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Chinese Yuan v The U.S. Dollar: In The Case of Global Reserve Currency

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Wed, 03/03/2010 - 19:28 | 253009 Shameful
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I don't think that many nations will jump on board with a national reserve currency that has no backing after they receive a brutal beating on the dollar. I could be wrong but that's like soling all your money at the blackjack table then taking the last of your money to blow it on video poker.

Also no chance in hell Dollar is the reverse currency till 2050, no way in hell. Might as well say by 2050 I'll be a star starter in the NBA. Sure it could happen but only if the world is full on crazy, and will pay a fortune for a broken old man let them down.

Thu, 03/04/2010 - 11:52 | 253601 whydtinogo
whydtinogo's picture

You may be correct, but until some other nation is willing to run a VERY LARGE current account defecit and also has the largest/strongest military force in the world to defend its interests. The US is the global hegemon and its currency will de by default the global reserve currency. Unless and until that changes, for better or worse the USD will be the reserve currency.

Wed, 03/03/2010 - 17:23 | 252832 Anonymous
Anonymous's picture

Can't even feed and water its citizenry.

One bad crop year, is all it takes.

Wed, 03/03/2010 - 16:40 | 252770 doublethink
doublethink's picture


People like to highlight China's nearly $2 trillion in foreign exchange reserves while discussing the country's ascendancy on the world stage. Never mentioned are the pyramiding domestic debts built up from excess liquidity and the malinvestment that is the result. Before the CNY becomes a reserve currency, China will have to reduce CNY-denominated liabilities. And what would that cost? I'd guess one or two trillion...dollars.


Wed, 03/03/2010 - 16:33 | 252758 Anonymous
Anonymous's picture

China collapse? Yes, but after others with big debts, just like people without money loosing houses faster than those with money. China goes hungry with full one year food reserve? possible in one year if no harvest at all, three years if really bad harvest happens. China survived when the door closed, but collapse if no trading? Bad years ahead possible, chaotic collapse? In your dream. Learn Chinese and then look into China then make your argument.

Wed, 03/03/2010 - 16:28 | 252750 Anonymous
Anonymous's picture

"Dethroned By 2050?"

You assume no geopolitical disruptions before this time. But for the yuan to assume primacy, China will need to have sovereign control of the East Asia waters for the export of its manufactures and the import of raw inputs. This will require that China create a military power at least on par with the US in order to challenge current US supremacy. Do you think the US will leave without a fight?

Wars are the biggest black swans around.

Thu, 03/04/2010 - 03:37 | 253377 Bear
Bear's picture

Exactly right ... China has more sever demographic problems than US by a long shot plus internal schisms that will dethrone China as a world major player by 2025! 

Wed, 03/03/2010 - 16:14 | 252729 Anonymous
Anonymous's picture

China will never be the reserve currency as long as they are a communist dictatorship. They lack transparent banking and are too controlled by the central Govt. No one would trust it. Instead, I expect either Canadian or Australian currency to assume reserve based on sound banking systems, democratic governments, more transparency and both countries have lots of natural resources and low debt compared to the USA.

Wed, 03/03/2010 - 15:37 | 252658 BlackBeard
BlackBeard's picture

LOL hilariousness.  We're going to see China's economy collapse and their cunty administration try to manage 1.4 Billion angry, hungry mouths before the event described above occurs.  Just a quick comment on word selection, China is a Creditor in relation to America, not the Debtor (which is America in this case).

Thu, 03/04/2010 - 14:17 | 253787 Almost Solvent
Almost Solvent's picture

If you owe the bank (China) $1000, that's your problem. If you owe the bank $100000000, that's the bank's problem.

Wed, 03/03/2010 - 15:28 | 252639 harshudeshpande
harshudeshpande's picture

Dear Sir,

Can you please present at least one argument in favor of Yuan? We all know the problems with USD "some of which" have been repeated in your post. But where is any factual argument for Yuan?

Wed, 03/03/2010 - 17:27 | 252839 brandy night rocks
brandy night rocks's picture

Facts?  Ha!  Chairman Mao farts in the general direction of facts!  These farts then magnificently waft up over the People's Mainland, spreading glory, joy, and good cheer to all members of the exalted proletariat, soothing their tears of oppression and satisfying their hunger!  And at the same time causing angry wailing and gnashing of teeth from decadent western bourgeoisie!


Wed, 03/03/2010 - 16:34 | 252759 Missing_Link
Missing_Link's picture

Who needs "facts" when it's China?

China!  China!  Ra ra ra!  Yaaaaaaaay CHINA!

Wed, 03/03/2010 - 15:22 | 252631 Captain Willard
Captain Willard's picture

The reserve currency in 15 years will be Gold. The only thing in which the Chinese will surpass the US is hubris.

Wed, 03/03/2010 - 16:33 | 252757 Missing_Link
Missing_Link's picture

The only thing in which the Chinese will surpass the US is hubris.

Is there an ETF for that?

Wed, 03/03/2010 - 15:39 | 252664 Master Bates
Master Bates's picture

And by then, gold to 60,000, bitchez!

We couldn't possibly use anything else, because only GOLD is the currency that matters.

Wed, 03/03/2010 - 16:01 | 252705 tmosley
tmosley's picture

Nope, just the only one that lasts.  Well, that and silver.

Wed, 03/03/2010 - 15:54 | 252688 Anonymous
Anonymous's picture

I'm master bates and I hate gold and say the same thing in every post
blah blah blah blah...

Wed, 03/03/2010 - 15:15 | 252617 trav7777
trav7777's picture

Bull fucking shit.

The yuan will NEVER replace the USD as world reserve currency.

Let them fucking depeg and let's see how their export ponzi works.

I absolutely MARVEL at the Chinese Supremacists who seem to be totally unaware that they are PEGGED TO THE FUCKING DOLLAR.

Wed, 03/03/2010 - 16:00 | 252703 tmosley
tmosley's picture

I hate to tell you, but Ponzis take money while not producing anything.  China, on the other hand, PRODUCES EVERYTHING.


I can't believe that there are still people out there that thing that China's dollar peg is holding up the value of their currency rather than dragging it down.

Thu, 03/04/2010 - 14:12 | 253773 Almost Solvent
Almost Solvent's picture

Wait a minute - if they de-peg then their export economy collapses since the US can fire up their old factories and produce goods as cheap as China; shipping costs way up since oil will skyrocket.

Chins needs a peg devalued currency more than US does.

Sat, 03/13/2010 - 16:36 | 264488 Anonymous
Anonymous's picture

Have you forgotten all of those auto/student/home loans in addition to the derivatives bubble?

The US consumer economy would collapse, it would take years to rebuild factories and infrastructure. What would the 35% unemployed do in the mean time sit and wait?

That is why the US would collapse.

Wed, 03/03/2010 - 16:14 | 252727 Ben Graham Redux
Ben Graham Redux's picture

30% M2 growth while building empty cities, towns, office buildings, and apartment buildings while also adding multiples of excess capacity in all major industries while concurrently speculating on commodities is a ponzi scheme.

Wed, 03/03/2010 - 15:12 | 252611 Ben Graham Redux
Ben Graham Redux's picture

Somebody save this piece - it's going to be hysterical when the Chinese economy collapses in the next five years.  The Chinese "miracle" makes our Internet bubble look like a balanced economy.

Do NOT follow this link or you will be banned from the site!