Even if we solve our problem, what will we be manufacturing, building, creating, producing?
Rising home values will not solve a damn thing.
It will only give us the MIRAGE of things being better.
Financial Times:
China calls for new reserve currency
By Jamil Anderlini in Beijing
Published: March 23 2009 12:16 | Last updated: March 24 2009 00:06
China's central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the People's Bank of China's website, Zhou Xiaochuan, the central bank's governor, said the goal would be to create a reserve currency "that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies".
Analysts said the proposal was an indication of Beijing's fears that actions being taken to save the domestic US economy would have a negative impact on China.
"This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money," said Qu Hongbin, chief China economist for HSBC.
Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.
"The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system," Mr Zhou wrote.
China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars, and this is unlikely to change in the near future.
To replace the current system, Mr Zhou suggested expanding the role of special drawing rights, which were introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate regime but became less relevant once that collapsed in the 1970s.
Today, the value of SDRs is based on a basket of four currencies - the US dollar, yen, euro and sterling - and they are used largely as a unit of account by the IMF and some other international organisations.
China's proposal would expand the basket of currencies forming the basis of SDR valuation to all major economies and set up a settlement system between SDRs and other currencies so they could be used in international trade and financial transactions.
Countries would entrust a portion of their SDR reserves to the IMF to manage collectively on their behalf and SDRs would gradually replace existing reserve currencies.
Mr Zhou said the proposal would require "extraordinary political vision and courage" and acknowledged a debt to John Maynard Keynes, who made a similar suggestion in the 1940s.
Looks like it's more than AoW, WC and I worried about dollar value plunging as the Fed creates cash out of a hat.
This will exacerbate our problems and it is in OUR PERSONAL INTEREST for Obama to turn this back.
THIS is Obama's issue on Obama's policies.
This is all on him.
As he wanted it
As it should be.
4 comments:
Free market and state-controlled currency. The dreams of my father.
On the other hand imagine China getting upset and uneasy with all the spending and USD devaluation. Imagine China selling and transforming all the USD assets into some other currency. You thought sharia banking is bad? LOL.
Cheers, infidels.
If this is not a warning to the U.S. about China's intention i don't know what will it take for Obama to get in his head that the dollar is the one weapon we have over the world and he is killing it in the long run with the possible deflation or inflation.
I'm afraid I forgot to point out the obvious: at the same time China is dumping US assets, the US is printing more money because they are completely oblivious at China's intentions. Shall I move to Zimbabwe?
You should also add to the picture what happened in Europe when Putin decided to cut the gas supply, and the fact that EU is heavily dependent on oil.
Nice, eh? An universal currency controlled by Russia, China, and (more or less) Saudi Arabia.
(Yes, I know, China has no oil. Pick your choice.)
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