Hey. Anyone picking up any ETFs that track the Yuan? Been thinking about it since the writing is on the wall.
TBH, petroyuan and yuan as a global reserve currency will inevitably rot China from the inside, so I’d be very wary of this change.
I don’t think China will change anything here, it’s just it’s going to be valuable to hold yuan because you can always exchange it for things you need. The advantage of a reserve currency is that it’s convertible, but with China it’s not an issue because of the sheer number of things China produces.
The problem is that if financial operations give higher and more consistent profit than manufacturing, they will hollow the manufacturing out, and the only way to avoid it is to drastically cut down the area of the market. China is not doing it, so they are vulnerable, even if less vulnerable than USA.
That’s a problem in capitalist societies driven by private capital. Banking in China is pretty much entirely state owned. That’s precisely why China was able to wind down the whole real estate bubble which would’ve resulted in a massive crash in the US.
Banks in China still operate under market logic, and it the very market logic, which is poisonous here. State ownership just allows the state to act, if it recognizes the problem.
Market is just an allocator, it’s a useful tool for doing dynamic balancing, but the market operates within the framework of the state plan. Hence my example of how real estate was wound down in favor of industrial development. If the market made final decisions we would’ve seen very different outcomes.
Good 👍🏻 Strangely enough, though, whenever I read about what will replace the US dollar as the world’s reserve currency, it seems like the Euro is usually mentioned before the yuan, whereas you’d think it would be the other way round 🤔.
This isn’t the great news you think it is
Why?
Very probably true, but I just get so sick and tired of the US’s behavior that it’s very tempting to root for its downfall.
