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Originally posted by: Darth Chaltab
And I didn't know that Chinese money was equal to US money. I wonder how that happened. Anyway.
It's completely intentional. China's government declared that their money would be locked to the value of the U.S. Dollar and that's the way the world has to valuate their money as a result. Why they did it is to make trade with the U.S. easier. Or, in other words, to make exporting their products to the U.S. much easier since the whole world knows how bad our trade deficit is. We export a helluva lot less than we import. That's common knowledge. And we're China's #1 importer. So long as the value of the Chinese Yuan is equal to the U.S. Dollar, then the U.S. will be willing to import anything and everything. Benefits the Chinese economy in a big way.
The problem arises in that the U.S. Dollar is losing value compared to almost any other monetary unit in the world. This means that the Yuan is also losing value. Every economist in the world knows that with China's economy booming the way it has and the Chinese government loosening its stranglehold on their marketplace, that the very second that the government unlocks their Yuan from the U.S. Dollar, the value of it will skyrocket. So many people have been buying thousands (even millions) of dollars worth of Yuan in anticipation of what they feel is the inevitable decision to unlock the currency. Then the Yuan they bought will be worth a ton more than they paid for it making them overnight millionaires, so to speak. It's really an easy way to make money, and it's completely legal. However, it's all based on speculation. You never know for sure if the money you invest in will go up or down. But the Yuan going up is a given if they unlock. But that unlocking will alienate their number one importer... my homeland.