Saturday, February 25, 2006

From the Silk Road to the Superhighway, All Coin Leads to China

This New York Times article points out that:

CHINA has such a huge stash of other countries' money that it could, in theory, hand out bonuses equaling half a year's wages to all 770 million of its famously low-paid workers.

The country will soon release statistics showing it has passed Japan as the biggest holder of foreign currency the world has ever seen. Its reserves already exceed $800 billion and are on track to reach $1 trillion by the end of the year, up from just under $4 billion in 1989.

They then discuss the fact that this kind of surplus was also built up against both the Roman and the British Empire. They guess that it didn't cause inflation in China because the Chinese saved the gold they got the same way their banking system is now saving the other currencies.

They consider this bad for us, but don't tell us why, or what the outcome will be.


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