Since the U.S. has no capital controls, it’s easy to convert the dollar into RMB (maybe not for us retail investors, but surely for the big boys). As confidence in the dollar has fallen, people are rapidly moving money into other accounts. Given the uncertainty of the Euro (dependent on what the ECB will do with interest rates), and the Yen (carry trade vagaries and fear of the Japanese housewife , the RMB is your best bet.

I wouldn’t be surprised if much of the hot flows are small transactions by Americans fleeing their domestic currency.

In the “Great Leap” era, each local government reported inflated supply /demand of foods, materials, and population and central government just believed them. In the real world, more than tens of millions people suffered in starvation, while local elites got decorations from the communist party.

We might be witnessing a repetition of Great Leap. The central government asked to banks to increase their reserve. Chances are… some of, if not all of, those banks might have reported highly inflated numbers.