Here's Why Asia Must Eventually Ditch the Dollar 40 comments
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Talk is cheap, and all ASEAN’s leaders did last weekend was to talk about an Asian currency zone and free trade agreement by 2015. News reports exaggerate the near-term ability to maneuver of the major players, for example, this rather overwrought report in the Times of India Oct. 23:
BEIJING: China is set to use the ASEAN meet to sell the idea of making the Yuan an international currency. It is using the sense of uncertainty about the US dollar to sell a new dream of enlarged regional trade, financial support from Beijing and reduced dependence on the volatile dollar.
China has also offered to contribute nearly one-third of the $120 billion economic stimulus package being worked out by ASEAN with the stated purpose of helping member-nations reduce their dependence on the International Monetary Fund. Japan offered to cough up a similar amount so that its influence in the region is not diminished.
A senior Chinese official has said that the China-ASEAN Free Trade Area agreement, which will come into being on January 1 of 2010, will result in wide scale use of the renminbi or Yuan as the regional currency. “The upcoming CAFTA, which boasts the largest population among all the world’s FTAs and allows zero-tariff on 90% of products traded between China and ASEAN, will quicken the process of RMB rationalization, ” the official Xinhua news agency quoted Xu Ningning, executive secretary general of China-ASEAN Business Council, as saying.
China is trying to persuade ASEAN nations to enter into bilateral agreements for trade settlements in Yuan. At present, it has sealed such agreements with two ASEAN members, Laos and Vietnam.
China recently launched the first-ever international bond in RMB in the Hong Kong market with significant success. It is pushing some Asian nations like Indonesia and Pakistan to transact business in RMB by offering them easy loans.
The last thing India wants is an Asian currency area led by China. As Prof. Robert Mundell argues, China is not likely to make the yuan convertible until 2015 or so. The Chinese financial system is too fragile and the yuan too vulnerable to massive currency outflows in the event of a political setback inside China for Beijing to take any such grandiose steps for the foreseeable future.
Nonetheless, if America continues to monetize debt at a trillion-dollar annual rate, and the United States continues to withdraw from international leadership, Asia will have no choice but to make its own arrangements. The Obama administration, in my view, will fail to reflate the burst consumer bubble. Attempting to do so by gunning the federal deficit up to 12% of GDP and ballooning the Fed balance sheet is one of the stupidest things the United States ever has done.
The flood of American liquidity threatens to create asset bubbles throughout Asia. China will have to let the yuan appreciate, which means fewer exports to the United States, and the rest of Asia will have to follow. The consequence of American monetary policy will be to compel the Asians to take local measures to stabilize their currencies without regard to Washington, and to expand the local market for their products in order to reduce economic dependency on the U.S.
If America were to propose to lead a currency stabilization effort in Asia (linking the dollar to the yuan, as I have advocated for the past year), Asia would be delighted. For all our problems, the Asians trust us a lot more than they trust each other. As matters stand, America is forcing the Asians to go it alone.
Asian currencies will continue to appreciate, faster than the Euro which is very pricey at over 1.50, let alone the Swiss franc at parity to the dollar.
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This article has 40 comments:
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No, they're not. The PRC leadership has shown zero interest in losing control over their own currency. Being a reserve currency means that massive amounts are held by foreign central banks, and these foreign banks have an associated power.
The Chinese are not willing to let the Renminbi be fully convertible, much less a reserve currency.
Moreover, they're not willing to let the Renminbi float, either. Its obvious to anyone looking at purchasing power parity that the Yuan is dramatically undervalued, but the Chinese have been steadfast in preventing its appreciation. As a fully convertible currency, they'd have to let the Yuan float-- meaning the loss of millions of export jobs, a political risk they are as yet unwilling to run.
2. Asian and other Global South Nations plus Russia also do not want to replace the Fiat dollar with some other Fiat currency under the control of a sovereign Regime. Having seen the willful abuse of the Fiat dollar and the global stresses and malallocation of resources this is causing, the world does not want to see the abuse repeated. The temptation to abuse is obvious and the path to abuse has been fearfully and indelibly shown by the US Regime.
In time, all reserve currencies under the control of a single opaque, deliberately and malevolently unaccountable Regime ( whether national or international)become debased.
3. Multiple, parallel, alternative proto stores of value and media of exchange are being explored and tested and will, likely, be pursued. Whatever international arrangements emerge, first super-regional and then eventually global, will this time, be based on real physical or technological assets that no Govt can control, manipulate or debase.
Clearly the nations of South and of East Asia each want to enhance their own independence of action in monetary and fiscal matters but it is a stretch to derive from this that they have a common desire (or individually desire now) to have the USD replaced as a reserve currency.
It is fair to say that China wants to enhance the regional role of its currency and would like to see its neighbours follow its lead on economic matters more closely. It is also likely that all these nations would like to diversify their foreign currency holdings further beyond current weights in USD and USD denominated securities. Isn't it too much of a jump, however, to extrapolate this into evidence of a collective desire on their part to ditch the dollar generally?
Perhaps it is just that this idea will take (and has already taken) decades to work its way through the human psyche. As we being to talk of literally parking our most precious information into the "clouds", this problem - groking the concept of currency as a medium of exchange and a handy method of keeping score - may be something which the young ones can handle better than we.
Oh, and I would agree that China is not yet ready (and I find the 2015 date very questionable) to float the yuan and make their opague maneuvers transparent enough to function as the reserve anything.
The last thing china wants is to strengthen its currency to loose it share of cheap export! Euro has little value based on uncontrolled credit system.
Central bankers will like to remain in power and will take any measure to block the Gold...But eventually this house of card will crumble.
GC
On Oct 26 02:43 PM Mad Hedge Fund Trader wrote:
> bdc Will people pleeease stop incessantly talking about the possibility
> of China dropping the dollar as a reserve currency? What else are
> they going to use? Monopoly money? Taiwanese dollars? Collectable
> postage stamps? At nearly $2 trillion, the Middle Kingdom’s reserves
> are so enormous that no other currency in the world could accommodate
> the switch, and no other security offers the necessary depth and
> liquidity but Treasury bills. Chinese attempts to buy anything in
> size causes its price to immediately skyrocket, such as we saw in
> the relatively Lilliputian commodity markets last year. And really,
> how like is it that China embarks on policies that quickly halve
> the earnings of the country’s exporters, as well as its 30 year hoard
> of accumulated savings? The demise of the dollar has been predicted
> more often than the ditching of Microsoft’s Windows as the global
> PC operating system, and is just as likely. Hate the greenback as
> much as you like, but there just isn’t any other alternative. I have
> been hearing these arguments ever since the US went off the gold
> standard in 1973. First there was a perennial Arab threat to price
> crude in a basket of currencies. Gee, they never seem to complain
> when the buck is going up. Then there was the speculated emergence
> of the “Yen Block”, in the eighties, back when Japan was dominating
> international trade and the yen was bumping up against ¥80 to the
> dollar. Remember the book “Japan as Number One? Ha! Double Ha! Then
> we got all that European whining after the launch of the euro when
> the weak dollar was everyone’s one way trade. Let’s face it, Europeans
> hate using someone else’s currency as the primary reserve instrument.
> Before the dollar, sterling was in widespread use and was equally
> despised. So rather than waste time discussing this issue anymore,
> let’s talk about something more important, like which of those two
> flies over there will jump off the wall first.
WWII
On Oct 26 04:42 PM User 183836 wrote:
> So what was it that caused the Sterling to stop being used?
> GC
seekingalpha.com/artic...
On Oct 26 02:43 PM Mad Hedge Fund Trader wrote:
> bdc Will people pleeease stop incessantly talking about the possibility
> of China dropping the dollar as a reserve currency? What else are
> they going to use? Monopoly money? Taiwanese dollars? Collectable
> postage stamps? At nearly $2 trillion, the Middle Kingdom’s reserves
> are so enormous that no other currency in the world could accommodate
> the switch, and no other security offers the necessary depth and
> liquidity but Treasury bills. Chinese attempts to buy anything in
> size causes its price to immediately skyrocket, such as we saw in
> the relatively Lilliputian commodity markets last year. And really,
> how like is it that China embarks on policies that quickly halve
> the earnings of the country’s exporters, as well as its 30 year
> hoard of accumulated savings? The demise of the dollar has been predicted
> more often than the ditching of Microsoft’s Windows as the global
> PC operating system, and is just as likely. Hate the greenback as
> much as you like, but there just isn’t any other alternative. I have
> been hearing these arguments ever since the US went off the gold
> standard in 1973. First there was a perennial Arab threat to price
> crude in a basket of currencies. Gee, they never seem to complain
> when the buck is going up. Then there was the speculated emergence
> of the “Yen Block”, in the eighties, back when Japan was dominating
> international trade and the yen was bumping up against ¥80 to the
> dollar. Remember the book “Japan as Number One? Ha! Double Ha! Then
> we got all that European whining after the launch of the euro when
> the weak dollar was everyone’s one way trade. Let’s face it, Europeans
> hate using someone else’s currency as the primary reserve instrument.
> Before the dollar, sterling was in widespread use and was equally
> despised. So rather than waste time discussing this issue anymore,
> let’s talk about something more important, like which of those two
> flies over there will jump off the wall first.
Debt as a percentage of the British GDP ballooned in the 70's and only mitigated some because of the North Sea oil revenue. Sound familiar? Only difference is the US lacks oil revenue and is a net oil importer.
**********************...
On Oct 26 04:42 PM User 183836 wrote:
> So what was it that caused the Sterling to stop being used?
> GC
Each country's central bank buys foreign currency from its domestic banks at the agreed exchange rate and pays those banks in domestic currency. So each country's commercial banks can treat foreign currencies "as if" they were convertible and accept deposits made by exporters who are receiving payment in foreign currencies.
The currencies are never actually converted into each other, just used as an accounting device to keep track of who owes and who has credit. If Thailand holds 1 million yuan then China owes Thailand 1 million yuan worth of exports. Calculated in Thailand baht at 5:1, China owes Thailand 5 million baht worth of exports. The conversion is just a convenience so you can understand how much these numbers mean in your own currency.
In reality each country is holding the other countries' currency as "gold". When you export goods you are paid in 'gold' by the importing country and when you import goods from that country you pay in the same gold. If ASEAN can engineer some monetary discipline regime to prevent members from inflating their currency, they can have a fully functioning trading system that doesn't require dollars or any other reserve currency.
If China chooses to vendor finance its exports to ASEAN like it has been doing to the US, all China has to do is allow its holdings of these countries' currencies to accumulate in its central bank rather than encourage Chinese to buy stuff from those countries to spend the money. Essentially China is lending them goods and taking their money as an IOU on future repayment in goods. Just like China did with the US, but will the US ever repay $2 trillion of goods to get its money back?
This just creates a mini global economy in the ASEAN bloc. They can still trade with the rest of the world using the dollar, but within their block they can cut the dollar out of the equation.
Convertibility is only necessary if you want to create an Asian Wall St money market where the big players manipulate values to screw everybody else out of their money. Right now China may resist yuan convertibility because they think by opening up to global capital flows they would be the screwee rather than the screwer.
I adhere to the first, but not to the second
break....
This is the mantra that the American economic establishment wants the rest of the world to believe. Anglo-American
Not to be pedantic but it was Nixon in 1971 who cut the convertibility to gold
What's the difference?
On Oct 26 02:43 PM Mad Hedge Fund Trader wrote:
> bdc Will people pleeease stop incessantly talking about the possibility
> of China dropping the dollar as a reserve currency? What else are
> they going to use? Monopoly money?
The Obama regime is embarked on restoring the Rooseveltian economics and finish the job of destroying capitalism. Their tool is once again 'mark to market' to produce enough deflation to mask the effects of devaluing the dollar. And the dollar is being devalued to obtain control over industries and alleviate the suffering that Obamanomics brings about. The Chinese and Indians are no fools and they do not like the idea that the Obama regime is planning to destroy the value of their dollar reserves. And that is what is at the bottom of Asian nations scrambling for a new reserve currency.
On Oct 26 02:43 PM Mad Hedge Fund Trader wrote:
> bdc Will people pleeease stop incessantly talking about the possibility
> of China dropping the dollar as a reserve currency? What else are
> they going to use? Monopoly money? Taiwanese dollars? Collectable
> postage stamps? At nearly $2 trillion, the Middle Kingdom’s reserves
> are so enormous that no other currency in the world could accommodate
> the switch, and no other security offers the necessary depth and
> liquidity but Treasury bills. Chinese attempts to buy anything in
> size causes its price to immediately skyrocket, such as we saw in
> the relatively Lilliputian commodity markets last year. And really,
> how like is it that China embarks on policies that quickly halve
> the earnings of the country’s exporters, as well as its 30 year
> hoard of accumulated savings? The demise of the dollar has been predicted
> more often than the ditching of Microsoft’s Windows as the global
> PC operating system, and is just as likely. Hate the greenback as
> much as you like, but there just isn’t any other alternative. I have
> been hearing these arguments ever since the US went off the gold
> standard in 1973. First there was a perennial Arab threat to price
> crude in a basket of currencies. Gee, they never seem to complain
> when the buck is going up. Then there was the speculated emergence
> of the “Yen Block”, in the eighties, back when Japan was dominating
> international trade and the yen was bumping up against ¥80 to the
> dollar. Remember the book “Japan as Number One? Ha! Double Ha! Then
> we got all that European whining after the launch of the euro when
> the weak dollar was everyone’s one way trade. Let’s face it, Europeans
> hate using someone else’s currency as the primary reserve instrument.
> Before the dollar, sterling was in widespread use and was equally
> despised. So rather than waste time discussing this issue anymore,
> let’s talk about something more important, like which of those two
> flies over there will jump off the wall first.
I am no lover of America and Europe, but at least they are democracies. That gives them a huge, huge, advantage. They have healthy self correcting mechanism. But like the first century Romans, the fat, lazy, materialistic and increasingly immoral citizens of “Developed World” (or the“Soft World”) loll around in their own blubber while their empires disintegrate all around them. Like the Romans, they are expecting their “passive investments” to rescue them from their rat race of borrowing and spending, borrowing and spending…
Democratic governments cannot impose physical restrictions on their people like China can. The Soft People should now act to save the world. But most important of all, they should stop thinking of their residential houses (or "homes" as Americans call it) as their life insurance. They should stop spending, learn to accept lower wages, get frugal, work extended hours and produce useful and cheap goods and services that the rest of the world can afford and use. Social security in the Soft World should be toned down significantly.
While they are at it, the Soft Worlders should also encourage their governments to create stronger and more universal currencies. For example, the British people should urge their government to adopt the euro. Undeserving members mistakenly included in the European Union should be persuaded to leave (if at all possible!) Canada and US (not Mexico, yet) should have a common currency. Meanwhile US should allow the dollar to depreciate with dignity. This will help the euro and the dollar to keep the leaderhip till such a time when Asia becomes eligible.
In a couple of decade or so, China will--I am sure it will--overthrow the current regime and become a democracy. Then it would be natural for all Asian countries to join together and create their own common currency. The same could be done by the people of South America. (The Middle Eastern countries could also have their own currency, but if the Soft World practice frugality, industry and innovation for a decade, oil might become irrelevant.)
Eventually, with four or five truly global currencies, we should all be able to live happily ever after…
That is no longer the U.S. and we are declining in that role each month more jobs go to emerging markets and investment dollars go to emerging markets and businesses relocate facilities in emerging market nations and each month we monetize more debt and each month we run over a trillion in deficits and each month we keep using the policies that got us in this mess over the last several decades.
That is why, I believe, the IMF and World Bank and yes, even China is supporting the SDR's that are growing in use and that even the U.S. has purchased some of and are one of the largest supporters of SDR's.
China has already, over 1/2 a dozen non-dollar trade deals and is constantly working on more. An Asian regional currency is no different than the regional currency recently established in S. America and the one scheduled for next year in Southern African nations. It is no different than the regional currency, the Euro and the use of regional currencies will probably continue to grow as they move away from using the dollar.
Iran, already sells its oil in Euro and Yen and the UAE nations are still working on a regional currency for them and have been for a couple of years.
It may take years but, even the President of the World Bank that the U.S. appoints says the reign of the dollar is coming to an end.
We brought this on ourselves and we forced the problem on other nations and now they are reacting to that.
When the S&P rates a currency, known as a sovereign currency rating, they use two components, one internal and the other external. The basis of that rating system is that a currency is a reflection of debt and the ability of that country to service its debt in a fiscally responsible manner, hence "external debt" and "internal debt". Every fiat currency has "debt" as its basis, so every currency in the World is a "debt derivative". By switching from one country's currency to another all you are doing is shifting debt service values. In other words, in this World of today, DEBT IS MONEY! Look what just happened ... banks failed why? Banks continue to fail why? Financial crisis is a permanent mainstay why? As Bill Clinton might say ... ITS THE MONEY STUPID!
The US TREASURY operates the largest DEBT STORE in the World, call it DEBT-MART. Most pundits through the aid of the mainstream media will get on shows like CNBC and talk incessantly about Treasuries and the US Treasury auctions known as the bond market. They will comment forever on the interest rates and what the US FED will do next, yet there is very little comment on the fact that any US Treasury security, be it a Bill, a Note or a Bond is like a coin. There are two sides. The US Treasury issues or sells them and the US Treasury buys or redeems them. The "redemption" is the other side of the coin. To me what the US FED and TV shows like CNBC are doing is "distracting" you. Its the oldest scam in the World where you create a "fire" or in this case a "crisis" to distract people from what is really going on behind the curtain, behind closed doors, which is looting whats left of every American's wealth.
America and the two party system is a POLITICAL MONOPOLY. All that happens is we run from one crisis to the other and if it happens that the DEMS are in power when a perceived crisis occurs then the US Voter will run to the REPS and visa versa, otherwise how else would Obama have been elected.? Sure he is a charismatic young guy, but if you lose your job and your 401k becomes a 201k when Bush and the REPS are in office then what is the likelihood you will vote REP? So its a big political game of ping-pong, where US Voters are the ping-pong ball, we have had the exact same result every decade no matter which political party is in power, which is MORE DEBT ... more CRISIS.
Right now the US Congress is up against the US Public Debt ceiling again. This is a game that was started 70 years ago in 1940 with the first "debt ceiling" set at $45BIL USD, to appease foreigners and to make it look like the US Dollar and the US government is fiscally responsible, so that the USA after WW2 would become the next foreign reserve currency. The new Empire ... Now it is 70 years later and the "debt ceiling" needs to be raised yet again as US Public Debt is approaching $12.1TRIL USD. This is part of the "internal debt", which is one half the equation of the US sovereign currency rating issued by the S&P and Moody's.
DEBT-MART, the US Treasury securities have much more debt issues than just the usual Bills(Regular Series), CMBs(Cash Management), Notes and Bonds that you hear discussed on CNBC every day. In fact the US Treasury breaks their debt issues into two categories. One category they classify as "marketable" debt, which is all the stuff that Bill Gross at PIMCO talks about when he is on CNBC, but then the US Treasury has this other category of debt they call "non-marketable". Anyone know the difference between a US Treasury "marketable" security and one that is "non-marketable"? It has something to do with the "internal" and "external" ratings of S&P and Moody's. As Americans we are all captive prisoners and we are forced to buy our groceries and our cars using only US Dollars and in actuality if you look at the money in your wallet they are not even US Dollars, they are Federal Reserve Notes. Look at a $1 or a $5 and above even where it says United States of America it says "Federal Reserve Note" at the very highest part. That kind of makes a statement just the way our money is printed as it shows you who is at the top. Foreigners have to have "marketable" securities due to the nature of cross border transactions, which gives the US DEBT-MART its value. US Treasuries have to compete with other foreign government debt. Over the past couple years we Americans and the global community have been given quite a show by our banks on what it means to have a viable "market", a financial instrument that is "marketable". For if there is no public market for debt securities then the security becomes nothing more than an IOU between two consenting parties.
The other half of the US DEBT-MART is the "non-marketable" securities, part of the other side of the US DEBT coin. You and I cannot buy one of those securities and neither can China. These securities are "non-marketable" because they are just IOUs between Public Trust Funds and the US Treasury. The S&P and Moody's base part of their rating criteria on a country's ability to service its debt through taxes. The US Treasury has some of the largest tax revenues of all the World, so it is therefore concluded that US Treasury securities are the safest and deserve one of the highest credit ratings possible. I have discovered that for FY 2009 the US Treasury ended up with around $1.9TRIL in net revenues and over $54TRIL in total DEBT issues. Most of that DEBT issued was IOUs to you and me, not China. In fact the $2TRIL USD China has in reserves pales in comparison to the $44TRIL our government owes us taxpayers. This information can be found in a US Treasury Daily Statement. But so long as we Americans are complacent and believe that our government will honor its IOUs then S&P and Moody's will continue to give the US Dollar its highest ratings.
So while there are endless debates, like this one, about whether China buys more US DEBT and the "convertability" of the Yuan and the US Dollar's global stature everyone misses the biggest scam going which is right under our noses and that is the "non-marketable" internal debt of the US Treasury whereby every dime that goes into "payroll taxes" is being looted and every dime that goes into government pensions are being looted and spent now, which is the complete polar opposite of such Trust Funds original intent. While we debate and mentally masturbate the China equation our financial stability is rotting from the inside out. Once again Jefferson had it right in terms of our biggest enemy. Our biggest enemy is our own government and its version of DEBT-MART. So do not worry about the poor Chinese and whether they are "safe" holding a US Treasury Bond for 30 years, worry more about yourself and whether you will be safe being a US citizen and whether you, like Californians are experiencing right now, will be handed a US government IOU when you retire. This country is built on IOUs. What else is fiat currency when there is no redeemability. This grandiose idea of "convertibility" is a game. What is it exactly that any currency is "convertible" to? DEBT ...
In 1971 Nixon gave the US FED what it was seeking ever since it was birthed in 1913. The US FED's true mandate was to end the gold standard. Something the US Congress wanted as well so they formed a partnership that has lasted some 96 years now. By former "empire standards" that is a very short time.
Look around you and tell me how well that "partnership" has worked for you? Do you feel secure and cared for? Is the "free lunch" everything you thought it would be? The real question and test in terms of your Freedom and Liberty is this question. Who owns you now? Who is it that you pay most of your hard-earned money to every year? Is it the utility company? Is it your mortgage company? Is it Blue Cross? Who gets close to 30% of your profits when you buy low and sell high? Who is your eternal partner in everything you do starting at birth and ending at death?
It is Uncle Sam who owns you ... the issuer of IOUs ... the CEO of DEBT-MART! Don't worry about China and their money for the Chinese have been around many more thousands of years than America and Americans have. Worry more about who you vote into the US Congress and who sits in the Oval Office. That has a lot more to do with your future retirement and what your money buys than a Yuan or a Euro does.
1) Trade takes it everywhere. (China fits the bill, it's imports or exports touch many many nations around the world; it is hammering out FTAs left and right)
2) it is perceived to be of hard value. (China fits the bill. the Yuan is not seen as weak)
3) it is a central bankers ccy (not yet, they have not liberalized exchange controls)
4) commodities are priced in this ccy (hmmm...China is the biggest consumer/producer of commodities ore, steel, copper, zinc, exporter of rare earths, they practically own australia...close call on this one but doable.)
5) It is a corporate reporting currency. (China does not have enough high level foreign corporate presence where 10Qs or such are printed in Yuan.. so NO on this count)
Final Marks: (2.0 + 0.5 + 0.5)/5.0 = 60%....
I DON'T THINK THE EURO comes anywhere this close on the real hard work of being a reserve ccy. (there is always the sense that some countries are falling out of line from the ERM mechanism...it could also be the main stream media hyping it ...but generally does not inspire confidence. Spain is currently bleeding euro for eg. Italy...less said better; geopolitically euro is more socialist and competing with US whereeas Yuan owns the US congress, politicians have already ceded Taiwan no questions etc.)
Soon we will all want Yuan.
Some of the components in Apple products are made here and assembled elsewhere.
The question is whether the U.S. can invent enough new stuff in a crunch that our people can do fairly well in spite of the fancy government the people tolerate.
U.S. people have bailed out government before. This time the people will probably need to restrain the government as well, but it can be argued that has happened before as well.
When the book Natural Capitalism came out, the author and others he works with got a call from an ideologist from China who completely understood what they were talking about and invited them to speak there.
Attempts to pigeon-hole China seem off the mark to me. It seems possible there are micro-cultures in China, as there are here, where things are being done well.
There is an appetite for sharing information now on how to do things better in specific climates. The Germans won the recent contest on the mall in D.C. on renewable-energy efficient homes, but most world people probably would not choose to live in the black box they designed, even though it produced far more energy than it consumed.
Obama went to MIT to tell them he wants the U.S. to get its edge back. It remains to be seen whether the drain from hinterlands to federal government is bad enough to stifle the innovation that comes from the restless energy and mixing of cultures at MIT and in garages, basements, and workplaces of the U.S.
It would be easier to count the U.S. out if we were counting only government activity. An enormous amount of work and invention goes on outside of government still, however, and counting that out seems a bit inaccurate to me.
The U.S. is not a hegemony.
Fantastic value-improvement activities go on unsung because only small segments of interest groups care about the details of the work they are doing. It can't be made into a 30-second sound bite. That doesn't mean that people from all over the world don't come to visit projects that hold promise for solving major world-wide problems like cleaning pollution and dealing with sewage, for example.
In small U.S. jurisdictions, cooperative cultures and exploration can still produce major breakthroughs that will fuel new ways of doing things around the world. The key is creating value.
Despite their mutual dislike of each other - Japan, Korea and China - from World War II, they are realizing that the US will NOT changes its ways and they mistrust the US and the dollar even more than each other.
They are working to come up with a regional currency that will be based on commodities and the various currencies in the region.
This short term focus makes reform impossible. Long term success is held hostage to short term failure. Reforming the banks would cause a (temporary) drop in the market as the changes work through. The greater long term benefit is ignored.
Everyone knows that long term the US is destroying its currency. But short term it all feels fine. For any outsider it just looks insane. Only those in the asylum support it.
On Oct 26 07:40 PM E.D. Hart wrote:
> Except that they think incrementally, and 50 to 100 years out. They
> already are de-emphasizing the dollar as reserve currency. It took
> well over 3 decades for the sun to set on the British Empire (read:
> the Pound Sterling), and we may be looking at two or three decades
> to replace the dollar as the worlds primary trade currency. Its already
> happening.
plus an excellent recommendation for the US-China to work on
The euro has not fallen below parity with the U.S. dollar since December 2002 but has risen in value.
As of November 2008, with more than €751 billion in circulation, the euro is the currency with the highest combined value of cash in circulation in the world, having surpassed the U.S. dollar.
The euro is the second largest reserve currency and the second most traded currency in the world after the U.S. dollar. (now looking for exact figures)
& thats in a ten year time span. It may be time for those running US monetary policy to take a long hard look at what may happen with China & the yuan/renmimbi.
On Oct 28 12:01 AM fishluvrain wrote:
> With the beginning of the Euro as a currency across borders the move
> has begun. There is the unused but still there NAFTA currency (Canada,U
> S, Mexico) with possible expansion south. There is a proposed Asian
> region currency, slowly in the works. There is room for others.
> When the bulk of the world changes from nationalistic currency, to
> trading partner currencies then the world will embrace a currency
> derived from the basket of all of these.
On Oct 26 04:09 PM twitee wrote:
> Gold has been and will be ultimate answer to corrupted European and
> American financial system. There is no other safer currency than
> dollar..If there is suppose to be one, it is Gold.
>
> The last thing china wants is to strengthen its currency to loose
> it share of cheap export! Euro has little value based on uncontrolled
> credit system.
>
> Central bankers will like to remain in power and will take any measure
> to block the Gold...But eventually this house of card will crumble.
On Oct 26 02:43 PM Mad Hedge Fund Trader wrote:
> bdc Will people pleeease stop incessantly talking about the possibility
> of China dropping the dollar as a reserve currency? What else are
> they going to use? Monopoly money? Taiwanese dollars? Collectable
> postage stamps? At nearly $2 trillion, the Middle Kingdom’s reserves
> are so enormous that no other currency in the world could accommodate
> the switch, and no other security offers the necessary depth and
> liquidity but Treasury bills. Chinese attempts to buy anything in
> size causes its price to immediately skyrocket, such as we saw in
> the relatively Lilliputian commodity markets last year. And really,
> how like is it that China embarks on policies that quickly halve
> the earnings of the country’s exporters, as well as its 30 year hoard
> of accumulated savings? The demise of the dollar has been predicted
> more often than the ditching of Microsoft’s Windows as the global
> PC operating system, and is just as likely. Hate the greenback as
> much as you like, but there just isn’t any other alternative. I have
> been hearing these arguments ever since the US went off the gold
> standard in 1973. First there was a perennial Arab threat to price
> crude in a basket of currencies. Gee, they never seem to complain
> when the buck is going up. Then there was the speculated emergence
> of the “Yen Block”, in the eighties, back when Japan was dominating
> international trade and the yen was bumping up against ¥80 to the
> dollar. Remember the book “Japan as Number One? Ha! Double Ha! Then
> we got all that European whining after the launch of the euro when
> the weak dollar was everyone’s one way trade. Let’s face it, Europeans
> hate using someone else’s currency as the primary reserve instrument.
> Before the dollar, sterling was in widespread use and was equally
> despised. So rather than waste time discussing this issue anymore,
> let’s talk about something more important, like which of those two
> flies over there will jump off the wall first.