A Tiger by the Tail
Just last year many were talking about how China is conquering the world economy. Now more wonder if there will be a world economy to conquer. I'm old enough to remember long long ago when Japan was conquering the world economy (roughly the 80s).
Didn't turn out that way exactly did it ?
I see a pattern. A country has a persistent trade surplus with the USA. Therefore they are winning and the US is losing. Their currency is strong. Therefore they are winning and the US is losing. They invest huge amounts of money in Treasury securities to keep the dollar from depreciating too much (how humiliating for the USA). Then they give up.
Then they are in deep trouble.
Japanese banks mainly got into trouble loaning to comercial real estate developers during the 1980s bubble, however, following requests from the ministry of fincnance, they invested hundreds of billions in dollar denominated assets. Those assets were worth many fewer yen when they needed yen. Japan was guaranteeing itself a huge loss on capital (which hurt expecially because it came as a loss of bank capital). This was considered brilliant economic strategy by US based Japanophobes.
Then the USA was number one for a while.
Then the PRC emerged as a booming economy and invincible competitor. They couldn't be beaten on the market becawuse they bought trillions of dollard denominated assets to prop up the dollar.
Fortunately the People's Bank of China can't run out of Yuan. However, I don't think the Chinese working masses will be pleased to find out what they get for their decades of working and saving.
Ah the contradictions of communism.