China holding the dollar bag

The author of the Chinese economic boom was the functionary who insisted on pegging the renminbi to the dollar, ensuring the American economy would be always available for Chinese goods. American manufacturing rushed into the Chinese miracle, bringing all the environmental chaos, and oh yes, forcing the Chinese government to take dollars in payment.

Now the dollar is falling, along with it the renminbi. The inflation in food prices is hitting hard. Fuel is subsidized by the government, but has to be costing more than a little, even aside the heavy price in "externalities." (External to what?) But the Chinese cannot cash in their 1.4 trillion in dollars for fear of sending the American currency lower and devaluing not only its own reserves, but its own currency.

The author of the boom is the author of the collapse. The Chinese need American technology to save their environment. Hell, we need that. Will the market provide it? Not in this bind. As the Chinese sink into the East, we will see them still clutching their bag of dollars, light to the rest of the world, but so very heavy to them.