scares you the most. Yeah. So the interesting thing about the Chinese exchange rate policy is it's now very negative for China. And for many, many years, it was actually very positive for China. So people may wonder, why would any country pursue a policy which is so negative for it? I also wonder that. We'll speculate on that in a minute. When you link your currency to somebody else's, you lose control of your domestic monetary policy. Now we have to pause a little bit, because it's not quite true in China because it has capital controls. But you give away a significant flexibility to control the price interest rates and the quantity of money in your own economy. And these are really very, very crucial things for anybody to control, whether they control about independence, central bank or the government. They're really very fundamental. And China has given that away. And what therefore does determine the price and quantity of money is the size of its external surplus, which is not just (54/99)
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