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  1. Barbara says:

    I was at Yahoo finance web-site. There is video by a professor from University of Maryland of today (05/26/2001). He is blaming China for over printing yuan. Is it so? I always thought that it is USA over printing of $. What is going on? Is there anyway of getting true story? I mean actual figures.
    Barbara

    • Hui Zhong says:

      I have no data to give you about the $ amount printed by both countries. But I can tell you the followings:
      1. Money is just a symbol one party own to others. How much of this kind of symbol needed in the economy should be determined by the production capacity. When production ability improves with the advance of civilization, money supply does need to increase because people become more and more productive. Otherwise, all goods produced would have become cheaper and cheaper.
      2. China is printing money all the time because of its over capacity of its production reflected by the trade surplus to other nations. When those currency reserve change for the Chinese yuan, money is printed but is backed by its increased production capacity in general. I see the over printing recently as evidenced by its high inflation, meaning the printed money is no longer backed by its production capacity completely.
      3. Unlike China, the dollar is world currency. When it is printed it is not necessary for them to stay in the U.S. but flow to the other nations in the world. We may find the U.S. production capacity is still not satisfied by printed money. But it does not mean the dollar is not over printed only because the money flows outside the U.S. causing the damage to the other nations.
      4. The big picture, I think, is the fact that the U.S. is transferring its productions capacity to the emerging markets, like China. So China has more room to print due to its increased production ability. On the other side, the U.S. is losing its production capacity so has little room to print.

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