of "Use it or lose it."