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Yuan as the World's Reserve Currency

If I were China, I would buy US debt under this simple plan:

  1. Keep buying US debt, support the US economy, keep the US buying exports as long as practical.
  2. Use dollars to setup long-term oil and other resource contract in the world. (Side note, China is doing this on an industrial scale).
  3. Maintain this practice as long as possible. Ignore risks of inflated dollars, but complain loudly.
  4. Recognize and accept the world will go through the crisis stated in the JOE-2010.

    Joint Forces Command's Joint Operating Environment 2010 (JOE-2010) warning to all US military commands:

    "By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day."

    "A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest."

    "Energy production and distribution infrastructure must see significant new investment if energy demand is to be satisfied at a cost compatible with economic growth and prosperity."

    "The discovery rate for new petroleum and gas fields over the past two decades (with the possible exception of Brazil) provides little reason for optimism that future efforts will find major new fields."

    Foward by General James N Mattis
  5. Use coal to bridge the energy gap (electric scooters).  Exchange lower standard of living for survival. Endure and accuse America as the world loses a third of its population.
  6. Deploy blue water navy to protect access to Australian coal. 
  7. As countries holding value in dollars liquidate dollars to survive, very slowly add to liquidating dollars. Reinforce that it is America's fault for decaying value and growing famine.
  8. Do not lead, but reinforce the collapse of the dollar. Lose $1 to $4 trillion.
  9. Shift world reserve currency:
      Offer to maintain existing agreements in dollars.
      Offer to maintain existing agreements in Yuan, backed by China's labor and manufacturing base.
I believe the value of displacing the dollar as the world's reserve currency far exceeds $4 trillion.

Action requests to prevent this:
  • Reject QE2.
  • Protect the value of the dollar.
  • Embrace the reality that: Life requires energy, energy from oil has become to expensive within how we use it. America was founded within a solar energy budget. If skills applied to re-tooling communication are applied to transport and power, oil addiction can become self-reliance.
  • Shift transportation and power infrastructure from central planning to governing by performance standards; repeating the success of re-tooling communications infrastructure after 1984.
Disclosure: Founder of JPods, a transportation technology that operates without oil.