China to replace the dollar with the yuan as the world's main reserve currency

originally posted by: johnwick
a reply to: Ultralight

Lol good luck.

America has the world's most stable gov and most stable currency, backed by the richest nation and most diverse culture in the worlds history.

Chinas entire economy will implode tomorrow if we start buying our goods from India.

You've been brainwashed.
Read the current news about China and how the US and Japan are not going along with China banking trends worldwide.

www.chinadaily.com.cn...

well i think this is a good thing, as long as Hillary doesnt get someone sodomised with a bayonet again over this deal i think it will work out well.

a reply to: MrSpad

Not as long as there is physical gold to buy for the Chinese US dollar bonds at a cheap price created by the FED. The change comes when there is nothing left to buy that the Chinese wants for the dollars. The Chinese holds all chips in this Texas holdem game.

a reply to: musicismagic

How does this substantiate your claim that the US has the most stable govt and economy in the world?

a reply to: Xtrozero

The yuan as indicated in the article.

originally posted by: Ultralight
a reply to: cenpuppie

Precisely!! People should pay close attention to this and ensuing articles going forward. This is a country that holds 1/3 of our national debt.

A third of all US debt? Lmao

You wouldn't have a source on that would you?

a reply to: Greathouse

www.blogs.wsj.com/economics/2014.

will give you info.

a reply to: Ultralight
The article was talking about stable currencies not how people pay their bills, maybe you should reread the article for better understanding of what is going on in this thread.

a reply to: Ultralight

A blog???? Well here's what they base they based the figures on in the real world.

The largest portion of U.S. debt, 68 cents for every dollar or about $10 trillion, is owned by individual investors, corporations, state and local governments and, yes, even foreign governments such as China that hold Treasury bills, notes and bonds.Foreign governments hold about 46 percent of all U.S. debt held by the public, more than $4.5 trillion. The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury.In total, China owns about 8 percent of publicly held U.S. debt. Of all the holders of U.S. debt China is the third-largest, behind only the Social Security Trust Fund's holdings of nearly $3 trillion and the Federal Reserve's nearly $2 trillion holdings in Treasury investments, purchased as part of its quantitative easing program to boost the economy.

usgovinfo.about.com...

a reply to: Greathouse

The govt??? I'd believe a wsj blog over the US govt any day.

a reply to: Ultralight


Properly link me to the article I'll be glad to pick your statement apart.

originally posted by: buckwhizzle
Doesn't the Chinese Gov't artificially "peg" their currency to the dollar? The yuan would need to compete in the open market and make it on its own before it became the reserve currency.IMHO

Yes. Reserve currency status is not anything that can be decided upon by government dictate---almost the reverse. The more a government tries to force such things, the less likely it will happen.

Whether or not something is a 'reserve currency' depends on the choices of million of private actors: what currency do they want to deposit their money in, and what currency do they want to make their long-term contracts in?

The biggest long-term contract market is of course bonds.

To have a reserve currency you need (a) open international banking to all (b) stable banks and trusted regulatory power (c) relatively low corruption (d) low likelihood of political nationalization (e) large economic footprint & political influence (f) predictable and stable central bank monetary policy, (g) open capital markets for investment (h) free floating currency---other people float or peg to YOU, you don't peg to anybody---and no currency controls or restrictions, unlimited foreign exchange rights.

Right now, China has (e) and (f). Maybe halfway (d). Maybe a third (b). Switzerland has all except (e) now that they broke the peg to the euro.

To be seen as a reserve currency, China would need to have a fully open bond market to unlimited international investment without restrictions, a fully exchangable currency without restrictions, fully open bank deposit & loan market to unlimited international investment without restrictions. They're decades from that, by their own choices.

The two reserve currencies in the world are dollar and euro.

a reply to: Greathouse

The figure which is left unstated is how much debt of the quasi-government mortgage agencies ("government sponsored entities") are held by China?

U.S. Debt probably includes only Treasuries and maybe GNMA, direct obligations of the US Treasury.

Other immense debt markets are Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

In the financial crash, the US government guaranteed at 100% (foolishly, in my opinion) the obligations of Fannie Mae + Freddie Mac which were not supposed to have full-faith-and-credit guarantees from the US Treasury. Supposedly in order to not piss off China.

It was a 'oh we don't have a guarantee, but we are definitely Too Big To Fail, nudge nudge wink wink'.

That's BS because it devalues the explicit and fundamental guarantee on direct Treasury debt, which should remain as AAA unquestioned.

The US government should set a guarantee for Fannie Mae et al---but not at 100% but at 90%. To make it clear there can be the possibility of loss.

originally posted by: LittleByLittle
a reply to: MrSpad

Not as long as there is physical gold to buy for the Chinese US dollar bonds at a cheap price created by the FED. The change comes when there is nothing left to buy that the Chinese wants for the dollars. The Chinese holds all chips in this Texas holdem game.

That's right. They're holding all the chips, and the window to exchange chips is only giving out more, differently colored, chips. "Only valid at the U.S. Cowboy Casino" is printed upon them, in Latin. The bar and the girls don't take chips.

Who's winning?

originally posted by: Ultralight
a reply to: Greathouse

The govt??? I'd believe a wsj blog over the US govt any day.

I think you are confusing some numbers. 34% of US debt is foreign owned. China owns 7.4% and Japan 7%. Who hold US debt FORBES Most of the Debt the US owes is to itself. We owe most of our debt to things the like the Social Security Trust Fund and a bunch of other Federal trust funds. China does buy up dept to help boost the dollar on occasion when because it is good for trade however, they stay around the 7% level.

a reply to: mbkennel

So they still don't hold one third of all national debt. But China does hold markers on guaranteed debt by the US government over private sectors.

Similar to the $2 trillion. in debt China holds on itself over their real estate bubble?

Pardon my oversimplification..

originally posted by: Ultralight
a reply to: Xtrozero

The yuan as indicated in the article.

Then they already failed...

a reply to: Ultralight

I don't think one thing you have posted has been in any way factual or from a legitimate source. You can't even quote stats from your own articles correctly.

Seriously, like I already said, you have access to unlimited amounts of information instantly. How hard is it to do basic research before making statements?

You want to talk about debt, research China's shadow banking and rate of debt increase. China's debt basically doubled in the last 2 years. If they keep up this rate of debt accumulation, along with the huge real estate bubble that is about to pop there, they are in serious trouble.

At the current rate they are going they will have well over 10 trillion in debt by 2020. Probably closer to 12-15 trillion. Talk about unsustainable.

Plus they have so many socioeconomic issues they need to address, especially if they ever want to grow out of being a purely export driven economy.

originally posted by: borntowatch
Well yeah, this has been going on for many years now.
China and Russia signed a mutual trading pact a few months ago and dont trade the US dollar for oil anymore

You might want to look into it a bit further, as it's simply not true. It's full of nations making goods, not so much nations buying goods.

It would be like 2 tire companies making a deal to trade with each other, but not being able to get a single car company to sign on.

a reply to: c0gN1t1v3D1ss0nanC3

Do you feel better? Glad I could be there for you to vent on. However, you are wrong on many levels. The Chinese DO want to replace the dollar, in fact, many nation do.

Now, go work off whatever frustrations you have somewhere else.