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3/23/09 - China calls for new reserve currency

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posted on Mar, 23 2009 @ 05:38 PM
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www.ft.com...

China calls for new reserve currency
By Jamil Anderlini in Beijing
Published: March 23 2009 12:16 | Last updated: March 23 2009 19:24
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”

Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC....(more at link)


This backs up the thread on the IMF calling for a new currency.
www.abovetopsecret.com...


[edit on 23-3-2009 by Dbriefed]

[edit on 23-3-2009 by Dbriefed]




posted on Mar, 23 2009 @ 05:48 PM
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reply to post by Dbriefed
 


This seems odd. What other currency or formulaic basket of currencies (other than the Chinese yuan/renminbi itself or some oil-state's-dinars) would be likely to tank less than the dollar if the dollar itself tanked? And the Chinese are already holding all these dollar-denominated items...if there was something better for them to buy they would have been buying it already...it just seems like they are just talking down the price of stuff they have bought already, with little hope for financial upside as a result...

Thus I see this as political...They are wanting to be one of the big folks, making statements with consequences, weighing in and being considered...national ego-boosting more than anything...but what do I know...



posted on Mar, 23 2009 @ 05:49 PM
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Well then I am not surprised to see China backing Russia and the IMF in their plan to induce another currency on us.

I figure China knows the money in borrowed to the US will never be paid, alteast not anytime soon. People are crazy if they think that this will help anything in regards to the economy, exept put the PTB in a better position to introduce the NAU and the Asian Union as being the only solution.

Very scary stuff...

~Keeper



posted on Mar, 23 2009 @ 06:08 PM
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This seams to be one of the last few coffin nails left in the fist of the greenback
Numero 2 line-o..Im practicing my spanglish..




[edit on 23-3-2009 by Redpillblues]



posted on Mar, 23 2009 @ 06:17 PM
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frok Peret Schiff. must red IMO

"There is an old adage on Wall Street that no one rings a bell at major market tops or bottoms. That may be true in normal times, but as many have noticed, we are now completely through the looking glass. In this parallel reality, Ben Bernanke has just rung the loudest bell ever heard in the foreign exchange and government debt markets. Investors who ignore the clanging do so at their own peril. The bell’s reverberations will be felt by everyday Americans, whose lives are about to change in ways few can imagine. While nearly every facet of America’s economy has been devastated over the past six months, our national currency has thus far skipped through the carnage with nary a scratch. Ironically, the U.S dollar has been the beneficiary of the global economic crises which the United States set in motion. As a result, our economy has thus far been spared the full force of the storm.

This week the Federal Reserve finally made clear what should have been obvious for some time – the only weapon that the Fed is willing to use to fight the economic downturn is a continuing torrent of pure, undiluted, inflation. The announcement should be seen as a game changer that redirects the fury of the financial storm directly onto our shores.

In its statement, the Fed announced its intention to purchase an additional $1 trillion worth of U.S. treasury and agency debt. The purchases, of course, will be made with money created out of thin air through the Fed’s printing presses. Few can doubt that they will persist with these operations until the economy returns to its former health. Whether or not this can ever be accomplished with a printing press alone has never been seriously considered. Bernanke himself admits that we are in uncharted waters, with no map or compass, just simply a hope that more dollars are the answer.

Rather than solving our problems, more inflation will only add to the crisis. Falling asset prices, the credit crunch, declining consumer spending, bankruptcies, foreclosures, and layoffs are all part of the necessary rebalancing of our economy. These wrenching movements, however painful, are the market’s attempts to resolve the serious problems at the root of our bubble economy. Attempts to literally paper-over these problems will lead to disaster.

Now that the Fed has recklessly shown its hand, the mad dash to get out of Treasuries and dollars should not be far off. The more the Fed prints to buy bonds the less the dollar is worth. Holders of our debt (read China and Japan) understand this dynamic. We must expect that they will not only refuse to buy new bonds, but they will look to unload those bonds they already own.

Under normal circumstances, if creditors grew concerned that inflation was eating into their returns, the Fed would raise interest rates to entice them to buy. However, the Fed will avoid this course of action as it fears higher rates are too heavy a burden for our debt laden economy to bear. To maintain artificially low rates, the Fed will be forced to purchase trillions more debt than it expects as it becomes the only buyer in a seller’s market.

Just last week, Chinese premier Wen Jiabao voiced concern about his country’s massive investments in U.S. government debt. In the most unequivocal statement yet by the Chinese leadership on this issue, Wen made it plain that he was concerned with depreciation, not default. With his fears now officially confirmed by the Fed statement, we must wonder when the Chinese will finally change course.

There is a growing consensus that if China no longer wants to buy our bonds, we can simply print the money and buy them ourselves. This naïve view fails to consider the consequences implicit in such a change. When the Treasury sells bonds to China, no new dollars are printed. Instead, China prints yuan to buy dollars which it then uses to purchase treasurers. This effectively allows America to export its inflation to China. However, now that we will be printing the money ourselves, the full inflationary impact will fall directly on us.

With such a policy in place, America has now become a banana republic. It won’t be too long before our living standards reflect our new status. Got Gold?

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read Peter Schiff’s book "Crash Proof: How to Profit from the Coming Economic Collapse".



posted on Mar, 23 2009 @ 06:53 PM
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reply to post by czacza1
 


I think the world will just keep the sick man going, pretend that the US has assets sufficient to meet its obligations, and just hope miraculously somehow to muddle through...because for other countries to pull the plug has immediate bad consequences for most everybody, with no straightforward long-term upside, and it would require a true courage in decision-making that few of the current world-leader-types possess (except maybe Osama and Fidel, and they ain't in a position to do much)...
Maybe the US will trot out some of that UFO technology we have supposedly under wraps, and with anti-gravity and cold fusion America will turn a profit and pay off its T-bills (waiting for the Space Brothers to save us, yet again)...



posted on Mar, 23 2009 @ 07:13 PM
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Originally posted by nine-eyed-eel
reply to post by czacza1
 

...because for other countries to pull the plug has immediate bad consequences for most everybody, with no straightforward long-term upside, and it would require a true courage in decision-making that few of the current world-leader-types possess


I think you might be missing a part of the equation here: there are two ways to get to the long term: pull the plug, as you say, or follow the USA blindly into whatever comes: hyper-inflation, debt defaults, and so forth.

Both situations have negative consequences - the difference is that if the plug is pulled, the control of the situation goes to the economies that have pulled the plug. If the status quo is maintained, those economies will be have the conditions for their survival linked to the economic policies of the USA.

I think you might be underestimating the decision making capabilities of the people behind this idea. Putin is known for a lot of things, good and bad - but the inability to make difficult decisions is not among them. Likewise China's leadership. I wouldn't trust anyone in Japan's cabinet to come in out of the rain, so I'll grant you that one.



posted on Mar, 23 2009 @ 07:27 PM
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reply to post by nine-eyed-eel
 


I think it will be not a rapid move like you called "plug out" type. China will try to get rid of the bonds in some longer time and they will stop buying more for sure.

this is going to be a slow way down. but at some critical point inflation is going to show up and things can go faster from that point.
but the impact will be mostly on US (and its blind EU friends) cause the dollar will be almost worthless. the rest of the world won't avoid the heavy crises to face for years but for the countries like China it is the only way to survive at all.



posted on Mar, 23 2009 @ 07:31 PM
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It seems it is all going according to plan. The only thing you need to know is all the Central Banks are all owned by the same people. They all work together as per their owners.



posted on Mar, 23 2009 @ 07:36 PM
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Originally posted by Dbriefed
www.ft.com...

China calls for new reserve currency
By Jamil Anderlini in Beijing
Published: March 23 2009 12:16 | Last updated: March 23 2009 19:24
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”

Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC....(more at link)


This backs up the thread on the IMF calling for a new currency.
www.abovetopsecret.com...


[edit on 23-3-2009 by Dbriefed]

[edit on 23-3-2009 by Dbriefed]


If China Central Bank Governer is concerned about "the inherent deficiencies caused by using credit-based national currencies"

and

"the potential inflationary risk of the US Federal Reserve printing money",

Then why the heck isn't Congress and the US Treasury concerned enough to do something about it as this is undermining our Sovergn Nation and it's Constitution?

At every turn, we are being played.



posted on Mar, 23 2009 @ 07:51 PM
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reply to post by czacza1
 





but the impact will be mostly on US (and its blind EU friends) cause the dollar will be almost worthless. the rest of the world won't avoid the heavy crises to face for years but for the countries like China it is the only way to survive at all.

Regardless of the currency, you seem to ignore, or be unaware of the economic realities of the US and its relation to the world.

The world's GDP (GWP) is $70.65 trillion. (2008 figures)
www.cia.gov...

The US GDP is $14.58 trillion (2008 figures)
www.cia.gov...

In other words, the US economy accounts for almost 21% of the world's economy. There is no way that the rest of the world would not suffer, if the US economy completely tanked.

In addition, the US has sufficient food to feed its entire population. Furthermore, if things got very bad, the US would be forced to open up Anwr to drilling, as it would also open those "forbidden" shelf zones.

Finally, if the US felt its back was against the wall, they would almost certainly resort to what Hitler did, when his economy was in shambles, and inflation had gone wild. War would become a certainty.

Understand, I am NOT advocating these actions. However, any student of history understands that war is always the final option when all other economic measures fail. I do not want that to happen. I hope it does not happen, but war becomes more and more inevitable, as this crisis continues to deepen.



posted on Mar, 23 2009 @ 07:52 PM
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Isn't it the trick to let the dollar fall so all the dollar based debt of the US will be wortless?

Is it an idea to increase and broaden the meaning/function of the already existing special drawing rights[SDR]? besides the fact that now only states can own them and trade them for only currencies..

[edit on 23-3-2009 by Foppezao]



posted on Mar, 23 2009 @ 08:26 PM
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My question is how will We The People Of The United States Of America take to not having the U.S. dollar as our currency? Will the United States give into China's demands of a new reserve currency to keep them quiet and under control instead of out of control?

How many Congressman will sell We The People out for the new currency to be put into circulation within the U.S.? What scare tactic will our government use to sell We The People on the new currency? Will the rest of the World go along with a new reserve currency or will they have a choice?

[edit on 23-3-2009 by amari]



posted on Mar, 23 2009 @ 08:53 PM
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reply to post by vox2442
 


I like what you say.
It's like there's a tipping point. Following the US into let's-pretend-mode will lead to a gradual worsening of conditions for the rest of the world. There will be a point in time when, because of this, the bad consequences of pulling-the-plug will not be materially much worse than the existing situation, and, pulling the plug would indeed give the plug-puller some offsetting benefits from being the one who finally takes action.
I just don't think we're at the tipping point yet. I don't see who could calculate that they'd be much better off if the USA fell down, at this moment. For example, I think China can barely hold down the tiger of its poor people with rising expectations even when their economy is growing. If the Party made the US market go away, their immediate short-term results would I think be more problematic than the long slow deteriorating muddle-through, for their own careers and for what happens next week.

It's like the boiling frog problem...it takes a visionary frog to jump before the soup's done.
Don't politicians usually always create long-term problems by pandering to near-term wants...Which nation would have a better near-term by starting this fire now, is all...But if the staus quo deteriorates eventually for sure there will be one.



posted on Mar, 23 2009 @ 09:02 PM
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This is very pertinent news...it is all coming together at a very rapid pace...

The Chinese word for crisis...is translated to our english understanding of the phrase "exciting danger". We are seeing things move along at a rather brisk pace.

What happens if China stops buying U.S. Debt...

And while I am not a fan of war...nor would I ever want to encourage war, sadly it is a fact of life. When the IMF warns of war...better watch out.
IMF warns of Civil Unrest and War



posted on Mar, 23 2009 @ 09:08 PM
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But its not pertinent news.
The IMF has long been proposing a world currency unit.
And now China is just trying to get in on it as well.
Probably because it hates America this week over the ship issues in international waters that China thinks it all of a sudden owns.
But it will never happen.
Because to much money is made from currency exchanges.



posted on Mar, 23 2009 @ 09:11 PM
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reply to post by nine-eyed-eel
 





It's like the boiling frog problem...it takes a visionary frog to jump before the soup's done.

There is one problem with that analogy. It is a myth:

www.snopes.com...



posted on Mar, 23 2009 @ 09:27 PM
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Originally posted by ProfEmeritus
reply to post by nine-eyed-eel
 





It's like the boiling frog problem...it takes a visionary frog to jump before the soup's done.

There is one problem with that analogy. It is a myth:

www.snopes.com...



Touche.
Another version of the boiling frog problem is the one that goes:

"I didn't object when they came for the trade unionists, because I wasn't a trade unionist. I didn't object when they came for the Catholics, because I wasn't a Catholic. I didn't object when they came for the Jews, because I wasn't a Jew. And when they finally came for me, nobody else objected on my behalf because there was nobody else left but me."

No doubt there are other, more apt, non-mythical restatements, but this was the first one that came to mind.
Amphibians or no, I think there are sometimes good uses for this family of analogies...



posted on Mar, 23 2009 @ 09:43 PM
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reply to post by nine-eyed-eel
 





No doubt there are other, more apt, non-mythical restatements, but this was the first one that came to mind. Amphibians or no, I think there are sometimes good uses for this family of analogies...

Oh, I agree. I use Pastor Niemöller's quote frequently, and I have to admit, I've used the frog one myself. It's been a slow night, and when that happens, I get rather playful with my comments. That's especially true when I believe that there is no real solution to the problem that won't drag everyone down.
I love win-win solutions, but I truly believe that virtually every attempted solution to the economic crisis is a lose-lose.
The only "solution" that may have worked was to do nothing, but it's too far gone now.



posted on Mar, 23 2009 @ 09:55 PM
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reply to post by ProfEmeritus
 


Yeah, the only out I can see is if we muddle along and something akin to the way information technology increased US worker productivity happens again, some classically unforeseen deus ex machina that makes the US charade more profitable and enables us miraculously to pay our debts...
Either that or some system-busting destabilizer like asteroid strikes earth or bird-flu kills billions, some (also bad) game-changing wild-card like that...9-11 was one of them, for example...One never knows, do one?



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