AmazonTania
1 Percenter Wannabe
I know what might make sense.
Imagine you have a store in Duluth Minnesota. *A Chinese man comes in and wants to buy something. *He offers you Renminbe
Do you take the Renminbi in exchange for your goods?
If I lived in China, I would. But I don't live in China. The United States has to purchase Renminbi in order to purchase Chinese goods, and vice versa for the Chinese regarding American goods. The only problem with this is that the U.S. doesn't actually export much of anything, so it doesn't accumulate much Reminibi from it's trade with China. As a result of this, America doesn't pay for it's imports with exports, but with worthless pieces of Federal Reserve notes.
Now again, if I lived in China and an American gave me their Federal Reserve notes in exchange for my goods, I wouldn't be able to eat, pay the bills or rent with this money. But luckily for me, the Bank of China is willing to intervene and give me Renminbi in exchange for those rather worthless Federal Reserve notes. Now I am able to do everything that I need to do with the Reminibi that I have, and the Central Bank of China can use those USD's to buy US treasuries to prop up our phony economy.
US exports to China were $10.3 Billion for last December alone.
Why go back to last December? Why not just talk about last April where the exports to China was $8.9 Billion? Even still, if you look at the make-up of what those exports were, very few of it was actually products the United States manufactures.
The US doesn't purchase Renminbi from China. *China businesses take US dollars.
I never said that US does purchase Renminibi from China. I only said they have to purchase Renminibi. The basic concept of trade applies: If you want what a countries produces, you need it's currency. Fortunately we can bypass all of this with our reserve currency. So technically (most of the time), we don't actually have to pay for our imports with exports.
And yes, I'm well aware that Chinese businesses are willing to take US dollars in exchange for their goods. Could have sworn I already stated that. Also it would be interesting for you to know that the Chinese have mandated and required that a portion of Chinese savings must be in US Dollars.
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