China should not rely too much on his reserves

All countries who have previously attracted high currency reserves as China, as China, later suffered the serious economic crises of their history

Relations between China and the US are currently so tense as long ago. So Washington has called a rusts of the rust with Taiwan and Prasident Obama summarizes a meeting with the Dalai Lama. Obama also wants "a lot of hard" This prevents that China fully implements the two-sided trade agreements and his preservation is not a long-term low.

Beijing shows itself self-confident as a long time, did not expect military cooperation with Washington and experienced sanctions against the US companies involved in the Judgment with Taiwan. There is nothing about a Chinese course change in the preservation of a Chinese course, the UN Security Council member China last placed across more Iran sanctions across.

But while the religiousness of China probably also will have to do with it, that from 2012 a comprehensive change of leadership is pending and the younger generation already seems to be positioned accordingly – which leads primarily to patriotic-nationalist supervises. However, the new self-confidence of China probably results primarily from the enormous war fund of significantly more than two trillion dollars, which China has in recent years. And so even Chinese regime regions swells the chest, if they speak of how much China the USA is currently in hand and will undoubtedly soon surveill. After all, China has probably been massively shooking up the market for US government bonds and probably brought the dollar to crash, it became his dollar reserves to the market or just ask this only.

An similar opinion obviously represents Thomas L. Friedman, who opposes the many skeptics in a comment, which worries about the various speculative bubbles that the Chinese probation and economic policy has meanwhile.

First, A Simple Rule of Investing That Has Always Served Me Well: Never Short a Country With $ 2 Trillion in Foreign Currency Reserves.

Thomas Friedman

Of course, a small view of the economic history should also result in concern in China. Because the fact is that in all cases in which a country had attracted for years of export bucherschusse such surprised foreign exchange reserves, exactly this country later suffered the serious economic crisis of its history. This ended at least ten years and fell much stronger than everywhere else in the world.

However, in the world history, it has so far only two times to approached comparable situations, which is not necessarily a statistically significant sample – but the crash quota is 100 percent: Japan had attracted almost a trillion dollar to reserves in the 1980s and considered the crash as economically invincible. After the bursting of a huge speculative bubble, it still fell into an economic abyss, which it has not yet left until today.

Even worse, the US had caught that in the 1920s thanks to a bleeding export economy to world-groamed citizenship and after the Borsencrash of October 1929 a ten-year-old "Great depression" suffered.

But why just Lander, who had achieved so unusually high export buers science for a long period of time, suffered a heavy crisis, is completely unclear. At this point, this can only be amed that this contained with the enormous loan expansion, which was observed in the time of the export supercourse both in the US as well as in Japan. For in both cases, it had come to a huge increase in consumption and private debt, with the subsequent crisis associated with a strong degradation of the private, at the same time increase in public debt. In both cases, the crisis ended only when the contraction of private loans had found their end

This seems noteworthy insofar as in China at least until recently not only the speculative bubbles, but also the private and public debt are massively swollen.

This is a hopefully not insignificant difference to Germany, otherwise in a similar macrooconomic position like China. As China benefits from the Fixen Exchange Rate with the US, Germany owes a weighty part of its export surgeries to the South EU Member States of the Member States of Truth Fixation by the Common Euro. In contrast to the ratio of China / USA, Germany does not have to invite foreign exchange reserves to keep the exchange rate. As a result, for Germany, although the already heavily lousy inflationary effect in China, there is any suspected intervention, which German population was allowed to pay the unequal export success now with stagnant real income and weak domestic consumption.

In addition, Germany is hardly suppressed to stand straight for the ailing state finances of his saddle trading partners. Thus, Germany can be found again in a similar situation like China, which probably the strongest affected goods, the US should want to get rid of their foreign debt on a dollar crash. The goods then not completely unfair, China has previously benefited from the existing suspension arrangement. Of course, the same applies to Germany, whose export inspections had made macrooconomically a great contribution to the economic impairment of the European Club-Med, as any economic Schlendrian, such as German economic and monetary politicians make these countries so gladly.

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