One thing they have gotten right is that using a national fiat currency as an international reserve doesn't work so well. From the above linked article:
“[The] dominance of the dollar as the main means of international payments [has] played an important role in the build-up of the global imbalances in the run-up to the financial crisis,” the report says. “Another disadvantage of the current international reserve system is that it imposes a greater adjustment burden on deficit countries (except if it is a country issuing a reserve currency) than on surplus countries.”Duh.
Some people think I'm nuts for predicting the US dollar to fall hard; but apparently I'm just as crazy as Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, who recently said the following:
If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies.He also went on to mention that China is buying up gold, but doing so methodically as to not agitate the market.
10 comments:
They definitely need to create an international currency, based on democratic fiat.
"He also went on to mention that China is buying up gold, but doing so methodically as to not agitate the market."
In other words: CHINA IS PROTECTING ITS INVESTMENT>
....through the purchase of gold and currencies other than the collapsing US dollar...
Yes, but the question is whether they are selling off their previous investments? I think you are confusing what they are doing with their new money..
I think you're forgetting that as the Chinese purchase new investments, the percentage of older investments (US Treasury Bonds) of their portfolio grows smaller; and it sounds like they see this as their only way of lowering the risk of holding US dollars without causing economic turmoil.
It is irrelevant if they are not moving those previous investments out of the greenback. This is obvious. The percentage is irrelevant and future investments are also irrelevant. What is relevant is what they are doing with their previous investments that are invested in the greenback. THIS IS LOGIC>
They'll start demanding repayment in Yuan as the South Koreans and Japanese have.
But you're wrong, percentages and future investments made the Chinese do matter in regard to the strength of the US dollar and the ability of the US government to fund its warfare/welfare state.
You make too many of these retarded statements.
"They'll start demanding repayment in Yuan as the South Koreans and Japanese have."
??? Have they?
"But you're wrong, percentages and future investments made the Chinese do matter in regard to the strength of the US dollar and the ability of the US government to fund its warfare/welfare state."
Ah, but we were talking about the potential collapse of the US dollar, not the welfare/warfare state.
"You make too many of these retarded statements."
I'm not the one who thinks he can change the subject without the other noticing.
"Ah, but we were talking about the potential collapse of the US dollar, not the welfare/warfare state."
It will work hand-in-hand.
Stop changing the focus.
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