How America Exports Inflation - Explained in Ten Easy Steps by Greg Simon from the excellent website www.knowmadiclife.com
- American people buy stuff they don’t need from Chinese company with money they don’t have on US bank credit card.
- US Bank creates new US dollars out of thin air by creating debt for American people and giving US dollars to Chinese company.
- New debt stays in America while new US dollars leave America.
- Chinese company takes new US dollars to Chinese central bank and exchanges for Chinese RMB.
- Chinese central bank prints new Chinese RMB out of thin air to give to Chinese company in exchange for US dollars.
- Chinese central bank puts US dollars in a vault out of circulation.
- New US dollar’s are out of circulation, not impacting market value of existing US dollars and therefore not impacting US dollar price inflation.
- New Chinese RMB are in circulation, negatively impacting value of existing Chinese RMBs causing Chinese RMB price inflation to rise.
- US dollar value remains artificially high while Chinese RMB value declines.
- American people and Chinese people are poorer. US bank, Chinese company and Chinese central bank are wealthier.