Oct 12, 2012

The appreciation of the Yuan against the dollar has been accelerating again; as of today it’s up to 6.267 to 1. Last July it was up around 6.38 to 1. I can’t help but think the timing of this has to do with the U.S.Federal Reserve’s announcement that they will print at least 40 billion dollars of new cash a month until the U.S. economy picks up. (They wouldn’t dare call it printing money; it’s “quantitative easing.”) What this probably means is that we can all look forward to higher prices in commodities and food prices. It also means we could soon see prices start to creep up again for imports from China, though I don’t expect them to go up too much.

I don’t understand why the Fed is printing money again when they already printed several trillion dollars and it didn’t get us anywhere. Remember the old days when growing the economy meant that small businesses, which were a big part of the engine of growth, especially in new hiring, took off? Instead of focusing on creating new products, services and innovative companies, our government makes monopoly money. The eventual outcome of this should make us nervous.