And it explains why foreign reserves cannot easily be used for domestic spending on infrastructure or shoring up pension systems, since simply converting the cash risks driving up both inflation and the value of the yuan currency.Yes, it would drive up inflation via money printing (they handed out 6 yuan when they swapped the dollar for yuan, now they spend it again for 6 yuan, total 12 yuan per dollar), but government directed spending is no longer efficient. The low hanging fruit was picked and wasteful investments are piling up. Given the state of the global economy, the losses are more likely to show up, at which time some people may question the value of the yuan and switch to U.S. dollars. And note, if they spent all of their forex, then the yuan would likely fall, as one cannot print money at a rate of 12 yuan to 1 dollar and not expect the exchange rate to head in that direction.
Not So Super
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FEEDSuper Micro (SMCI) makes rack servers. Boring, right? Well, not if they
got the privilege of riding the silly AI fad, which they did to great
effect. C...
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