very interested in your "controls on outflows have been lifted" comment. Care to elaborate? For instance,should a crisis equivalent to the asian crisis occur, could investors exit with their funds/hot flows as effectively as investors in 97/98? How would that be accomplished?

Email would be fine too

You could borrow and spend.

DC: Bernanke won’t raise rates because he doesn’t give a damn about destroying the savings of the American working-class.

Low interest rates are a wonderful thing if you are up to your ears in debt. It’s the super rich that have huge savings, not the working class, and so this conspiracy theory falls flat there.

DC: The US has been gaming the global economic system for decades; sucking up two-thirds of the world’s capital, giving nothing back in return except mortgage-backed junk, cluster bombs, and crummy green paper. Nothing changes; it only gets worse.

And there’s no particular reason to think that this can’t go on for at least the next century, since sucking up the world’s capital allows the US to build 12 carrier battle groups which it can use to continue its control over the world financial system. It’s actually quite a stable system.

There are lots of things that can cause the forward market not to match up, and capital controls is only one of them. In particular, if the differential were due to capital controls, you’d see markedly different prices in Shanghai than in Singapore/HK, and while there is a difference, it’s not huge.

So far, even you have to admit that betting against the US Dollar is a winning proposition. I am not a short term speculator, borrowing heavily on margin to short the US Dollar, but I would like to at least preserve the "real" purchasing power of my hard earned savings. What else can I do, invest my capital in the frozen bond market with negative interest rates, or the sinking stock market, or the collapsing housing market? The Bernanke Fed has gummed up the entire US financial system with its low-interest credit scam. The only long-term trend is for the US Dollar to collapse into a black hole. Bernanke won’t raise rates because he doesn’t give a damn about destroying the savings of the American working-class. Writes Mike Whitney, "What matters to Bernanke is making sure that his fat-cat buddies in the banking establishment get a steady stream of low interest loot so they can paper-over their bad investments and ward off bankruptcy for another day or two. Its a joke; it was the investment banks that created this mess with their putrid mortgage-backed securities and other debt-exotica. Still, in Bernanke’s mind, they are the only ones who really count. The US has been gaming the global economic system for decades; sucking up two-thirds of the world’s capital, giving nothing back in return except mortgage-backed junk, cluster bombs, and crummy green paper. Nothing changes; it only gets worse."

It’s quite a risk bet since the PBC might just well let the RMB inflate meaning that you are left with RMB whose appreciation matches inflation. As long as price increases are confined to food, the Chinese government is under no particular pressure to reduce inflation since higher food prices and stable non-food prices, effectively redistributed income from urban to rural areas.

There’s also the risk that PBC will miscalculate and lose control of the situation in which case you have a 15% appreciation on a currency that has dropped 20%.