Quote:
Originally Posted by quantum-x
Here's the thing: If China dumps 1.4trillion USD, the currency is going to take a fucking HUGE hit. That's the summary. Yes, if you live in the USD, 1$ == 1$, but when imports start costing more and inflation sets in, the $1 from 2007 will not each $1 in 2009  |
And that's exactly why China will never dump their reserves. The USA is their largest marketplace and if the dollar goes down any further Chinese exports will be less competitive.
China has a one note economy...If anything happens to their ability to export they are screwed. As it is they are already starting to be squeezed by a low dollar and $100 oil. If they do something as destabilizing as dump their USD reserves their 1.3 billion people will need that $trillion to live on for the next 100 years.