>Politically, the country is under international pressure to rein in its huge trade surplus.
The government doesn't feel any of this pressure, as it's not an internal issue they don't care.
I would argue that yes the yuan is likely to rise against the dollar, but because of high inflation (very very high in China) most assets would also rise in comparison to the dollar(Oil, Gold, Silver etc.)
Actually the only good reason to invest in the yuan I would think is diversification. It's not a good idea to keep your investments as cash during a time of high inflation.
In January 2006 Gold was $525, January 2010 it was $1125
Silver, January 2006 $9, 2010 $17, most assets are climbing fast in relation to cash, much faster than 25% over 5 years.
Is there much inflation in the US right now? It's really high in the mainland at the moment, particularly with relation to food.
My business partner just sold an apartment in Beijing. I tried to convince her to buy up some land back in the US, but she chose to buy another apartment here instead. Part of her concern was that the US housing market was going to be relatively flat for the next couple of years, which is her desired time range for selling the new property. The future potential weakening of the dollar vis-a-vis the RMB also played a role.
The only major difference between CPI and Core CPI is that CPI is more volatile than Core CPI. This is why, for the purposes of year on year changes, Core CPI is usually reported. If we didn't do this, we'd get headlines like "OMFG, massive inflation, we are all doomed" followed by "OMFG, massive deflation, we are all doomed" 6 months later. Over a period of a year or two, massive inflation x massive deflation = small but stable inflation.
A better way to go would be to use moving averages, but that's too complicated to explain to reporters.
> A better way to go would be to use moving averages, but that's too complicated to explain to reporters.
Yes, MA is the first thing that came to mind when reading your big paragraph. It would be a real shame if journalistic incompetency truly is the reason we have not adopted it.
Fair enough; a misnomer on my part. However, it's disingenuous to tell the US consumers that the core inflation is 1.2%, when their gas price has doubled (from 2009)
Official inflation rates often aren't a very relevant measure anyway. Better to think about personal inflation rates, depending on one's future expenses and living locations. An unhealthy 50-year-old with high upcoming medical costs has a high "personal" inflation rate, whereas someone surfing every day on a Mexican beach a low one.
The government doesn't feel any of this pressure, as it's not an internal issue they don't care.
I would argue that yes the yuan is likely to rise against the dollar, but because of high inflation (very very high in China) most assets would also rise in comparison to the dollar(Oil, Gold, Silver etc.)
Actually the only good reason to invest in the yuan I would think is diversification. It's not a good idea to keep your investments as cash during a time of high inflation.
In January 2006 Gold was $525, January 2010 it was $1125
Silver, January 2006 $9, 2010 $17, most assets are climbing fast in relation to cash, much faster than 25% over 5 years.