There’s a good piece on Seeking Alpha today on the prospects for global commodity appreciation if and when the Chinese Yuan starts appreciation vs. the US dollar.
At the same time, there’s also a sentiment of unease about inflation given the amount of new currency created in the wake of the financial crisis but it puzzles some that this hasn’t kicked in yet. Also from Seeking Alpha:
Logic dictates that we should all be gearing up for inflation, now, but the data does not lie and I can pull the most aggressive data I want and it shows ultra low inflation rates, which is scary, frankly. With the massive printing and monetization of debt that we have seen over the past 2 years, we should see some inflationary pressure, somewhere, but nothing.
There’s already an obvious relation between the two ideas, but we might have to rely on Kedrosky to hammer the point. In order to keep the Yuan stable, China has been buying greater and greater amounts of US Dollars over the years.
Ergo: the biggest reason why inflation hasn’t hit, is because all the new dollars are in China.
Ergo: if the Yuan appreciates, dollar drops, inflation hits, interest rates rise,
recession worsens??
Wait, I thought the Yuan thing was supposed to be a good thing?
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The Critical Thinker(tm) 