China was the first to open the floor for discussion on the continued viability of the US dollar as the world’s reserve currency a couple of months ago. With good reason, since they are now the largest foreign holder of US debt instruments (that’s the paper money the Fed prints out of thin air). Just yesterday, however, on July 4th, Russia and India both reopened the discussion, each expressing doubt about the future stability of the US dollar, which is now the currency of the world’s largest debtor nation – a place where total debts are equivalent to about 10% of GDP.
Today, France chimed in to say with Russia that the current currency reserve system which is dominated by the US dollar is “out of date.” That sounds like a polite French way of saying that they’re also worried about the geopolitical implications of continuing to trade in such a heavily indebted dollar – a currency, the coming inflation of which even its own citizens are beginning to get concerned about.
“The dollar system or the system based on the dollar and euro have shown that they are flawed,” Russian President Dmitry Medvedev said, according to a Bloomberg report. I suspect that many US citizens don’t take seriously much of what Russia’s President says, since they have been schooled into thinking that anything Russian = out of date, silly or not worth paying attention to. But the fact of the matter is that Russia is just one of several countries now questioning the value of the US dollar for world trade. Recall Jim Rogers’ warning to the Russians about the US dollar months ago.
The G8 meets over July 8-10 in the Italian city of L’Aquila. Reuters India reports that China has been “pushing for a debate” on the world reserve currency at the meeting. Today, however, Chinese Vice Foreign Minister He Yafei was quick to take back these sentiments, apparently, stating that the US dollar will remain the world reserve currency for some time to come. All this means, though, is that China, like France, isn’t sure what the replacement should be.
Who can blame China, Russia and France? Would you keep lending money to someone who never pays you back and arguably doesn’t intend to?
It’s as if they’re saying, “if you want to destroy your own currency, go ahead, but if so it shouldn’t be exported to the rest of the world.” The rest of the world shouldn’t have to deal with more US financial problems, the main one now being the prospect of a kind of exported inflation.
You might think that that’s inevitable, since the US is the “world’s superpower” and since “anything the US does” the world has to put up with. I think that’s increasingly not becoming the case. The US still has the largest military, so they can effectively bully whoever they want into doing whatever they want, but it remains to be seen how wise and consistent the US government will be with regard to financial democracy. Sooner or later, you pay your debts, in one form or another.
If you liked this post, why not subscribe to my blog for free updates and get these delivered right to your reader or by email? Also, feel free to connect with me on Twitter.
Related Posts - Three Things That Would Kill the Price of Gold
- 5 Signs You Need To Take the Yuan Seriously
- What Bank Will Wikileaks Bust?
- Zhou Xiaochuan's Proposal for New Global Reserve Currency is Accepted by the UN
- Top 10 Canadian Dividend-Paying Multinationals
Related Articles From Other Websites
-
{ 6 comments }
It’s always so amusing that all these countries want to suggest that everyone is _forced_ to use the dollar. China and Russia are not transparent countries at all. Who would want to use a country like that’s currency for reserve? Ultimately while the US has plenty of problems, we’re at least upfront about ours.
@Secure – China and Russia aren’t suggesting they use their own currencies. The problem China has raised, actually, is that of one country’s currency serving in both roles as a domestic currency (subject to the domestic economy’s problems) and also as the international reserve currency. If you read the history, you’ll see how much the U.S. under Nixon basically fleeced the rest of the world when it wanted its money back and Nixon took away the gold standard. That meant the U.S. could inflate all it wanted to and not really ever have to fully pay back its debts. Clearly, there’s a conflict of interest.
To the person who wrote this:
Dear US-Hater Activist,
You must thank the US for decades of keeping the advancement of the world. The computer where you typed this, the internet, the cabling of the phone system, the electric systems of cities, the telephone, the electric light system, and many medical procedures, and vacines have been discovered, pioneered, and brought to the world by companies, and individuals from the US. All these countries who want to essentially get rid of the US b/c they envy the US, I don’t see any of them a comparable role-model. What is China, Russia, etc going to bring to the table? The Chinese Yuan is 0.1 of US$, and in the field of advancement, they oly know how to copy from the US, b/c China doesn’t have advancements in technologies. In these countries you see repression, exploitation, low standards of living, corruption. Is that what we want for the world? Imitate the imitators? Good luck!
Long Live The US! Die to US-haters!
To the person who wrote the original article:
Dear US-Hater Activist,
I’m your worst nightmare, and I’m back. I forgot to tell you that the EU countries, Russia, Middle-Eastern countries, and Asian nations, they are mostly bluffs. You have to live in one of those countries, and live in the US to realize, there’s no comparison. No freedom = nothing is real. Anti-US/left-wing activists try to portray China, India, etc like the great nations, etc. Nonsense, there’s no comparison. You can’t believe aything that comes from a totalitarian country. Everything they publish is filtered, inflated… a bunch of lies. the Chinese reality is poverty, opression, human rights violations from the gov against their own citizens… and God forbid you’re an immigrant or immigrant worker in one of those countries! You’ll be treated as a dog!!!
The Europeans, they are so cynical-hypocrites… they pretend to be the most socialist/humanistic people in the world… no death penalty for criminals no matter what, etc. But they are soooooo racist! If you are not white, it’s virtually impossible to stay in any of the European countries. And the immigrants they have are treated like 2nd-class citizens. You have to work without pay for some time… yes, in the US that’s called slavery. Just take the French for example, they are the most classist people you can find! Go to France as a tourist, and try to ask someone anything in English… they will ignore you! Just like that! And Spain is the same! They take naps during the afternoon like for 3 hrs! That means that if you want to make extra money, and work more than one job, you can’t, because everything closes for those hours, shortening the work-day! How can you advance the world by taking naps!?
I understand some in Europe feel envious of the US, after all they were the great Romans, the Vikings, the conquerors, the Napoleons, the industrially revolutionaries… and then, an incipient unknown nation called the US took over, and they started lagging behind. Then the US had to come to their rescue in both European-and-Russian-started World Wars… Durig the Reagan administration, we freed the world from the expansion, and the threats, and saved millions of citizens of the former USSR from the slavery they were living in. The European nations couldn’t, and were not willing to do it, most were too afraid. But such a word never was in the Reagan administration’s dictionary. His team accomplished the most unbelievable feat of the XX century, and convinced the USSR they were doomed b/c they were wrong. This accomplishment of the US alone was a catalyst for the world’s economy, and Europe has been the one to benefit the most from it… now they feel cocky… they are ungrateful. And China? They wouldn’t dare to venture into capitalism while big brother USSR was alive, so their progress is also a by-product of US policy. In the last 9 years, the US has cleaned up international terrorism… which is great for Europe, b/c I haven’t heard any more bombings in Britain’s trains, no more car bombs in Rome, etc. European nations are getting the spill-over benefits of all the effort. the sacrifice, and the money that the US has muscled behind the ethical and humaine cause of liberating liberate the world from the genocidal threat of terrorism.
In the social/economic arena, the EU is now trying to regulate things that in the US have been regulated for many decades, like briving, corruption, organized crime, sexual harassment, discrimination, unfair labor practices, etc. US is the leader in legislation, and proactively enforcing all these regulations to protect the individual. The US has the fairest trial system, with jurors for civil, and criminal cases. In other countries you won’t get a jury, you’ll be at the mercy of the judge!
For all this, and much more, I say do not let US-hatry activists to confuse you:
Yestarday, now, and forever: Freedom is our maxim!
Long Live The US, and the Principles for which It stands!
Say YES to progress,and values for Humanity, and say NO to US-haters, left-wingers, and communist activists!
God Bless The US!
@Rick – With all due respect, it seems it is you who holds these stereotypical views you seek to criticize elsewhere. Thank you for taking the time to comment – I am sure it will provide others with interesting points of comparison.
I agree with “Secure Saving” the US economy is keeping afloat the rest of the world for a hundred years, but there are ungrateful people in this world. Most of those countries live in an eternal crisis, that’s why they can’t see their own problems, because it’s their “niormal” day-to-day estate of living. They criticize the US b/c they’re envious, greedy for power, but they don’t have anything to offer to the rest of the world so they are doomed, and frustrated… immerse intheir own hate.
Who wants to trade in rubles, Cuban pesos or Chinese paper?
The whole “change the international currency” tune is a very old one. Hater-Opportunist-in-chief George Soros is one of its promoters, and communist elements and regimes, like Cuban dictator Castro–as main puppet of the USSR–have been pushing for it since more than 20 years ago. These precedents and the evil interests they serve should awake the naive, and turn on the lights and sirens in any honest person who loves humanity and freedom.
Let’s keep the glorious green US Dollar as our international trade currency for the free world, and let the US-haters turn green of envy!!!
Gimme US Dollar or gimme death!
Comments on this entry are closed.