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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Wed Nov 19, 2008 11:33 am Post subject: |
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| seosan08 wrote: |
| mises wrote: |
The dollar can't be "dumped". Look. If I own a T-bill and decide it isn't a good investment for me I have to find somebody to sell it to. It isn't like taking back a poor fitting pair of shoes. The debt exists and can only be transferred until it is mature. Even if China made the bat shit crazy decision to "dump" or flood markets with their dollar denominated debt, it is still considered among the most safe investments on earth and foreign governments would buy them up so that the stability of the US will rub off on them.
This crises is layered. One layer is the financial crises in the US/UK etc, but the big and rather surprising economic crises is the speed with which the "global pool of money" has abandoned developing nations and found safety in the US.
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No, the Chinese are reselling their T-bills. They can be dumped, or exchanged for the billions of $$ gold the Chinese are currently in the process of buying. |
What happens when you exchange a bill, from the standpoint of the United States? |
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seosan08
Joined: 10 Oct 2008
Location: Korea
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| Posted: Sat Nov 22, 2008 3:54 am Post subject: China lifting its gold reserve by 4,000 tons from 600 tons |
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PBOC may raise gold reserves
Editor: Zoe Zhang
21 Nov 2008
http://news.alibaba.com/article/detail/business-in-china/100024544-1-pboc-may-raise-gold-reserves.html
Nov. 21, 2008 (China Knowledge) - The People's Bank of China (PBOC) is mulling lifting its gold reserve by 4,000 tons from 600 tons, in a bid to diversify risks resulted from the country's huge foreign exchange reserves, sources reported, citing unnamed industry insider in Hong Kong, as saying.
However, the insider didn't provide detailed information on the plan.
China has the largest foreign exchange reserves in the world. As of end-September this year, the country's foreign exchange reserves amounted to US$1.9056 trillion.
A large proportion of China's foreign exchange reserves were contributed by U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, as per industry sources.
Copyright � 2008 www.chinaknowledge.com |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Nov 22, 2008 9:45 am Post subject: Re: China lifting its gold reserve by 4,000 tons from 600 to |
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The above is very likely. They have big ambitions and a reserve currency is a necessary condition.
http://english.caijing.com.cn/2008-11-21/110030891.html
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China Bids for Yuan to Trump U.S. Dollar
A Beijing expert says China�s currency is moving toward becoming the global standard, although it needs more time.
China�s yuan has met three out of five market conditions for upstaging the U.S. dollar as the standard international currency, which is a Chinese government goal, according to a Beijing university expert.
Li Daokui, director of the China and World Economy Research Center at Tsinghua University, made the comment based on the recent G20 summit in Washington attended by Chinese President Hu Jintao and a decision by the Philippines central bank to include the yuan in its foreign currency reserves.
Li called the goal of making the yuan the global standard �a beautiful vision�, although he said a worldwide switch to China�s currency from the dollar will take time.
In an interview with Caijing, Li also said he doubts the euro will replace U.S. dollar as the dominant currency since �an international currency is essentially the result of economic strength.�
But the yuan is on its way. The currency has met some requirements through its role in China�s sizable economy, its use in a wide scope of trade, and because its value has been appreciating steadily.
Li said the yuan falls short because its exchange rates are not set on the open market, and because China�s financial market is immature. The nation�s financial sector currently lacks the kind of stability that would bring short-term capital flow under control.
The Filipino government�s decision, however, suggests the yuan�s influence is growing.
�The new world financial paradigm is not dependent on negotiation or by declaring who is to replace the U.S. dollar,� Li said. �Rather, it is dependent on strength.�
Moreover, in Li�s view, the G20 financial summit showed China has set a goal to gradually promote its currency as the international currency.
Chinese leaders demonstrated at the summit that China has a sense of responsibility for international affairs and wants a stable international financial framework, Li said. |
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Bigfeet
Joined: 29 May 2008
Location: Grrrrr.....
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| Posted: Sun Nov 23, 2008 12:16 am Post subject: |
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 The Chinese yuan becoming a reserve currency |
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seosan08
Joined: 10 Oct 2008
Location: Korea
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| Posted: Sun Nov 23, 2008 12:24 am Post subject: |
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| Bigfeet wrote: |
| The Chinese yuan becoming a reserve currency |
There are a lot of structural problems in China. Like huge numbers of desperately poor who need jobs. A overpopulated, polluted, dry country, etc... But purchasing 4000 tons of gold will go a long way to partially backing up it's currency. 4000 tons out of a wold total of 130,000 tons of gold. Exchanging US dollars for gold makes perfect sense. China will do what is best for China, just like anyone else would.
China is already the number 2 producer of Gold! One thing they'll do is to just buy the gold that they already mine and hoard it instead of sending the gold into the open market. China produces 250-300 tons annually.
The repercussion is that the world's gold production supply just went much lower. Gold is acting more like a store of wealth than US Treasuries, at least to the Chinese. |
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Bigfeet
Joined: 29 May 2008
Location: Grrrrr.....
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| Posted: Sun Nov 23, 2008 12:39 am Post subject: |
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| I doubt China will ever become a rich country. They may have the world's largest GDP, but only because they have so many people. But all that people will be eating up most of the money. |
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