We Finally Scared China

Discussion in 'Economics' started by ShoeshineBoy, Mar 17, 2009.

  1. Now we did it! We finally scared China. They're scared and they are even admitting it publicly:


    If Wen doesn't want our debt and is concerned about our solvency, what makes us thing the rest of the world will want the flaming multi-trillion dollar flaming turds that we're laying on the auction tables?!?

    Is it time to run for the hills or no big deal?
  2. This is old news.
  3. the1


    China will eventually stop buying US debt no matter how hard Clinton begs. When that happens the US will have to find another source to run their ponzi scheme. That source will be a national pension plan. Your employer will be forced to pay into a national pension plan much the same way they presently contribute to your 401k with the difference being, you will have no control over how its invested. The SSA will do that for you and guess what they will be buying.....yeah, you guessed it, Government Bonds.
  4. Yeah, you're right. But guess what? It's really not. Look at this Reuters clip where Russia is organizing many of the key nations in the world to use a basket of currencies instead of the dollar.

    And guess what they're mad about? The very thing that horrified me yesterday: the Fed proudly pumping a trillion dollars into the economy through treasury buybacks.

    This is our wakeup call. Will we respond???


    China backs talks on dollar as reserve -Russian source

    By Gleb Bryanski

    MOSCOW, March 19 (Reuters) - China and other emerging nations back Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday.

    Calls for a rethink of the dollar's status as world's sole benchmark currency come amid concerns about its long-term value as the U.S. Federal Reserve moved to pump more than a trillion dollars of new cash into the ailing economy late Wednesday.

    Russia met representatives of China, India and Brazil ahead of the G20 finance ministers meeting last week, as the big emerging powers seek to up their influence on decisionmaking globally. Their first ever joint communique did not mention a new currency but the source said the issue was discussed.

    "They (China) did not formally put forward their position for the G20 summit but unofficially they had distributed their paper regarding the same ideas (the need for the new currency)," the source told Reuters, speaking on condition of anonymity.

    The source said the Chinese paper envisaged the International Monetary Fund's Special Drawing Rights (SDRs) being first assigned a role of a clearing currency on some transactions and then gradually becoming the main global reserve currency. "They said that the role of reserve currency should be given to SDR," the source said.

    A U.N. panel of experts is also looking at using expanded SDRs, originally created by the International Monetary Fund in 1969, but now used mainly as an accounting unit within similar organisations as a new reserve currency instead of the dollar.

    Currency specialist Avinash Persaud, a member of the U.N. panel, told a Reuters Funds Summit on Wednesday that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

    The SDR and the old Ecu are essentially combinations of currencies, weighted to a constituent's economic clout, which can be valued against other currencies and against those inside the basket.

    The Russian source said Moscow was aware that the emergence of the new global currency would not happen overnight and said its goal was to initiate a discussion about it at the G20 summit in London on April 2.

    The source said that India did not object to the discussion but was not prepared to take the lead. The source said South Korea and South Africa backed the idea, while developed nations were not "allergic" to it.

    "We are not waiting for everyone to say: 'How beautifully it has all been formulated, let's subscribe to it'," the source said. "The main idea is to start a discussion about it."

    Russia holds about half of its reserves, the world's third-largest, in dollars, with the rest in euros and pounds. Prime Minister Vladimir Putin has called on reserve currency issuers to show more financial discipline.

    Finance Minister Alexei Kudrin told reporters on the sidelines of the G20 finance ministers meeting that it would take up to 30 years to create a new super-currency, suggesting there was no unity in Russia on the issue.

    President Dmitry Medvedev's top economic aide and G20 sherpa Arkady Dvorkovich is behind the Kremlin's G20 proposals, made public one day after Kudrin returned from England. (Reporting by Gleb Bryanski; editing by Mike Dolan/Patrick Graham)
  5. This is BS posturing...

    Otherwise gold would already be $10K/ounce.
  6. It would actually be a good development for the US. Having the strong dollar policy all these years has destroyed the manufacturing base in the US. How can we compete with Asians?
    That's why there are no jobs without the financial sector.

    Short term, the fed would probably have to do a large one off devaluation, but most people's savings have already been wiped out by the mortgage crisis and stock market meltdown. If there were ever a good time to do it, this would be it. Maybe that's what the fed is planning. They will buy back the outstanding debt from foreign nations, devaluing the dollar.
  7. Well, that's an interesting comment and one that I've made myself many times. But, even so, we don't want the dollar to fall because we've overinflated the currency! Yes, evil can sometimes carry with it some good, but we still have to recognize evil as evil. And imo an overinflated money supply - thx Alan - is what got us into this mess! Inflation, asset bubbles, stagflation, etc. will come along with this kind of devaluation.

    Of course, your point is a great point for trading purposes if that's where you're headed...