Fight with China by depreciating US dollar

[wp_lightbox_prettyPhoto_image link=”http://www.economicsignature.com/wp-content/uploads/2018/03/20180308-USDCNY.png” description=”China owns about USD $1.2 trillion U.S. bonds. This amount costed China about Chinese Yuan (CNY) $7.8 trillion, assuming that the exchange rate was CNY/USD 6.5:1. Trump administration can intentionally depreciate the US dollar for a while, leading the exchange rate down to a low level, say 6.0:1. In the sequel, when the U.S. would return the debts of USD $1.2 trillion, China would receive CNY $7.2 trillion, causing China to incur a terrible loss of CNY $0.8 trillion.” source=”http://www.economicsignature.com/wp-content/uploads/2018/03/20180308-USDCNY.png” title=”Fight with China by depreciating US dollar”]

One of our previous articles addresses how to Fight with China by tax cuts and trade wars. To combat with China, Trump involves multiple schemes, one of which is based on currencies.

Let’s recall that China owns about USD $1.2 trillion U.S. bonds. This amount costed China about Chinese Yuan (CNY) $7.8 trillion, assuming that the exchange rate was CNY/USD 6.5:1.

How does the U.S. return the amount of USD $1.2 trillion back to China? Trump administration can intentionally depreciate the US dollar for a while, leading the exchange rate down to a low level, say 6.0:1. In the sequel, when the U.S. would return the debts of USD $1.2 trillion, China would receive CNY $7.2 trillion, causing China to incur a terrible loss of CNY $0.8 trillion.

Let’s watch how low the USD/CNY will be.

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