China embraces gold standard

[Clive]

?

[chrikenn]

Interesting.  Is this good or bad for the PP? 

[AdamA]

I would predict that this would be good for the gold portion of the PP, but bad for 30 year bonds and cash. 

The reason for this is that it would remove the peg between the yuan and the dollar, which would essentially mean we wouldn't be able to export our inflation to China any more. 

In theory, I think this is inflationary, because it means that instead of using US dollars to buy Chinese Yuan (ie, the Chinese helping to monetize our debt), they would have to use US dollars to buy US stuff, which would force the dollars that would have, in the past, been converted to Yuan back into the economy (inflation). 

However, who knows what will happen if the US can't buy as much stuff from China any more.  Some say that this could tip off a global recession b/c the US consumer won't be able to buy things any more (which could be deflationary).  Others say that this is an overrated threat and that the Chinese (and the rest of the world) would do fine to consume their own goods. 

So, to sum up, I really have no idea. 






Probably won't have a huge impact on the stock market (although this is the hardest one to forecast).

[dualstow]

Seems like this would have appeared in the WSJ or something by now.
Ah, I see. It's just a thought with a question mark appended.