China again pushes for change from USD as Global Reserve Currency

[ponycar17]

Hu Highlights Need for U.S.-China Cooperation, Questions Dollar

By ANDREW BROWNE

BEIJING—Chinese President Hu Jintao emphasized the need for cooperation with the U.S. in areas from new energy to space ahead of his visit to Washington this week, but he called the present U.S. dollar-dominated currency system a "product of the past" and highlighted moves to turn the yuan into a global currency. ...

Continued at http://online.wsj.com/article/SB1000...oWhatsNewsTop#

Now, let's talk about what this means. It basically means to me that our credit system will dry up. Fiscal responsibility would be the only outlet to economic success in the event that our credit mechanisms are crippled. With so many entitlement programs in place, coupled with the fact that around 1/3 of American earners (~50% of population) pay no taxes whatsoever I don't see this change being an easy one to bear.

We have flung financial poo at our creditors who bought our Treasury Notes with the promise of a return on investment. We've unwisely borrowed and spent money that will never produce a return on investment through the so-called "stimulus bills" and financial "bailouts." We've printed money through "quantitative easing" to pay off our creditors with devalued notes. Can any of us blame China for this stance? They're basically saying that we're being immature little brats in the global financial sandbox and it's time to go home and sit in time out.

So, what really happens if we lose our Reserve Currency status?

[redwing carson]

What you say Pony is correct. The China Boys have made a real investment mistake. They after all are still controled by the communst party. This party does not have a winning record of handling money. They loaned us a trillon dollars at the expense of their other creditors. In a nut shell they put all their eggs in one basket. The value of those dollars are dropping every day as the U.S. prints more money to pay our debts. This is causing a real strain on the economy in China. This could break the People's Rupublic of China. The PM of China is going to have to deal out with the U.S. government on some trade issues to stop this bleedding. The people of China are getting really up set with the ruling party over these issues.

RC

[carver]

That is how much the United States has borrowed, and how much we have to pay interest on. To put $13 trillion in perspective, our national debt is larger than the total economies of China, the United Kingdom, and Australia combined. According to the Congressional Budget Office, the national debt held by the public will grow by more than $9 trillion over the next decade, to more than $20 trillion total. This year, the United States will accumulate over $3.5 billion in new debt each and every day. That’s more than $2 million per minute.

http://www.defeatthedebt.com/underst...uch-do-we-owe/

[CampingJosh]

Inflation is great for those in debt, and it's awful for those who have a lot of cash-value investments (cash, bonds, etc). The U.S. government is in immense debt, and they also happen to control the rate of inflation. Does anyone else see a conflict of interest here?

What really happens if the dollar is no longer the reserve currency? I don't know. But I certainly don't like the policies that have driven us to this.

[CampingJosh]

Oh, but I do expect that we'll be back on a gold standard within the next five years. Scary thought, huh?

http://www.forbes.com/2010/01/13/gol...-ron-paul.html

[ponycar17]

Originally Posted by CampingJosh

Oh, but I do expect that we'll be back on a gold standard within the next five years. Scary thought, huh?

http://www.forbes.com/2010/01/13/gol...-ron-paul.html

Seeing as Paul is now the head of the oversight committee for the Fed, I think you may be hitting on something. I wouldn't consider it necessarily scary however anything pioneering after such a global shift to a credit-based system will have its heartaches in the beginning.