Ray Block discusses China’s modest revaluation
exclusively for Henry Thornton: “Having finally revalued by only a fraction,
the US will be demanding a much larger revaluation. And here, the Chinese have a
major dilemma because they have little room to move without severely
disrupting their economy and seeing a large capital outflow.”

Henry observes that this is the “capitalist road”
down which Australia went all those years ago. The so-called “crawling peg”
provided massive opportunities for speculators, and their activities fairly
quickly led to a full float of the Australian dollar. China’s move will unleash
the same forces, and will eventually lead to the same outcome.

Read more here.

Peter Fray

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