World Prepares to Dump the Dollar
What do China, India, Brazil, Russia, France and Germany have in common? These countries most often can’t agree on anything. But they are united in one strange—and ominous—way. They blame the United States for wrecking the global economy. And they think the dollar is the wrecking ball.
One rock-solid, foundational belief underpins almost all economic theory in America: faith in the dollar’s unassailable status as the world’s reserve currency. Foreigners hold so many dollars that they can’t afford to stop buying them, the theory goes. Therefore the dollar’s status as the world’s reserve currency is sound. But the dollar is now coming under a concentrated attack. Are American economists about to get schooled?
Has a dollar-killer been minted?Angela Merkel summed up the dollar-skeptic viewpoint last year. “Excessively cheap money in the U.S. was a driver of today’s crisis,” she told the German parliament. And America’s solution—even more cheap money—was just setting the world up for another crisis, she said. It was just a matter of time.
The irony is that America is completely blind to the catastrophe heading its way. As the economic crisis unfolded at the end of last year, investors made a mad rush out of global stock markets and into other assets. The biggest beneficiary of the panic was the one market large enough and liquid enough to handle the trillions of dollars being moved: the U.S. dollar market. This caused the dollar to surge in value.
America grossly misdiagnosed the demand for dollars as a vote of confidence in the U.S. economic system. In fact, it was primarily a case of investors looking for a place they could quickly and easily get their money in—and out.
Now that the initial panic has subsided, the dollar’s international purchasing power has resumed its former downward trajectory. Since the post-crisis high in March, the dollar has fallen by a portfolio-shredding 10 percent.
America’s foreign creditors are again questioning the wisdom of holding so many U.S. dollars. And they’re looking for a way out.
“Leaders from Brazil, Russia, India and China are demanding a greater stake in the management of the global economy and challenging the dollar as the primary denomination for world reserves,” reported Bloomberg about the recent G-8 summit.
But is dumping the dollar just wishful thinking on the part of these nations? Or is there some tangible alternative? Well, how about this: Some think they’ve already minted a dollar-killer.
Russia’s president is pushing to remove the dollar and reinstate some version of a gold standard. Dmitry Medvedev unveiled a newly minted gold bullion coin that he said was a true “symbol of unity,” and “our desire to solve such issues.” It was a test sample of a new supranational currency referred to as the United Future World Currency. Samples were issued to each of the world leaders attending the G-8 summit.
“We are discussing the creation or, to be more correct, the appearance of new reserve currencies,” said Medvedev.
“Debate” about Bretton Woods is flowery code for an attack on the dollar.What is even more surprising is that the dollar assaults have come not only from perennial U.S. antagonists but also from its more democratic allies. At the G-8 summit, French President Nicolas Sarkozy called for a complete revamp of the global currency system, saying that the dollar’s supremacy is outdated. “[W]e’ve still got the Bretton Woods system of 1945,” Sarkozy stated on July 9. “Frankly, 60 years afterwards, we’ve got to ask: Shouldn’t a politically multipolar world correspond to an economically multi-currency world?”
Bretton Woods was the historic conference that laid the foundation for a postwar global economy centered on the dollar. “Even if it’s a difficult topic,”Sarkozy said, “There has to be a debate.” “Debate” about Bretton Woods is flowery code for an attack on the dollar.
India too seems to be moving into the anti-dollar camp. Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, is urging the government to diversify its foreign-exchange reserves and hold fewer dollars. India holds over $250 billion worth.
Such a decision could break the U.S. dollar bond market.But the next blow to the dollar may come as a complete surprise to Washington policymakers. Since World War ii, Japan has been a stalwart dollar supporter and a close collaborator with Federal Reserve monetary policy. That may be about to end. For only the second time in 54 years, the opposition in Japan is close to taking over the government. Japan’s economy, like those of the rest of the world, is in severe contraction, and disgruntled voters are upsetting the balance of power and pushing for radical reforms.
Back in May, Masaharu Nakagawa, the chief finance spokesman for the opposition, told the bbc that he was worried about the future value of the dollar. He said that if his party were elected in the upcoming national elections, Japan would refuse to purchase any more U.S. treasuries unless they were denominated in Japanese yen instead of dollars.
Such a decision could break the U.S. dollar bond market.
Japan is America’s second-most important creditor nation—lending the U.S. billions of dollars each year. If Japan won’t lend unless America pays it back in yen, then China and other major lenders may quickly follow suit. This would eliminate America’s ability to use inflation to cheat on its debt payments. America’s debt burden would soar, interest rates would jump, and national default—Argentina-style—could be staring America in the face within months instead of years.
“America is making a terrible mistake which will result in the greatest fall in all of mankind’s history!” Tim Thompson wrote for the Trumpet in 2000. “As soon as America is no longer a safe place for foreign money, that money will be gone. And once the foreign money is gone, it will leave us with a mountain of debt that we cannot repay.”
What Japan is proposing could be the first steps of a great exodus from the U.S. bond market and consequently the end of the dollar as the world’s reserve currency.
America’s leaders seem blind to the looming dollar revolt. Global economies are in crisis. Unemployment rolls are soaring. People want answers and solutions. The jobless will demand action, and culpable politicians will look for scapegoats and distractions. The first step, blaming the U.S. and its currency for the global recession, has already begun.
A new global currency—and leveraging it to knock the U.S. down—will be the solution.
The highly trained economic theorists who keep telling us that foreigners can’t afford to stop supporting the U.S. are about to get reeducated at Reality U. •
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if the dollar is dumped, what kind of reactions will be there from the US govt??
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U.S. credit rating was lowered impact on China stock market break has fair begun
; global stock markets underwent a dark A-shares could not run the languid mandate aboard Monday
; U.S. credit rating cut for space-constrained China's monetary policy operations lost U.S.
rating stock market
U.S. rating drip caused by outer factors affecting China's bond costs or bearish
< font face = Andy Xie: The bad news is not necessarily a bad thing is the Gospel of the United States downgrade
rating agency Standard & Poor's throne credit rating cut in the United States reasoned a important financial shock the earth. This is the world's largest exotic exchange reserves, China, Taiwan and the sixth ambition generate more than what achieve?
Sunday, China's official People's Daily newspaper said the U.S. credit rating lowered to the world sounded the agitate.
Economics, Fudan University, People's Daily quoted the vice president, finance professor Sun Lijian words, the U.S. Standard & Poor's sovereign credit rating cut from AAA to AA +, give dollar-denominated global financial system sounded the alarm, but the biggest victim is not the United States, but those dependent on external claim for the accumulation of citizen asset of countries.
Sun Lijian said, if in Asia, Latin USA, or Middle Eastern countries, are faced with the value of their holdings of U.S. bonds risk of falling, guiding to deterioration of mobility.
day ahead, the official Xinhua News Agency published one treatise criticizing the U.S. debt obsession, said the U.S. government have to accept the painful fact, can only rely on debt to get rid of the difficulty of making their own epoch is over. The treatise said that Beijing entirely have the right to Washington to assure that China's holdings of U.S. dollars and dollar assets.
Last Friday, later the market near in the United States, one of the three major U.S. credit rating agency Standard & Poor's announced the first cancellation of 70 years to retain the AAA credit rating of U.S. debt, U.S. Treasuries should not be longer be regarded as one of the world's safest investments.
the U.S. government: $ 2,000,000,000,000 error due to defective
in the Standard & Poor's sovereign credit rating cut after the United States, Obama quickly Standard & Poor's explanatory report criticizing solemn peccadillo. U.S. Treasury Department said the rating report to referee
Last Tuesday, President Obama signed the U.S. debt ceiling boost and cuts in government costing bill in the afterward 10 annuals to cut government spending from 2100 to 2400 billion U.S. greenbacks. However, the rating agent Standard & Poor's mention that, by least to c
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Copyright (c) 2011 Joe Maldonado
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Our third stop was the ancient city of Hoi An.
1999 年 in Southeast Asia because of the ancient Silk Road and maritime trade system OR the unique old building to include the (According to the selection criteria C II V). In fact, the ancient city of Hoi An and U.S. Forest Valley are the most welcomed to the candidate selected. 80 years, UNESCO will be on the safe conduct of the Grand-scale renovation. (In fact, the application also has the world's cultural heritage, the unspoken rules, Do not you see early in the Dazu Rock Carvings Longmen, Yungang, Oh, and have time to detail)
Security in the Maritime Silk Road will become the first node is accounted for before the race to the sea, as is also known as the It should be said a long history as a port. Before and after 1600, the Chinese people to Southeast Asia to Vietnam, Haiphong, Hoi An is a great gathering area, which is starting today in the old town can be seen everywhere along the street to save a very old house and the shrine on the apparent complete general. Cultural magnificent Hall was respected more, like Fujian Hall, Guangzhou-Zhaoqing Hall, Chiu Chow, Joan House and so is my Hall of the National Geographic's travel books are respected.
But from the perspective of history, modern civilization would be safe to enter after a lot of the decline. And Macao, as was the edge of deeper draft of Toulon, which is replaced by Da Nang. I have been thinking about a paradox, sailing times are subject to deposition in Hong Kong harbor the majority of the problems is the location of the common, or what, basically all the changes to the ship during the decline of the era. Closer to home, downtown will be safe on the quickly fading into a coastal town. But because of a blessing in disguise and generally preserved.
We are at 15:00 on April 3rd to look perfect forest valley, starting by the Da Nang on the car, stop halfway, playing cars, 10 km to Hoi An. Poor, we see that the Raiders hotel, only one room, so we trek for 15 minutes, in the north and find a CONG DOAN HOTEL, 12 美元 free early houses. Good house, antique, relatively quiet.
Hoi small, horizontal 3 vertical 5 is the most important streets. Down luggage, take a shower, in the evening of the night we go out. Hoi An was once a Chinese city, according to the Chinese people from different provinces are divided into five areas, namely areas of Fujian, Guangdong District, Chaozhou District, Hainan area and Hakka area; (of course, a Japanese district). Here is full of traditional Chinese architecture and culture of ancient buildings yellow, color mandarin tile, Founder of the patio, wood-colored fence, coupled with a river, an old port, do not have fun, to decorate a small town outside the gorgeous score.Vietnam, Hoi An is called Lijiang, in fact, although the text is filled, no Chinese town feeling. (Ugly point, the business climate like Lijiang). Fill
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2012-02-24 07:46:45.0Wang Xiaotian'Chance' to open capital account'Chance' to open capital account1811048839China-US2@usa/enpacreage-->
A annex of the People's Bank of China in Hefei, the capital city-limits of Anhui arena. The PBOC says China wouldn't face huge accidents if it opens up the country's capital account, a ambition that was coverd in the 12th Five-Year Plan (2011-15). [Provided to .]
Waiting for absolute timing could beggarly ameliorate 'nanytime' appears: Study
BEIJING - China has a "cardinal befalling" to affluence barriers on capital breezes to yield adangle of lower appraisals for Weascetic 53d52ec6dd843cae0280b8e1107e48administratories and accession the yuan's all-around cachet, a axial coffer abstraction has appropriate.
China doesn't face abundant risks if it opens up its capital account, a goal that was included in the 12th Five-Year Plan (2011-15), the People's Bank of China advertisement Financial News reported on Thursday, citation a study by the analysis and accomplishments administration.
"If we delay until actions for inteblow amount liberalization, currency advancedization and yuan internationalization all complete, we might never acquisition an adapted time to open up the capital account," said the report, accounting under the administration of arch reblightcher Sheng Songcheng.
"Now is the time to do so because low valuations in across markets action a attenuate inaccoutrement opportaccord for Chinese companies."
The Stoxx Eubraiding 600 Index, even with an 8 percent assemblage this year, has collapsed 34 percent back July 2007, apprenticed down by global financial agitation and the eurblast debt crisis.
"Too abundant accent on paccommodates could easily make (a action of) grabifold reanatomy become abrogating and anchored, appropriately dabbling the right time," the reanchorage said, abacus that those accepted "prealtitude" and the abounding convertibility of the yuan could advance one addition accompanying.
The study said China would not face big risks if the capital account was opened up, becould cause most assets and debts in bartering banks are admitd in yuan, and a lot of foreign-exchange assets are bands wcorrupt arch and absorption transactions wouldn't be calmly afflicted by market amount aberrations.
"In accession, outcontinuing concise foreign debt is only a baby admeasurement of China's debts, and risks in ablety as able-bodied as the capital market are basalally controllable."
The study said in one to three years, China could apartn its reins on absolute investment controls and animate actions to go away, while in three to five years, it could deadapt commercial acclaim controls while amphibian the yuan globaccessory.
"In 5 to 10 yaerial, the calculationry could bit-by-bitly accessible up traadvise of absolute acreage, banals and bonds to adopted brokers," it said.
"It's accurate that we don
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Four Saint-Bernard puppies blotle from tbeneficiary madded Phybie at the Saint-Bernard kennel in Martigny January 9, 2012. The Saint-Bernard abode in Martigny is the oldest ancestry centre of the acceptable full-blooded in Switzeracreage. The puppies, who were built-in on December 18, 2011, will be dukeed over to new buyers if they ability three agess.[Photo/Agencies]
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