How might you hedge your exposure to a weakening dollar? Well, you might by land and gold, to name a couple of popular assets.
Well, a top Chinese Communist Party economist is urging his country to do the same thing.
The gold part isn’t all that exciting, really, since we know China is snapping up commodities left and right. But the land part is interesting, particularly because he’s saying the government should buy land in the US.
Now, given the weak market, and China’s trillions in dollar holdings, obviously they could buy a hell of a lot of land if they wanted to. But what will happen if they actually do buy land in any meaningful volume (or try to) is they’ll run into political resistance. And they’ll quickly realise that they’re the equivalent of Class-B holders of US dollars, not enjoying the full rights and privileges of Class-A holders of dollars, which is US.
Now granted, they do get perks. The Chinese are getting paid in full despite lending billions to Fannie and Freddie. But if we’re worried about when the Chinese will lose interest in the dollar, it’ll probably come some time after they try spending their dollars, and can’t buy what they want.