This is an interesting development.

One thing that has been talked about quite a bit is a potential “race to the bottom” of currency devaluations.

Simon Heapes of Anglo Far-East has said numerous times that the “symphony of inflation” would ultimately end up in a race to the bottom.

Uncanny how accurate that guy has been over time.

If we see this unfold, we are looking at a failure of fiat…which means real disciplined money (gold and silver) will revalue to equal the amount of currency created.

Since I own gold and silver, I sure wouldnt mind the wealth transfer!

1930s beggar-thy-neighbour fears as China devalues

China has begun to devalue the yuan for the first time in over a decade, raising fears that it will set off a 1930s-style race to the bottom and tip the global economy into an even deeper slump.

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 10:39AM GMT 04 Dec

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Beijing swells dollar reserves through stealth

Last Updated: 3:24pm BST 26/08/2008 The Telegraph.co.UK

Rule changes for commercial banks are acting as cover for exchange rate intervention, writes Ambrose Evans-Pritchard

China has resorted to stealth intervention in the currency markets to amass US dollars, using indirect means to hold down the yuan and ease the pain for its struggling exporters as the global slowdown engulfs the economy.

A study by HSBC’s currency team in Asia has concluded that China’s central bank is in effect forcing commercial banks to build up large dollar reserves, using them as arms-length proxies in a renewed campaign of exchange rate intervention.

Beijing has raised the reserve requirement for banks five times since March, quickening the pace with two half-point rises in late June.

This is having major spill-over effects into the currency markets because banks in China have been required over the last year to

...

Beijing swells dollar reserves through stealth

Last Updated: 3:24pm BST 26/08/2008 The Telegraph.co.UK

Rule changes for commercial banks are acting as cover for exchange rate intervention, writes Ambrose Evans-Pritchard

China has resorted to stealth intervention in the currency markets to amass US dollars, using indirect means to hold down the yuan and ease the pain for its struggling exporters as the global slowdown engulfs the economy.

A study by HSBC’s currency team in Asia has concluded that China’s central bank is in effect forcing commercial banks to build up large dollar reserves, using them as arms-length proxies in a renewed campaign of exchange rate intervention.

Beijing has raised the reserve requirement for banks five times since March, quickening the pace with two half-point rises in late June.

This is having major spill-over effects into the currency markets because banks in China have been required over the last year to

...