Golden Triangle Drug Traffic Arbitrage?

[James A. Donald]

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On 23 Mar 2005 at 10:27, Tyler Durden wrote:
> China pegs it's currency to US currency. With the 
> dropping dollar, this means that there's going to be a 
> larger and larger gap between 'reality' (as measured 
> in the true cost of goods in a free market) and the 
> pegged rate.
>
> On Cypherpunks do I need to explain the idea that this 
> difference will inevitably give rise to a big black 
> market to exploit that difference?

There will be no black market as long as the chinese 
government is prepared to buy US dollars from all comers 
at the official rate.  The black market can only happen 
if they start saying "well, you are just a regular 
person, not a proper registered business, so we will not 
buy your dollars, unless you give us a good explanation 
of how you came to have them."

In my opinion the official chinese rates are pretty much 
in line with reality, are reasonable and realistic. The 
chinese government is prepared to buy and sell unlimited 
dollars at the official rate, because it thinks that 
dollars are reasonably cheap at the official rate, and 
they are reasonably cheap, because they can be used to 
buy stuff that chinese want, and stuff that the chinese 
government wants.

And if the official rates are not reasonable and 
realistic, there will be no black market until the 
chinese government is simultaneously unwilling or unable 
to buy unlimited dollars at the official price, and also 
unwilling to change the official price. 

    --digsig
         James A. Donald
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