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How the Chinese Central Bank could peg the Yuan to the dollar by printing Yuan and buying dollars (building up a dollar reserve) More
Added Oct 25, 2010
Channel Education
Duration 6:52 | views 45359
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Recent Comments 40
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Tags yuan dollar renminbi peg currency reserve central bank china
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Recent Comments (40)
stardaveable Says:
I think you think China is afraid of US invading China? I seriously doubt a war will break out between 2 nations that both holds ICBM. Another reason I think is because China is trying to gain leverage with the US's wall street/corporate elites, whom is the true masters of the nations. As long as they are rich, they will promote stability policy between US and China, and stability can only benefit China in the short and long term.
stardaveable Says:
Something I don't understand, if China wants to peg its currency to 10-1 for dollar, so they print more Yuan, but where does the newly printed Yuan go? In theory the Yuan should go to USA to buy the dollars to keep the currency peg balance right? But last time I check US holds almost no Yuan reserve, and where does this Yuan end up? Who receives the printed Yuan after it is being printed?
stardaveable Says:
We already do, it is called quanative easing, and so far we have printed more than 1 trillion, and if you think it will only hurt China then you are dead wrong, foremost, it will hurt the American people by inflation, have you notice how much food and gas other have gone up in price during the past 2 years or so? The same thing goes for global commodity market. But guess who benefited the most? The elite 1% who is able to capture this money cheaply first and massively increase their wealth.
nithinvnath4utube Says:
Khan, Thanks a ton. But if this keep going wont a weakening US economy diminish the Chinese export demand and make a counter effect. Or does it mean that even with artificial Chinese currency valuation US is still in reality growing that the Chinese exports are still growing in the US? Sorry I cant connect here. Again thanks a ton for all your work. Good luck!
LearnerX1 Says:
Hi Khan, thanks for all your awesome videos. I've got just 1 issue that bugged me a little. Yuan is pronounced as "yu-en". The way you pronounced it sounds like "won"; South-Korea's currency.
nokkont Says:
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PimpinBassie2 Says:
Hu Jintao likes pegging!
louisbrassyyy Says:
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vickiormindyb Says:
I have a really good question. What video can I find that you have that will start economics on a plane that I understand? I mean which one is the starting video, the one that's most like 'economics for dummies?' Which, to be honest, I am. I want to be able to watch one that I understand and move on from there. This one isn't it though. So where should I look?
Pfsif Says:
Printing money is stealing from those who save in dollars.
EXHellfire Says:
am I the only grammar mofo that kept on being slightly annoyed by the fact that Sal kept spelling Chinese "Chines"?
HermandLo Says:
so what if the US stops expanding/printing the USD???? would there still be an inbalance? the fact that this is the symptom of the problem that corporate america spent the last 30-40 year moving jobs offshore via globalization.
urbandiscipline88 Says:
lol...in that case the US would need some super fast printers.
marcabela Says:
@Bosskan, It's like asking why is Gaddafi selling his oil to the US instead of keeping it for his poor country - answer is simple, the day (mid-2009) Gaddafi hinted to the effect that "I think will keep the oil for my country", WEB: uk.reuters.com/article/2009/01/21/businessproind-us-libya-gaddafi-oil-idUKTRE50K61F20090121 the US immediately "barged in": WEB: news.yahoo.com/s/nm/20110519/ts_nm/us_libya Asia only "buys US treasuries" due to the threat of massive retaliation from US military.
Bosskane Says:
Why is china buy US treasuries if they are going to be worthless once the yuan is revalued
marcabela Says:
@khanacademy Khan, please remove the "This is what export-lead growth is." You are (most surely unknowingly) promoting the enslavement of entire countries - this false rhetoric of "artificially devaluing one's currency = export-lead growth" does not belong in your lines of teaching. It is as wrong as anything I have seen - regardless of how many big shots write it in any mainstream newspaper. Think. You can't (cannot) vendor finance your people into prosperity. Does not make sense.
marcabela Says:
@EasyGameFR Once again: "export-lead growth" does not mean "anything" (let alone "growth"). At all. You don't export - just for the pleasure of exporting. You sell - to customers. It is a losing proposition to say "I need to give my customers money or else I will lose my labor" (in macro = I need to ship my resources abroad, i.e. I need to buy US treasuries, i.e. I need to help the US prevent from inflating their currencies, i.e. I need to keep a low yen - just so that I can keep my "labor").
marcabela Says:
@Bosskane, A good (pretty simple & recent) historical example of what can happen when a country "owns" another one with its debt, is on the following link: On Wikipedia: Suez_Crisis (Financial_pressure) USA held the UK (previously the major power in town - up until the 1920s at least) by the "balls" back then (late 50s) as the US held massive amounts of UK-Pounds. China today holds the US by the balls. The US can only have to inflate their way out - i.e. make Americans poorer. Delayed tax.
marcabela Says:
@Bosskane The Chinese government has been selling its people's labor in an attempt to buy more treasuries - as a result, the Chinese leaders today "own" the US. Having China buy treasuries helped 1. US administration (Nixon onwards) to avoid billing their constituents while pursuing wars etc, and helped 2. Chinese administration by having as debtor the biggest military machine in the world. It alienated however American people by enslaving kids to enormous future debts & abused Chinese workers.
Bosskane Says:
could you explain what is china doing?
marcabela Says:
Khan makes a very common mistake here. It's a completely meaningless proposition to send your resources abroad (i.e. buy foreign treasuries, i.e. maintain a low JPY) just so that "you can keep your labor". It's like saying to my wife "quick, honey, give my boss money, or else I'm going to lose my job". Gaddafi said no more oil last year - Obama walked in. The day Asia (Japan, China) says we're done buying treasuries - they will walk in. If they have anything left to walk in with.
EasyGameFR Says:
Marcabela probably means export-lead growth is not real growth (which you probably agree with)
lumaix Says:
Please help us if this is the kind of crappy logic that economists use!
FengNing85 Says:
Amazing videos. You are pronouncing Yuan wrong, however. Its pronounced, you-on, not won- which is of course the Korean currency. Keep up the great work.
auntievanilla Says:
the claim that cheap yuan will lead to more export in dollar term clearly ignore the price elasticity of chinese exports--given that they are necesscity, the elasticity is likely to be low (Joseph Stiglitz agrees on WSJ). Just like no one would argue that the low price of oil adds to the competitivelness of oil-exporting country and lead to their trade-surplus, we have to rethink when we claim cheap yuan leads to trade surplus. The fact that this claims is repeated does not mean it is true.