China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
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Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#2So what? TFA keeps repeating that this is bad, but fails to explain why.
Is countries actually having money a problem now?
Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#3There's an adage that goes something like...when you owe the bank $100,000, you have problems. When you owe the bank $100,000,000, the bank has problems.
Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#4So what? TFA keeps repeating that this is bad, but fails to explain why. Is countries actually having money a problem now?
>Is countries actually having money a problem now?
USA looking at central and south America: Yes.
Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#5So what? TFA keeps repeating that this is bad, but fails to explain why. Is countries actually having money a problem now?
Planning to switch to another reserve currency seems to be a "career-limiting move".
Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#6Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#7and...? The article doesn't say how it's a big deal (or not). Looking at the list oof countries' forex reserves, tiny Switzerland has almost a trillion. Generally this is a sign that they export more than they import so are stuck with a bunch of foreign exchange. Of course they have to buy stuff with it: oil, other commodities, or, you know, foreign debt. China's 3T would be 10% of the US federal debt, or much smaller % of total (federal, state, municipal, and random entity) government debt. And that's merely the US. EU is smaller but adding it up in my head it's about 15-20 T.
The US has about 4T of foreign exchange reserves (despite having the reserve currency) and presumably private entities have a large amount too (sovereign debt), surely more than China's private entities.
Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#8So what? TFA keeps repeating that this is bad, but fails to explain why. Is countries actually having money a problem now?
Which country’s values do you prefer influencing the developing world: China’s, or the United States’?
Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#9So what? TFA keeps repeating that this is bad, but fails to explain why. Is countries actually having money a problem now?
They could in theory choose to sell lot of it in exchange for another currency, messing with exchange rates.
Or they could go on a buying spree, messing with asset prices
Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says
#10and...? The article doesn't say how it's a big deal (or not). Looking at the list oof countries' forex reserves, tiny Switzerland has almost a trillion. Generally this is a sign that they export more than they import so are stuck with a bunch of foreign exchange. Of course they have to buy stuff with it: oil, other commodities, or, you know, foreign debt. China's 3T would be 10% of the US federal debt, or much smalle…
I think the implication is that the global market makes pricing and reliability guarantees based on the public number, not the actual number. In other words: by secretly hoarding foreign reserves, China is signaling something that the markets might not have priced in already.
(This is my interpretation; not an endorsement in any particular direction.)