The moment we've all been waiting for has arrived. China has publicly stated that they believe it is time for the U.S. to issue debt denominated in Yuan. If anyone had any doubts about the future China sees for its currency, those doubts have now either been removed, or moved into the category of "denial". This is a takeover move, plain and simple.
A brief quote: "NEW YORK (Reuters) - A top Chinese banker on Sunday called on the U.S. government and the World Bank to sell yuan-denominated bonds in Hong Kong and Shanghai to encourage the development of debt markets in those centers and to promote the yuan as a major international currency."
The linked article, which I recommend you read in its entirety, sounds the death knell for the US Dollar as reserve currency. China's FOREX policy has changed from merely questioning the Dollar's international status to outright declaring it dead:
"He said that foreign currency risk, particularly the risk that the yuan would continue to appreciate against the U.S. dollar as it has in recent years, could be hedged."
To paraphrase: "We don't want to be paid in dollars anymore, Ben is printing them at such a rate as to render them valueless."
This announcement will be met by another, perhaps final, dollar pump (currently in progress). If the U.S. ever issues Yuan bonds in any quantity we will one day resemble Iceland: broke, starving, hideous tax rates, and completely beholden to a foreign lender for survival. In Iceland's case, the foreign lender is called "IMF". In our case, the foreign power has a navy of its own that wants ours out of the Pacific and IO, for starters.
For more information about Iceland, I suggest reading the blog "Surviving Iceland". On the subject of tax rates in the U.S., "Cap and Trade" and "Health Care Reform" are nothing more than hideous tax increases, with the aim of strengthening the Treasury market.
Don't say we didn't warn you. The last bubble is the Treasury market.
Disclosure: I am not a financial professional, and my rantings are not to be construed as making any sense at all. Please DYODD. My portfolio is long various U.S. Dollar short instruments (PM's, TBT, DXO, miners) and hedged by a substantial cash position.