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Zilong
Joined: 17 Apr 2010
Location: Broseidon's Lair
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 Posted: Sun Apr 18, 2010 8:36 am Post subject: Is China Ready to Challenge the Dollar? |
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From the Freeman Chair:
http://csis.org/files/publication/091007_Murphy_IsChinaReady_Web.pdf
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| However, in a fiat currency world (unlike the gold and quasi-gold standard), the dominant reserve currency nation will almost certainly be a net debtor: as the reserve nation�s principal reserve asset is its debt securities, other countries must have current-account surpluses to invest in those debt securities, so the reserve nation itself must be willing to run a current-account deficit. A fundamental question for China is whether it is willing to radically alter its trade and economic policies and assume the considerable external liabilities that would come with achieving even ordinary reserve status for the renminbi. |
I never really understood what China was shooting for with that Shanghai Cooperation thing. I think it was meant as a way to make the US nervous and grab headlines more than actually moving towards a meaningful discussion of a new reserve currency. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Sun Apr 18, 2010 5:40 pm Post subject: |
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Of course the renminbi will never displace the dollar. The very notion is passe. The Chinese do not even hold the power to bring this about; this power belongs to the global banking establishment which is currently destroying the US economy (and others around the world) by design, causing a global depression that will lead to the devaluation and/or collapse of most currencies, including the US dollar. This is being done deliberately, as it was done deliberately during the Great Depression (caused by the Fed).
The banking structure creates the problem, then they offer the solution: a world currency issued by a world central bank (controlled by them). The financial structures already exist for the most part (the IMF/World Bank and SDR's), but they want to consolidate their control over world governments by bankrupting them all and forcing them to become indebted to a world central bank (issuing a new global fiat currency as credit), rather than the national central banks they are already indebted to at present. This is the final phase of their domination, and it is happening before our eyes.
China is also completely indebted to its own central bank, which creates money as debt out of nothing. Moreover when the US dollar devalues or collapses, so will China's heavily leveraged economy (which will then be forced to sign on and borrow from the World Bank just like everyone else). This was all planned long in advance. |
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Zilong
Joined: 17 Apr 2010
Location: Broseidon's Lair
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| Posted: Sun Apr 18, 2010 6:43 pm Post subject: |
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| visitorq wrote: |
| This was all planned long in advance. |
By whom? The Illimunati? Greenspan? Tri lateral? Bretton Woods? |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Sun Apr 18, 2010 10:03 pm Post subject: |
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| As one Chinese scholar explains, amid the financial crisis�particularly falling exports and rising unemployment�the Chinese leadership has been �eager to figure out a way to assuage the public�s dissatisfaction. Openly talking the dollar down is a good way to transfer the public�s outrage towards the United States." |
85% of what China does on the world stage is meant for domestic consumption.
China invests directly in the US and holds its foreign reserves partly because of its lack of confidence in its own domestic development. In this respect, China's behavior is the same as Japan's was in the late 80s and early 90s.
However, China, and every other country, would serve itself well by diversifying its reserves. In China's case, stocking its strategic petroleum reserve as well as engaging in long-term mineral contracts is a no-brainer. China is extremely vulnerable to being cut off from its sources of energy. THAT is the purpose of the Shanghai Cooperation Organization, which is at least as oriented towards preventing terrorist interruptions as countering the Indian-American threat.
Lastly, when the Fed just invents a trillion dollars and some change, what do we expect China to do? Applaud and smile?
As for the internationalization of the RMB, this is inevitable for the only country to comprise fully 20% of the world's population. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Mon Apr 19, 2010 3:50 am Post subject: |
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| Zilong wrote: |
| visitorq wrote: |
| This was all planned long in advance. |
By whom? The Illimunati? Greenspan? Tri lateral? Bretton Woods? |
All of the above, more or less. They're all related (though I'd leave the "Illuminati" out of it, that's more of a European thing)...
Basically the banking establishment has been planning this outcome many decades in advance. They've been using central banking systems to control individual countries for centuries (starting in Europe, but including the US once the Federal Reserve came into being), and more recently they've moved onto regional central banks (the EU), so the formation of a world central bank to control all countries collectively is just taking what they've always done to its logical conclusion. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Mon Apr 19, 2010 5:05 am Post subject: |
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| The Happy Warrior wrote: |
As for the internationalization of the RMB, this is inevitable for the only country to comprise fully 20% of the world's population. |
What about the Indian Rupee then? I believe India's population will surpass China's in 20 years or so. |
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Zilong
Joined: 17 Apr 2010
Location: Broseidon's Lair
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| Posted: Mon Apr 19, 2010 7:18 am Post subject: |
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| bucheon bum wrote: |
| The Happy Warrior wrote: |
As for the internationalization of the RMB, this is inevitable for the only country to comprise fully 20% of the world's population. |
What about the Indian Rupee then? I believe India's population will surpass China's in 20 years or so. |
India's manufacturing and overall export prospects look a little dim at the moment, I think that probably will affect things. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Mon Apr 19, 2010 7:42 am Post subject: |
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| Zilong wrote: |
| bucheon bum wrote: |
| The Happy Warrior wrote: |
As for the internationalization of the RMB, this is inevitable for the only country to comprise fully 20% of the world's population. |
What about the Indian Rupee then? I believe India's population will surpass China's in 20 years or so. |
India's manufacturing and overall export prospects look a little dim at the moment, I think that probably will affect things. |
I was just commenting on HW's logic there...
And while you are right, India also doesn't peg its currency and manipulate it like China does. As long as China does that, the RMB will not displace the dollar, euro, or even yen. |
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Zilong
Joined: 17 Apr 2010
Location: Broseidon's Lair
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| Posted: Mon Apr 19, 2010 8:01 am Post subject: |
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| You're right, the RMB won't displace anybody in the coming years, I think people underestimate how insecure China's leadership is about their position in the world, politically or financially. |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Mon Apr 19, 2010 8:27 pm Post subject: |
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| bucheon bum wrote: |
| Zilong wrote: |
| bucheon bum wrote: |
| The Happy Warrior wrote: |
As for the internationalization of the RMB, this is inevitable for the only country to comprise fully 20% of the world's population. |
What about the Indian Rupee then? I believe India's population will surpass China's in 20 years or so. |
India's manufacturing and overall export prospects look a little dim at the moment, I think that probably will affect things. |
I was just commenting on HW's logic there...
And while you are right, India also doesn't peg its currency and manipulate it like China does. As long as China does that, the RMB will not displace the dollar, euro, or even yen. |
China is going to de-peg its currency very soon, likely before July.
Its not the currency controls really holding China back from becoming an investment currency, but its economic policies. Its too export-oriented. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Apr 20, 2010 4:37 am Post subject: |
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You think? I see them maybe widening the trading band but they won't de-peg. Unless you see widening the band as a form of de-pegging (which is possibly true).
China is furiously scrambling for 3,000 ton of gold to implicitly back their currency (20% of M1). They're capturing most of their of domestic production as of last year.
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/14_Jim_Rickards_files/Jim%20Rickards%204%3A08%3A2010.mp3
The USD dominates the world not because of the natural health of the US but because of the political order post-ww2. For the CNY to replace it there would have to be a similar agreement. It is possible, I suppose. |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Tue Apr 20, 2010 8:30 am Post subject: |
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| mises wrote: |
| You think? I see them maybe widening the trading band but they won't de-peg. Unless you see widening the band as a form of de-pegging (which is possibly true). |
I meant they won't have a hard renmenbi-to-dollar peg. I'd be shocked if they didn't have a band in place.
Yes, they will widen the trading band. This is almost certain, and not really much of a revelation on my part. |
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Thu Apr 22, 2010 7:13 pm Post subject: |
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| China has much bigger issues. Much of WEstern China is still the third world. They have huge economic problems like how to produce enough jobs for their 1.4. billion people. Also no one really knows whats on the books of those big Chinese banks. The housing boom has generated a lot of capital but also left a lot of sour loans. |
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travel zen
Joined: 22 Feb 2005
Location: Good old Toronto, Canada
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| Posted: Fri Apr 23, 2010 5:26 pm Post subject: |
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It's amazing how "Communism" was such a bogeyman for decades in the US and Western Europe. People died for the idea of ending Communism and its threat.
Now the US and allies are in bed with the beast, all because of economics. Reminds me of a paid prostitute. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Apr 23, 2010 5:43 pm Post subject: |
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| travel zen wrote: |
It's amazing how "Communism" was such a bogeyman for decades in the US and Western Europe. People died for the idea of ending Communism and its threat.
Now the US and allies are in bed with the beast, all because of economics. Reminds me of a paid prostitute. |
China isn't communist. Good god. Do I actually have to point that out? |
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