He takes China as a prime example. Obviously they are the elephant in the room when it comes to global economies with massive foreign currency reserves. Over the past 12 years, they have build up over three trillion in mostly dollars and other currencies while their local currency did appreciate in value. So, they do have a loss.
Faber flips the argument here and says that loss may in fact be China’s gain. They enjoyed a massive trade surplus with the United States and the rest of the world. And with it came a huge transfer of technology to China as the country became the main producer.
So the small loss China incurred on the foreign exchange market netted it a huge transfer of wealth when it came to real wages, jobs and growth. Marc Faber sees it as a net positive when it comes down to brass tacks of either or.
Then there is the issue of Abenomics. Asian Central Banks are taking the Federal Reserve Experiment and going wild with it. In Japan, the BOJ is rapidly devaluing the yen to try and break the cycle of deflate. Its neighbour to the west Korea is already thinking of following suit. Faber wonders how long China will be able to hold off?
- Source, Trade the News Room: