In the Currency War Against the US Dollar, China Faces an Increasingly Dangerous Prospect of Defeat

2006/3/10 0:17:18

(Written a year ago; since then came the RMB appreciation — the beginning of a great strategic defeat)

This lady analyzed the origins, progression, and strategy of this currency war — provoked by the US dollar to shift the burden of America's tech bubble crisis and maintain the old order of US global economic dominance — in "Currency War and RMB Strategy" two years ago. From the current situation, because China is a novice in currency warfare, manipulated by a bunch of incompetent, fully brainwashed-by-their-American-masters returnees, China faces an increasingly dangerous prospect of defeat.

Remember — Japan's current malaise was manufactured during a round of ferocious US dollar devaluation over a decade ago, and the Americans are now replaying the same old trick. Just look at the astonishing historical similarity between the oil and gold price correlations then and what we see now, and you'll understand the gravity of the current situation. (Without America, the great market maker, would oil and gold just shoot up by themselves? The price myths around resource commodities are merely the requirements and results of currency strategy. Myths always have their origins and beneficiaries — the underlying mechanics are the same as futures and options games, which I'll elaborate on when there's time.) Under the manipulation of certain returnees, old rightists, and vested interest groups, China manufactured the real estate frenzy that began in 2001, and now they're plotting the so-called state share reduction scheme — all perfectly coordinating with America's currency strategy. Meanwhile, China's old leftists and new leftists are clueless buffoons about modern economics, thinking that shouting a few slogans about "the people" can make them invulnerable like the Boxer rebels. Accordingly, the blind infighting between left and right is like the mantis stalking the cicada — making the American oriole behind them laugh with delight.

The Japanese at that time also cheered their skyrocketing foreign exchange reserves, their triumph in the fully export-oriented economy, and their real estate frenzy — a situation identical to China's current predicament. Look at Japan's state now, and you'll understand what a trap looks like, what indulgence followed by decline means. Where Japan was better off than China: Japan had no returnees, no compradors, no traitors, no deranged vested interests driven to utter madness.

Since China has unavoidably joined this globalized game of capital homogeneity, it must learn and master its rules, unspoken rules, and tricks. But under the turtle shell of so-called "financial risk prevention," China wasted over a decade of precious learning and practice opportunities. In the international capital game, our skill level is worse than that of a retail investor.

Remember — when you're licking honey, there's often a blade underneath. The time and space left for us to turn the tide and fight to victory are increasingly limited. Don't fixate on the current prosperity — markets always reverse at the peak of frenzy. As a super player who has navigated capital markets with many brilliant battle records, this lady wrote that post two years ago — and now wastes breath again — merely to fulfill the responsibility and conscience of a fellow citizen. As for the rest, let fate decide.