US-China Dollar Cycle

[suki]

Can someone tell me if I've got this correct:


China produces low cost goods - ship goods to US
US purchases Chinese goods with US Dollars
US Dollars flow into Chinese manufacturers
Chinese Govt prints more Renminbi and purchases US Dollars from Chinese manufacturers
Chinese Govt purchases US Gov't debt with US Dollars
US Govt uses dollars from sale of US Govt debt to fund social and defense spending
Social and defense spending trickle down to US consumer as wages
US consumers use wages to purchase low-cost Chinese goods
Repeat...

[touchring]

Re: US-China Dollar Cycle

may i add:

Can someone tell me if I've got this correct:


China produces low cost goods - ship goods to US
US purchases Chinese goods with US Dollars
US Dollars flow into Chinese manufacturers
Chinese Govt prints more Renminbi and purchases US Dollars from Chinese manufacturers
Chinese Govt purchases US Gov't debt with US Dollars
Chinese Central bank lends the dollar to SOE to purchase gold and commodities.
Chinese Govt pledges US debt to international banks for loans to purchase even more gold and commodities.
US Govt uses dollars from sale of US Govt debt to fund social and defense spending
Social and defense spending trickle down to US consumer as wages
US consumers use wages to purchase low-cost Chinese goods
Repeat...