May 28, 2008
China's Reserves
China has increased its foreign currency reserves nearly tenfold in the last eight years, amassing U.S. dollars at an incredible rate.

Unlike historical strategies for building reserves, China’s foreign currency accumulation is not intended to strengthen their currency. Rather, China’s stated aim is to protect U.S. purchasing power. China presents itself as the friendly trading partner, saying it will gladly keep buying dollars so that the U.S. may keep buying Chinese products.

But these massive U.S. dollar holdings also give China the ability to influence the U.S. currency. The Chinese have a keen understanding of the concept of leverage, and can use these reserves to maintain their current trade advantages. Any attempt to make China revalue the renminbi will surely be met by more threats from Beijing to diversify their reserves away from the U.S. dollar.

Meanwhile, the United States has remained complacent about growing its foreign currency reserves, leaving the U.S. government powerless to curb the dollar’s recent plunge in value.


 

Stay in touch with the economic trends reshaping the world.

In May 2008 issue of the International Speculator, Doug Casey, Chairman of Casey Research, discusses how a lower U.S. dollar, runaway inflation, and other economic forces are culminating in the Greater Depression. Doug Casey writes in "All the Trouble in the World, Part 2: Really None at All" about how an individual can protect their wealth – and profit handsomely– even as the broader economic picture darkens. To turn the fast-approaching economic crisis into an opportunity, sign up today for a no-risk, 3-month trial subscription to the International Speculator.

Learn more and get started now… click here
The Casey Research web site & Kitco Casey web site, Casey’s Investment Alert, Casey's International Speculator, Casey's Gold & Resource Report, Casey’s Energy Confidential, Casey's Energy Report, Casey’s Energy Opportunities, Casey's Trend Trader, The Casey Report, Casey's Extraordinary Technology, Conversations With Casey, and Casey's Daily Dispatch are published by Casey Research, LLC. Information contained in such publications is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained in such publications is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated and there is no obligation to update any such information.

Doug Casey, Casey Research, LLC, Casey Early Opportunity Resource Fund, LLC and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. Corporate policies are in effect that attempt to avoid potential conflicts of interest and resolve conflicts of interest that do arise in a timely fashion.

Any Casey publication or web site and its content and images, as well as all copyright, trademark and other rights therein, are owned by Casey Research, LLC. No portion of any Casey publication or web site may be extracted or reproduced without permission of Casey Research, LLC. Nothing contained herein shall be construed as conferring any license or right under any copyright, trademark or other right of Casey Research, LLC. Unauthorized use, reproduction or rebroadcast of any content of any Casey publication or web site, including communicating investment recommendations in such publication or web site to non-subscribers in any manner, is prohibited and shall be considered an infringement and/or misappropriation of the proprietary rights of Casey Research, LLC.

Casey Research, LLC reserves the right to cancel any subscription at any time, and if it does so it will promptly refund to the subscriber the amount of the subscription payment previously received relating to the remaining subscription period. Cancellation of a subscription may result from any unauthorized use or reproduction or rebroadcast of any Casey publication or website, any infringement or misappropriation of Casey Research, LLC's proprietary rights, or any other reason determined in the sole discretion of Casey Research, LLC. © 1998-2009 by Casey Research, LLC.