China allows a flexible Yuan

On Monday, stocks climbed on the word that China will allow a flexible yuan.

"Energy and materials shares led the way up as commodities were boosted" by the move. The move is expected to boost purchasing power and demand in China, the world's third largest economy. According to some analysts, a higher yuan would help temper inflation by pushing down import prices, which could mean Beijing would have less need to tighten monetary policy aggressively.

However, my opinion is that if China moves to allow a higher Yuan, it is a move that also simultaneously mean that the US must devalue its currency against the Chinese. Bitten by huge debt and the potential Euro-Crisis "jump-over", the US will have to print even more money and that will depreciate its currency even more until an eventual massive inflation occurs.. Which explains why gold has risen so much. The more money that is thrown and credit that the central banks throw at problems, the worse the currency depreciation gets and eventual inflation becomes hyper-inflation.

So, what of China? Isnt it amazing that for the most part, alot of analysts have been getting China wrongly? A property bubble? Based on price appreciation alone? But direct comparison of property prices in China to the west are nonsensical. The fact of the matter is that in China ...property price growth matches GDP growth. That wasn’t happening in the west before the bubble burst.. Second, first time homebuyers in China are now required to put down at least 30%, while buyers of second homes must put down a minimum of 50%. These are hardly bubble causing leverages that one witnessed in the Lehman brothers case. And finally, the Chinese authorities are taking the right steps to ensure things turn out well for them... like higher owner equity requirement, bigger bank reserve requirements, getting rid of speculations etc.. And as such China is in my opinion bullish..