Quote:
Originally Posted by Cimarron29414
Well, I don't necessarily agree that IMF/WB loans to other countries who then loan/borrow with China...that there is no correlation or influence on the "market value" of Chinese currency in that regard. Certainly, China is a powerful force in the UN and policies in the IMF/WB will favor them (as they do the U.S. in many cases.) Again, my original point is that when comparing the dollar to the renminbi - China's currency looks more like a peso than a country that is launching satellites. It's value is not reflective of it's current wealth as a country. However, that fact seems to favor the US at this time so I backed off saying that was a bad thing.
Dippin, I love you like a brother, man - you don't HONESTLY believe that the Fed chairman is not influenced by the executive branch, do you?
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You are making several mistakes here.
First, the IMF and the World Bank are completely independent from the UN. So whatever powerful force in the UN China has is not directly tied to their power in the World Bank or the IMF.
Second, the IMF decision making is very different from the UN. In the UN it is generally one country, one vote. In the IMF, each nation's vote share is determined by their IMF quota (i.e., how much money they make available to the IMF). The United States provides 16.77% of the funding, so it has 16.77% of the vote. Japan provides 6.02% of the money, to it has 6.02% of the vote. China, in contrast, has 3.66% of the vote.
So the idea that the IMF is somehow biased towards China, or harming the US in its decisions, is simply false.
Furthermore, unless you are talking about "chaos theory" scenarios, where a butterfly flapping it's wings in Asia influences tornadoes in the United States, no, the IMF plays no role direct role in determining the Chinese exchange rate. It would if China needed IMF money, but since it doesn't, the IMF has no power over China. In fact, the standard IMF recommendation for exchange rates, which recently has been to float them, goes against what the Chinese have been doing.
Same goes for the World Bank.
Third, you have a mistaken notion of what an exchange rate should reflect. The "strength" of a currency is not determined by its numerical value regarding each other, but on it's yearly fluctuations and its impact on the trade account balances.