printThe trashing of the dollar by Bush/Barack is worrying those to whom we’ve been exporting our inflation. The US’s relationship with China is another fiasco. We’ve relied on that country to finance our debt, but kept up the sanctimonious preaching. (Search BAB’s “China” archive for details.)
How do you like that for hypocrisy, to say nothing of a performative contradiction? Preaching about human rights and individual rights while simultaneously fleecing your own people without flinching!
The patient Asians took what we dished, but now, they’re getting nervous about their finances.
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.
Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.
GOLD?? – or a mixed basket of gold, silver, oil, bushels if wheat, sugar cane, copper, coffee beans… ? If the currency cannot be converted, it will most likely get corrupted as the political pressure to bailout country X or bank Y will eventually overwhelm the system. In fact, is the IMF any better than a UN-type version of the Federal Reserve? By the way, China can always revalue its currency but it would lose exports – so it subsidizes cheap goods in America to keep the several hundred million urban dwellers employed at relatively depressed wages.
I think it was just a matter of time. Look at Canada: our conservative prime minister has done his best to contain and shun China, yet the left always keeps poking him in the eye, saying that shunning China is a big mistake for Canada.
The fact is that China is what it is, despite its appearance of acting within the confines of a capitalist marketplace. Commies are commies, and there’s no two ways about that!
Bill Lind has a great article about the little dust up over our spy ship last week. It’s worth reading the entire article and thinking of it in relation to our need for Chinese production, loans and stability. Here’s a taste:
http://www.d-n-i.net/dni/2009/03/23/on-war-297-tactics-over-strategy-again/
“to say the U.S. Navy’s actions were legal is not the same as saying they were strategically wise. On the contrary, the incident looks like another case of elevating tactics over strategy, on the part of both the U.S. and China.”