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122 Comments
- redux2redux, on 07/20/2009, -5/+57The Chinese are pissed. They found out that the dollar is of the same quality as of the products they sold to us.
- JHW539, on 07/20/2009, -10/+50Sure thing. I can see the line up of people from here who'd prefer a currency run by a quasi-Communist authoritarian government rather than a Democracy that has literally given corporations the same rights as people.
The US Dollar is the worst currency in the world - except for all the others. - bigtoes, on 07/20/2009, -2/+31Good then the rest of the world can manipulate their currency . I really doubt China would give up control of its moneys value . I just don't see it .
- khimairaGT, on 07/20/2009, -0/+23thanks john madden
- Bakedwafer, on 07/20/2009, -3/+23Let China's currency float freely on an open market and watch its economy shrink. They artificially hold their prices at certain levels and purposefully deflate their currency.
- darknecross, on 07/20/2009, -2/+17What a misleading title.
FTA: "Nor are there signs that China is ready to ditch the dollar. Derek Scissors, a research fellow at the Heritage Foundation's Asian Studies Center, points out that Chinese official holdings of U.S. Treasury bills have increased by 50% in the past 12 months, as China continues to invest its ever increasing stash of dollars. "Cheap talk aside, China is actually the biggest supporter of the dollar," says Scissors. "It has no choice." Don't expect to change those greenbacks for redbacks anytime soon."
Let's construct this story entirely out of speculation and then conclude that it is all improbable.
Also, here's a story posted on Digg two weeks ago:
"China says dollar to remain leading world currency"
http://digg.com/d1vm8C - X9001, on 07/20/2009, -2/+15People on this site have some really stupid ideas about how global economics works.
- jasvll, on 07/20/2009, -2/+10Not as long as the US is able to enforce the 'oil trades in US $' policy. But we're running out of kisses to give Arab princes and threats to give 'rogue nations'.
- DarkShroud, on 07/20/2009, -0/+8Just wait until it become to expensive for US companies to manufacture goods in China. The second they stop devalueing their currency is the second they then have to depend on thier own people to but their own goods.
- Richandler, on 07/20/2009, -0/+7Yes but you realize the US owes their country trilliions of dollars. Trillions that could be making them prosperous instead of us.
- Sideshowslob, on 07/20/2009, -3/+10The way Obama is spending, it doesn't sound too far fetched to me.
- CCoburn3, on 07/20/2009, -10/+16When we lose our status as the world's reserve currency (and it will happen soon), the game is up for the US.
Right now, because the dollar is the reserve currency, we can get foreigners to take little pieces of green paper for actual goods & services. We don't have to give them things for their things -- just bits of paper.
But when they will no longer take our bits of paper, we're going to be up against it. We don't make that many things that they would want or be able to afford. It's true that we manufacture lots of stuff. But its mostly high tech stuff (and weaponry) that no one will be able to afford when the crash gets worse. Things will be a lot different when the dollar's day is over. - FredFredrickson, on 07/20/2009, -0/+6Boom!
Tough actin' Tinactin. - CrazedLeper, on 07/20/2009, -8/+13Woe is the US if the world gives us back all of our Not-Federal, nothing-in-Reserve notes.
- RandomGorilla, on 07/20/2009, -0/+5Turnabout is fair play, after all.
- SirBruce, on 07/20/2009, -1/+6Not gonna happen. Countries will switch to from the dollar to the euro before they ever swtich to the yuan.
- gcnaddict, on 07/20/2009, -0/+5buy tons of bonds, etc.?
It's pretty simple when currency is easy to manipulate simply through fear tactics.
extreme example: "Scientists believe that recent tectonic activity underneath the Chinese mainland may be indicative of an impending supervolcanic eruption"
Pretend that this headline was pushed through all major news outlets throughout the globe. All of a sudden, everyone all over the place is scared of a force roughly 10,000 more powerful than Tsar Bomba basically sending China to a *****. What's the first thing that'll be dumped?
Chinese currency. - CCoburn3, on 07/20/2009, -3/+8Actually, you're probably right. The United States is a fascist country & has been since FDR. We are becoming ever more fascist. Obama has nationalized huge chunks of the economy (following Bush's lead) & is working to nationalize even more. What the government doesn't own outright, it controls.
The Chinese have very little personal freedom, but more economic freedom. Plus China is on a trajectory toward more freedom while the US is moving in the opposite direction. - zeth006, on 07/20/2009, -1/+5I beg to differ. People have been buying up Yuan reserves in anticipation of the Yuan strengthening as soon as currency controls are lifted. Forbes Magazine is even saying count on China to turn Shanghai into a major investment center and lobby to make the Yuan/Renmibi a reserve currency.
$2 trillion in reserves is a lot to play with. I wouldn't bet on the Chinese sitting on their asses forever and accepting a status quo where the US just keeps on printing money. - CCoburn3, on 07/20/2009, -2/+6We certainly didn't go to war because Iraq was a threat to the US. We didn't go to war because Iraq had WMD. We didn't go to war because Iraq was connected to 9-11. We didn't go to war because Iraq didn't comply with UN resolutions -- if we did, we'd be at war with Israel.
There must have been some reason we went to war -- unless your theory is that Bush was a madman who went to war just for the hell of it. - darkened, on 07/20/2009, -4/+8If this occurs we're ***** because we'll be devastated economically where the great depression was like the roaring 20s compared to the new depression, OR we'll goto war with china and/or the rest of the world to enforce us as being dominant.
Either way we're incredibly *****. - airfabio, on 07/20/2009, -2/+6Reserve currency that you can't buy on open market.
- CCoburn3, on 07/20/2009, -1/+5The problem is that they cannot keep propping up the dollar forever. Devaluing their currency only works as long as the dollar ha residual value. But with the deficit likely to be $2 trillion this year & the national debt (including all the stuff they keep off of the books) at over $100 trillion, they cannot keep the yuan under the dollar for long.
- shiddysmurf, on 07/20/2009, -0/+4We have big plans!
- serif69, on 07/20/2009, -2/+6This just in: China owns more US debt than any other entity. They have a vested interest (pun intended) in ensuring the stability of the dollar. If they seek to replace the dollar with their own currency on the global market, they will devalue their own holdings.
- darkened, on 07/20/2009, -0/+4Oh I know we'd win if we started WW3 but alot of us won't be around to see the end of it ;/
- X9001, on 07/20/2009, -2/+6If that were to happen the US would go into a depression, if the US were to go into a depression the world would go into a depression. So that is not likely to happen
- zeth006, on 07/20/2009, -2/+6To the skeptics out there:
I don't think the Chinese are purposely blowing a lot of hot air for nothing. They're probably well aware as we are of the dollar's actual value, which is summed up in Paul Krugman's joke to his students: "They (China) give us poisoned products, we give them worthless paper." At some point, they'll begin making their own changes to the current financial system. It makes sense seeing how they're bound to become a major world power and player within a couple of decades.
China, Japan, Korea, and Taiwan currently hold trillions in reserves. Since the 1960s, the policy has been for East Asian countries to buy greenbacks to pad down their own currencies and make their products cheaper to sell to US consumers. With the said countries as its "satellite countries," the US has been the main consumer market by which these countries maintain their living standards.
But as Ron Paul noted in his speech:
"In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency. In this case that’s the United States. As long as foreign countries take our dollars in return for real goods, we come out ahead. This is a benefit many in Congress fail to recognize, as they bash China for maintaining a positive trade balance with us. But this leads to a loss of manufacturing jobs to overseas markets, as we become more dependent on others and less self-sufficient. Foreign countries accumulate our dollars due to their high savings rates, and graciously loan them back to us at low interest rates to finance our excessive consumption.
It sounds like a great deal for everyone, except the time will come when our dollars-- due to their depreciation-- will be received less enthusiastically or even be rejected by foreign countries. That could create a whole new ballgame and force us to pay a price for living beyond our means and our production. The shift in sentiment regarding the dollar has already started, but the worst is yet to come."
Translation: Things are great for now. But this approach of printing dollars is unsustainable. At some point, the countries that traditionally buy US reserves may one day refuse to do so. Think back to the time when Switzerland and other countries started demanding that we pay them in gold for the printed dollars they were holding--and what happened after Nixon forcefully closed the gold window in the 1970's. But imagine what'll happen now that we have almost no gold to back up our currency. - SirBruce, on 07/20/2009, -2/+6No, it's not. Stop believing a silly propaganda video you saw on YouTube.
- Richandler, on 07/20/2009, -7/+10China is argubly more capitalist than we are. Democracy and Communism don't really matter as much as the capitalism vs fascism or socialism deal.
- CCoburn3, on 07/20/2009, -1/+4And this is one reason that Obama has delayed the release of the summer financial data. When it comes out, it will be so bad that the US will have to pay much more interest to finance our debt. And it will cost a lot more to roll over that debt. Then add California & other states going bankrupt & the picture is pretty bleak.
- 4AntiStupid, on 07/20/2009, -1/+4I've read the same articles, and they are definitely hinting at making it freely convertible. The problem is no one trusts an authoritarian government to really take their hands off permanently. Speculators are of course going to set their position to cash in but that doesn't mean it's likely to happen.
- CCoburn3, on 07/20/2009, -6/+9That's the real reason we went to war in Iraq. They wanted to use Euros for oil instead of dollars.
- protogenxl, on 07/20/2009, -3/+6Thats a good plan General.
- trolleyfan, on 07/21/2009, -0/+3"There must have been some reason we went to war -- unless your theory is that Bush was a madman who went to war just for the hell of it."
I think we went to war so that Bush could get re-elected...which explains why he sorta ran out of ideas on "what to do in Iraq" after the election.
Though, honestly, madman works too. - FredFredrickson, on 07/20/2009, -0/+3Where's Vault-Tec when you need 'em?
- govtdoesnotwork, on 07/21/2009, -0/+3The key to understanding, IMO, is to do what the central banksters very much DON'T want you to do. Follow the REAL money, which means follow what's happening to silver & gold prices. Because those prices affect inflation, governments all over the world (addicted to fiat money printing & spending) and ESPECIALLY their central banks all wish to suppress their prices in order to delay/deny eventual hyperinflation stemming from their irresponsible policies.
- asdfrewq, on 07/20/2009, -0/+3Not that I disagree with you, but is he any worse then the millions who believe the silly propaganda they see on mainstream TV news?
- tonmil, on 07/20/2009, -2/+5If that happens the U.S. will have massive deflation. Eventually there will be wage parity between China and the U.S. So, China won't have the big cost of manufacturing advantage. Same goes for India
- tonmil, on 07/20/2009, -0/+3The problem is exacerbated by deficit spending. Yes. all administrations have done it. However, Obama's admin has added 1 trillion just this year. Americans should be obsessed over it. If other countries stop buying U.S. dollars, America is going to have massive deflation
- Dregganaut, on 07/20/2009, -0/+3Ours is printed on plastic, yours is like pretend money to us.
- DarkShroud, on 07/20/2009, -0/+3Mean it would then become more expensive for us to manufacture outside of the US. So companies here would have to buy American and probably be forced to open new plants here in the continental US.
- Dregganaut, on 07/20/2009, -2/+5Some of you guys are way too obsessed with Obama.
This stuff has been going on waaaaay longer than Obama, Bush, or even Clinton. - BotchaMcCoola, on 07/21/2009, -0/+3Looking over the responses I see I am not the only one that has trouble understanding intl monetary issues. Btw, anyone know if this is related to the Saudis not wanting to price oil in dollars any more?
- PuddMaster, on 07/20/2009, -1/+4who's going to buy their products when the prices sky rocket because of the increased value of the yuan?
- BlacklabelSAR, on 07/20/2009, -0/+3Ah, the illusion of Value.
- zeth006, on 07/20/2009, -0/+2Does anyone really give a ***** that China is run by an authoritarian govt when they buy stuff that's made there? This laptop I'm typing on is--yes, you guessed it!--made in China!
The number of factory construction contracts and the level of investment China receives rivals and in some years has been known to surpass that of the US's. That really does show a lot.
If people really did place a high premium on the presence of a democratic govt, market economics wouldn't reign so high in China as it does. China isn't Russia. People who invest in China don't have nearly as much fear of having their assets arbitrarily seized by the govt. Western investors are able to invest in China with a few notable limits on asset acquisitions. For goodness sakes, many of our major investment funds and banks do business there and I haven't read anything about the evil Chinese govt kidnapping CEOs and executives and threatening to blow up factories.
"The problem is no one trusts an authoritarian government to really take their hands off permanently."
I get the feeling you don't really know what you're talking about. The Communist Party of China has been around for DECADES, yet when I read the business section of Wall Street and the LA times, I read about 6-11% GDP growth rates and a growing entrepreneurial spirit.
They've come this far. Even if the world doesn't trust China to eventually look to another reserve currency or make their own currency the next reserve currency, they have the power to do it.
This isn't coming from some hyper-nationalist Chinese. Just someone who's written plenty of papers and read articles. - sturmgiest, on 07/20/2009, -0/+2China has been generous!
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