Exchange rate is incorrectly relay an erroneous

 Exchange rate on the exchange rate is incorrectly relay an erroneous
mm system of knowledge and understanding described corrective
accused the Chinese government since the U.S. currency manipulation and threatened trade sanctions against China since the war of words between the two countries fighting on the exchange rate still intoxicated. Exchange rates Not only newspapers, radio and television network into a hot spot, has become the topic of ordinary streets. one by one, after an impassioned experts and scholars on stage, one by one the people have long been deeply moved by the blood boiling indignation.
However, despite the indignation of the people are extremely old United States, In fact, they are still on the exchange rate knowledge about a word or a few, some absolutely does not quite understand, they are just used instead of every United States will have. Of course, do not understand is not the fault of the people, because the experts are saying The reason most of Ma Tau mouth full of flaws, in itself illogical theory that it, of course Jiaoren Ruzhui cloud mist. most of the others had just parroting against RMB appreciation, its views generally have the following three:
a appreciation of the renminbi, China's exports very expensive things, export enterprises will close down, people will be unemployed depression; Second, we feel the immediate devaluation of the RMB has been in constant, but in telling us Americans appreciate, this is not What is the plot; third is the heart of U.S. imperialism death I die, let us do all Americans, certainly not what kind security!
to revalue the yuan really is an American conspiracy? I would like to advise our compatriots, get clear before the truth, do not resort to force Hengmeilengdui. I Fucai, willing to try the most simple language to describe the systematic exchange of knowledge, again, convinced that our readers even without any knowledge of economics, but also enables you to re-exchange rate understanding, so you Sudden Impact on the above questions, at least those who will not be easy to superstition in bursts in the media spotlight the so-called economists.
I. Why do we need foreign trade?
there is a story had repeatedly raised, although the story the contents of the already too old tooth nothing new, but for people without the knowledge of economics, learning theory it is essential to understand the exchange rate.
is still in the barter of human savagery, a Liangbing created a sharp ax, shot dead two fat person B's wild sheep, a knife which it is enough simply cut their own trees, and the other handle is idle; B half past one will also eat two sheep , the other a long time will put spoiled. Thus, the two have something spontaneous exchange of excess, though the ax or hatchet, wild goats are still wild sheep, not their quantity and quality of any change But the two sides have since exchanged the situation has improved, because both parties use their own in exchange for the extra material wealth of their useful.
This story tells us, equality, voluntary exchange to a variety of resources more rationally and effectively be distribution of wealth can increase the exchange of the two sides. From the story to promote the open, in order to make a country richer people in one place, it must be reasonable policies adopted to promote more extensive exchanges, exchange more and more people get rich the pace faster. Of course, humans have already entered the era of using the currency of civilization, but the nature of barter exchange has not occurred any change, money is only as a medium of exchange.
foreign trade between the people and domestic exchange does not substantially different, the same can also promote the exchange of both wealth growth, which is why national political leaders regard the slogan of defending the freedom of trade as a reason for hanging in the mouth. But foreign trade and domestic are also different, because their products unit of account used when pricing is not the same, the Americans used the U.S. dollar, the Chinese use the RMB yuan with a number of Chinese products in exchange for a dollar to U.S. products, this is a problem, so the exchange rate issue should be shipped born.
Second, the exchange rate is determined by what?
said before, the exchange is the essence of barter, if a product has what resources the country, and lack of resources and products of State B, then A country's money is even more valuable, because the urgent need for State B State A product resources, it is willing to use more products to a country in exchange for money to buy a country's resources, or a country will not exchange with you. < br> However, this situation is not static, if State B was originally an urgent need for a country's oil resources in their own territory later found a large oil field storage of rich, then Country B on the needs of a country's oil resources will drop, this time with respect to State B, State A bill bill will naturally rise. because State B's distress short of oil has eased, the original fuel for 1 ton of a country willing to come up with 10 tons of food, now only 5 tons of food to spend.
to the two countries, the RMB against the U.S. dollar is the United States from China (or the world market, as the U.S. is the world's currency) a variety of resources products, and the United States (or the world market) to supply and demand of Chinese products, the decision of various resources, just as the price within a country is determined by supply and demand as the two sides. RMB exchange rate is the price on the world market.
China's reform and opening up, wound China's lack of manufacturing technology, car, computer, aircraft and all kinds of machinery and equipment are not made, and China needed to support the modernization of these things, so the renminbi in international trade is very not worth much, because on the one hand we have an urgent need for the dollar the United States and the world market to buy advanced equipment and technology, on the other hand got a lot of RMB foreign but nothing in the Chinese market can purchase what they need. as the currency of Haiti is now worthless as simple as that, because you are now Even with the currency in Haiti, but because it has suffered a serious earthquake, you do not buy the things you need.
However, with the deepening of China's reform and opening up, China addition to large aircraft, the only they can make computers , car, and all types of machinery and equipment, and can use the equipment and the advantages of Chinese labor to produce more shoes, socks, ties, and many other light industrial products lighter, so that on the one hand we do not need more dollars to buy industrial products to the United States , and thus demand for the dollar to drop; the other hand, Americans can once they get the RMB to buy cheap Chinese light industrial products, and therefore increase their demand for the renminbi, and the down a liter, which means reduced demand for the dollar increased demand for the renminbi, RMB naturally more valuable. In other words, as China's economic development, the appreciation of the RMB against the U.S. dollar is inevitable.
Third, there is no exchange rate movements objective criteria?
question now is how much the RMB is appropriate that the rise? Some experts say that the exchange rate issue is the issue of sovereignty or the State did not rise up to us to decide; Some experts say the yuan rise has been in 5 years 21%, not up again a; some scholars say it, not only should the RMB appreciate, it should be devalued, because the depreciation of the means of our products cheaper, more conducive to seize the world market.
the face of divergent views, of course, confused people. However, once the text of the voluntary exchange of equal Syria both the growth in wealth can contribute to this basic principle, we can still to this seemingly inscrutable questions to find clarity in the answers.
The purpose of exchange of any party that is not from the subjective to others but to themselves, although the objective is also helpful to others. foreign trade, if we just sold out the things that were not enough, we also have to sell things for back to the U.S. dollar to the United States market, buy what we need, so that the exchange is completed. If you only sell not buy, that means we'd give something to others, but others did not give us anything, so Perhaps the exchange is to promote the growth of American wealth, but did not make our own corresponding increase in wealth.
modern society has entered an era of specialization, to really complete a thorough exchange between the two countries, it is necessary to export-dependent companies have to rely on imports company. If the export company just to sell products abroad, and importing companies are reluctant to use the export company in exchange for dollars to complete the import, it means that the exchange was not complete. There is a standard to measure exchange rate is correct, that is, in return for U.S. exporters to sell unimpeded import company, import companies and are willing to buy all those dollars for imports, then it means that the exchange of fully completed, it means that our wealth has been increased, so that the exchange rate is correct.
An example may help everyone understand the above passage. assume that the Chinese passenger car factory in a number of high-end passenger car exports to the United States, 100 million Americans are willing to dollars to buy, more than the price Americans would prefer to create their own or to other countries to buy. At this point, a passenger car factory or else the deal is done depends on both the manufacturing costs, but also on the exchange rate. If the production cost of the established bus is 6 million yuan , can not sell the key to look at this $ 1,000,000 RMB back the number of domestic can be replaced. China is a foreign exchange control of the country, 100 million passenger car plant to get after it, only to state-owned commercial banks, the ratio prescribed by the State to convertibility of RMB. If according to 1 U.S. dollar 6.8 yuan RMB, the passenger can make these 80 million yuan, it alone can do the business, of course; if the state will change it to $ 1 exchange only 5 yuan, then this single business can not do, it must be done to mean loss of 100 million yuan. Through this case we can see that the lower the exchange rate (that is $ 1 more to exchange RMB), for example, can be exchanged for $ 1 100 yuan, the export business to booming business will no doubt immense.
problem, however, this is not the end, the RMB is not of course help us valuable export dollars can be saved is not our purpose, our aim is to use these dollars from the United States or the world market to buy back our domestic need, this time featuring large companies rely on imports either. U.S. imports need to, then what kind of import enterprises in the price of the bank to buy dollars? of course, is to in accordance with the bank to buy dollars from the export price of the implementation of enterprise, and to add charges, or bank it not lose money? However, this time importing firms simply do not enthusiasm, because, according to 6.8 yuan to one U.S. dollar price of exchange to buy U.S. dollars, Apart from a few companies that import large aircraft such as the sort of sophisticated products, the other almost back home no matter what to buy are uneconomical, or RMB enough of their own these products can not afford, or bought back these products high domestic prices, no one will buy. abroad readers must have had a similar experience, when we changed a lot of dollars to foreign countries, we find that almost no matter what to buy, if converted into yuan than domestic expensive, but to U.S. again brought back again into RMB. In other words, the current exchange rate system, we can not afford most of the Chinese dollar.
a phenomenon can be used as secondary evidence. China's foreign exchange reserves will be at what time a lot to spend it? certain leaders are generally led to go the United States or Europe, the results come back often to enter into a generous order. most people may be wondering, how Chinese entrepreneurs have become a child, the non- The import, is it still better tomorrow's leaders check it? The secret lies in China's business with the current exchange rate to buy foreign products most uneconomical, and only state-owned enterprises in the political task of the current situation, only willing to or have no alternative but to act as suckers!
finish the example above the reader should understand this reasoning, assuming that the correct exchange rate, the bank's vault account there will be no accumulation of too many dollars, since they export enterprises from bought at the dollar has long been bought the business to be imported, the fact is that our country has accumulated a very huge huge 2.4 trillion dollars, you can say this is right up the exchange rate?
Fourth, the export Whose business is making money in?
So, how much should be present in the end to the convertibility of RMB $ 1 is reasonable? In fact, in addition to the market, any experts can not answer this question. because the market is always changing , a national demand for the product on foreign resources and foreign demand for products of the country's resources are dynamic, and what price to co-ordinate a package of items together, what is a fixed parity with dollar peg policy, as well as the exchange rate fixed once and for all a value on the real exchange rate may be mile away.
is because the market is in perpetual flux, almost all market economy countries intervene in the exchange rate is not mandatory, nor save a lot of foreign exchange rather, the needs of the people according to their own preservation and freedom of exchange, so that the real exchange rate to reflect market demand, exports and imports in order to reach a balance, at this time is the right of the real exchange rate in order to truly promote the exchange of both increasing wealth. It is because of this reason, the exchange rate is free floating to be internationally accepted measure of whether a country is an important criterion for market economy countries.
, of course, free floating exchange rate risks will export enterprises, such as three months ago is 1 U.S. dollar 6.8 yuan, so the company received $ 10,000,000 for a single business, but three months after completion of manufacture, the exchange rate can only be converted into a $ 1 5 yuan, which means revenue will be dropped from 68 million yuan 50 million yuan, then the awful order is entirely possible from the profits into the drain. So, for export enterprises, at least they want the RMB exchange rate is stable, it is best depreciation, whether How do not appreciate.
bus back to the previous example, a number of high-end passenger car exports to the United States, our cost of production is 600 million Americans are only willing to buy a $ 1,000,000, according to the current exchange rate bus plant earned 80 million yuan. But if the state liberalize the exchange rate controls, according to market demand in China and the U.S. dollar is not so valuable, the RMB is bound to appreciate, is assumed to 1 U.S. dollar appreciated 5 yuan, the Bus Factory in the real market price, Every production batch of buses, in fact, loss of 100 million, which is single business should not be done; but if the government forced to devalue the RMB, for example to 1 U.S. dollar depreciated 10 yuan, you can make each batch of 400 million passenger element, which is a passenger car factory out of money, it is simply heaven.
dwellers need to draw readers attention, no matter how much the RMB U.S. dollar, even if is 1 U.S. dollar 10 yuan, a passenger car factory can made a fortune, Americans pay for these buses only 100 million U.S. dollars, our country can only be relying on these 100 million from the U.S. market, the goods back $ 1,000,000. Since Americans do not pay more, but they earn pots full bus plant bowl full of this money come from?
this money in fact, has nothing to do with the Americans, this is the $ 1,000,000 passenger car plant to the commercial banks at a fixed exchange rate to the standard. The Chinese like the Airbus factory export enterprises far more than do the same, because their existing money to be made under the standard exchange rate will certainly increase the production exported to foreign countries desperately in exchange for dollars, then those dollars from domestic commercial banks in exchange of the renminbi, make money enterprises will certainly never bored.
problem is that commercial banks, the money is to come from U.S. dollar, the company stands to reason that should be imported to the dollar from the purchase, import and export to a country balances. may be earlier mentioned, in accordance with the standards of the current exchange rate, import companies simply do not import the enthusiasm of the dollar not only enter into less or more out, no amount of money commercial banks, export enterprises can not afford the payment, they had to sell dollars to the central bank, the central bank because the payment standard is developed. the central bank of the no money, because the central bank is not a profit unit, but this does not prevent the central bank to pay the money, because the central bank although not profitable, but it is the right to print money, with the with the continuous inflow of U.S. exporters, the central bank to printing money in dollar printing 6.8 times the amount of export enterprises to pay the RMB, and then the RMB and then through the procurement aspects of the production of export enterprises into the domestic market all.
you think China's foreign exchange reserves now exceed 2.4 trillion U.S. dollars, so the number of central banks print more yuan this market it? your mental arithmetic will be able to come has already put more than 16 trillion yuan. In fact, it is more than this number , because in the past for a long period of time, price of foreign exchange is 1 U.S. dollar 8.7 yuan. you now understand why we always feel at home continue to devalue the RMB up?
five yuan does not appreciate what consequences?
yuan does not appreciate, it means that export enterprises to produce prosperity, profit enterprises, workers are not laid off, which of course is a good thing an export enterprise, which is also against export enterprises with certainty the reasons for appreciation of the renminbi. But Government decisions can not only consider the interests of export enterprises, and more is to consider the interests of society as a whole. we will look at the RMB does not appreciate what our society disastrous consequences?
one of China's Wealth will be flowing continuously into the United States, and the same wealth in return for fewer dollars, because the low exchange rate means that we need in exchange for the dollar equivalent of something more, that white stuff we are sending to others ; Second, more and more trade friction, because the government does not allow appreciation of the renminbi, to rely on print yuan to U.S. dollar payment, equivalent to using the power of the country to subsidize the cost of export enterprises, damage to other countries and production capacity of China's export enterprises similar business interests, which does not comply with WTO rules; Third, the industrial structure will be more abnormal, low-cost or cheap products as export enterprises can make money, the original should not be put into the business because of the export profits and swap hard to increase investment, the so-called central repeatedly made to reduce exports to increase consumption as the goal of economic restructuring will eventually come to nothing; Fourth, as the world financial crisis eased, the gradual recovery spending power abroad, exports will continue to increase in the dollar reserves increase of RMB to U.S. dollar had a large number of distribution, domestic inflation will come back go hand in hand.
Some people see here, perhaps luck is not the appreciation of the renminbi's foreign exchange reserves in China, after all, so that we get the world's first the top spot, which shows that we have money in China now, not like that anymore the poor and weak. However, the amount of days of foreign exchange does not mean we have wealth in the hands unbreakable, it also faces the possibility of continually falling in value .
When we deliberately used a low exchange rate for foreign currency, save money in the process, we return with something more dollars have been lost in less time; when we use a variety of foreign exchange reserves to purchase U.S. fund shares, the fund share price dropped (such as Blackstone) brings us a loss; when we use foreign exchange reserves to buy all the bonds, because these companies (such as Freddie Mac, Lehman) bankruptcy of or loss of our and loss of time; when we hesitate to hand a loss of those dollars dilemma, the U.S. has been printing money to rescue City, a steady stream of U.S. dollar market, so that we damaged their dollars further. These losses of tens of astronomical, Interested readers can check out the Internet in China in the United States, is a poor country, most can only be regarded as a developing country, this 2.4 trillion of foreign exchange reserves means that the Chinese people have sent more than 16 trillion yuan of wealth to the United States, and we did not get back from the Americans, where the corresponding wealth, the Americans gave us only a 2.4 trillion of the IOU, and even there can be no IOUs, because the Americans do not therefore of interest to us, and the dollar is the United States, a sovereign state has the right to keep them continued depreciation of the printing . Of course, this does not go to blame the Americans, black heart, the Americans paid the dollar means that they are willing to exchange with us, the problem is that our exchange rate system to the Chinese people can not use the money, this system should not be reform?
six, the future Where is the way?
China's many problems, had only an economic strategy can fully discuss the dispute, and then find the best policy. However, once stained with the political economic policies, saying that white is a Leaders expressed their views for a particular phenomenon, the whole of China will be thousands of people side immediately unanimous opinion, numerous lower-level will take the initiative and consciously look for supporting arguments for the superior argument.
the Central Government on the issue of hard-line attitude of appreciation upon issued, the various media will be immediate action, various experts have rightly condemned the acts of the U.S. hegemony, to find some plausible reason for confusion. Some presenters in fact, did not fully understand the principle of the exchange rate, could not wait to start Attractively patriotic performances.
Some economists often ironic thing, for example, Keynes said that the recession, the government can hire a group of people during the day to dig trenches, to hire another group of people to fill out the ditch at night , and so forth cycle, and then give them wages, so that you can pull consumption. to take such a theory to snookered a farmer weeding in the field, will be the farmer laugh, because in his eyes it was a waste, act a fool , as really want to take care of people, money is sent directly, why waste energy ditches. However, contrary to common sense is that some of the theory, but won the appreciation of government officials around the world, Chinese government officials at all levels have been regarded as a model, the underlying Officials do not know source is not common sense, do not know a huge waste of money and efficiency is low, but this theory to profit from intervention in the economy, officials found a reason and an excuse.
exchange rate issue is probably no exception. the amount of days gathered in central bank foreign exchange control in the central, this unearned windfall (as opposed to foreign managers) for the relevant sectors and the interests of interest groups is not a great thing, I believe that the hearts of readers of friends own sense of propriety. can see the facts , the central bank's so-called experts, no one is not against Renminbi appreciation, opinion highly consistent, clear-cut attitude, which apparently decided to head butt the principle is at work. These experts and scholars to some of the problems seemingly rigorous logic plausible, as long as serious readers understand the text earlier in this article, will be able to match exactly the logic in which to find its vulnerable soft underbelly, interested readers can judge their own to analyze.
make people worry about most is that if the yuan revaluation (As for the one-step or slow the appreciation of methodological issues that is), it not fall down a large export enterprises? it fall slow appreciation of the renminbi (such as some experts suggest that the appreciation of 2%), the business unprofitable, and that shows This enterprise is long overdue closure, it had therefore also profit, not the Americans gave them a profit, but the country to feed their people through inflation. As for the workers, would help if the government really want to help them, simple The approach is to bill directly to them and let them switch as early as possible, countries are more used to youth in need industry, struggling to prop up the country so why the loss of a seat factory, so why the wealth of handing a large amount of foreign people do?
would help if the exchange rate eventually rose to market acceptance of the real exchange rate, the majority of enterprises will be based on actual behavior of the exchange rate to adjust their production, the exports to exports, the imports to imports, China's limited resources endowments to will not be cheap or cheap, you can get a reasonable and efficient use and allocation, China's industrial structure is possible substantive adjustments, the Chinese economy was likely to phoenix from the ashes.
In fact, at this stage even if the slow Appreciation is also expedient, because, Qian Wenyi above, the right end from the market exchange rate adjustment, in order to improve efficiency, the Chinese economy to rid itself of dependence on exports turn boost domestic demand, the only way out is to abolish exchange controls, get rid of the fixed exchange rate system, so that all foreign currency and RMB convertibility, the market will find the right from the way the exchange rate.
issues on the exchange rate and continue to spread misconceptions repeated the baseless assertion, some voicing support for the so-called economists played an aggravating role, History will eventually prove that they do not only focus on the reality of error and nail them to shame in the academic conscience, they are: to loose Jo, Han Xiuyun, Wu Nien-Lu, Tan Yaling, Xiao Lian,, Zhou hh