All Posts Tagged With: "china"

Normally, bank robberies work the other way. An armed and masked gang walks into the bank, fires a few shotgun blasts, tells everyone to get on the floor, and asks the clerks to fill up canvas bags with the fabulous moolah. It’s simple. That is not the way it works in modern central banking, though. Today, it’s as if Hank Paulson is pointing his “big bazooka” bailout plan at Wall Street and demanding it opens up its wallet so he can fill it with other people’s money.

The best thing you can do for your children is to teach them Chinese. And make sure their money is not in dollars. The U.S. is now the largest debtor ever…

Did you see the first line of the minutes from the RBA’s June 3rd meeting? In case you missed it, here it is: “The Board’s discussion of the world economy commenced with a briefing on the outlook for Australia’s trading partners.” Why would a meeting on Australian interest rates begin with a discussion of foreign trading partners? Could it be that foreign demand for Aussie resources threatens higher inflation even more than Aussies hitting the shops with a credit card? Hold that thought.

Now, China has the money - the biggest pile of dollars in the world. And soon it will have the most powerful economy. It won’t be too much longer before Chinese leaders will want to throw their weight around.

“Terms of trade” is one of those terms of the trade that gets throw around by economists all the time. But what does it mean? The simple definition is this: it’s the ratio between export prices to import prices. If you get more for what you sell and pay less for what you buy, your terms of trade improve. And guess what people? Thanks to this particular moment in history, Australia gets a lot more for what it sells and pays a lot less for what it buys (except for crude oil).