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China To Challenge US Dollar Reserve Currency Status

Tyler Durden's picture


From GoldCore Gold Bullion

China To Challenge US Dollar Reserve Currency Status

Today’s AM fix was USD 1,786.50, EUR 1,380.92, and GBP 1,109.01 per ounce.
Yesterday’s AM fix was USD 1,777.25, EUR 1,374.73and GBP 1,102.38 per ounce.

Silver is trading at $35.08/oz, €27.13/oz and £21.84/oz. Platinum is trading at $1,707.00/oz, palladium at $664.50/oz and rhodium at $1,180/oz.

Gold edged up $3.40 or 0.19% in New York yesterday which saw gold close at $1,778.50. Silver initially climbed to $34.848 then it fell off in afternoon trading and finished with a loss of 0.06%. 

Cross Currency Table - (Bloomberg)

Gold inched up on Thursday, continuing its 4th day of gains as investors await more clues from central banks on further stimulus plans.

Today, The ECB has a rate decision at 1145 GMT and Bank of England at noon local time.  

Investors will watch the key the nonfarm payrolls figure on Friday to determine if QE3 is beginning to stimulate the US economy.

Alan Wheatley, Global Economics Correspondent for Reuters has written a very interesting article, 'Analysis: China's currency foray augurs geopolitical strains’ where he emphasizes China’s desire to wean out the US dollar’s currency reserve status.

China is actively taking steps to phase out the US dollar which will decrease volatility in oil and commodity prices and deride the ‘exorbitant privilege' the USA commands as the issuer of the reserve currency at the centre of a post-war international financial architecture which is now failing.  

In 1971, U.S. Treasury Secretary John Connally said, "It's our currency and your problem".

China is frustrated with what it sees as the US government’s mismanagement of the dollar, and is now actively promoting the cross-border use of its own currency, the yuan, or also called the renminbi, in trade and investment.

China’s goal is to decrease transactions costs for Chinese importers and exporters.

Zha Xiaogang, a researcher at the Shanghai Institutes for International Studies, said Beijing wants to see a better-balanced international monetary system consisting of at least the dollar, euro and yuan and perhaps other currencies such as the yen and the Indian rupee.

"The shortcomings of the current international monetary system pose a big threat to China's economy," he said. "With more alternatives, the margin for the U.S. would be greatly narrowed, which will certainly weaken the power basis of the U.S."

Zha's comments were highlighted at a seminar in Bahrain this week on the geopolitics of currencies organized by the International Institute for Strategic Studies, a London think tank.

GoldCore brought up these issues back in 2005. Rising economies of China, India and the Middle East are looking at trading options that do not include the greenback.

Not only the East but their financial ministry colleagues in the West are also questioning the current monetary order.  Change is certainly around the corner.

At the Clinton Global Initiative last week Goldman Sachs CEO Lloyd Blankfein said that the US could risk its status as the world's reserve currency if congress fails to act and the "fiscal cliff" program of tax increases and spending cuts is enacted January 1st. 

If the US continues its trillion dollar deficits and does lose its reserve currency status what will a world without a reserve currency look like?  That is what economists, think tanks and finance ministers are grappling over today.

John Williamson, one of the foremost academics on exchange rates, and a senior fellow at the Peterson Institute for International Economics in Washington examined the benefits of the US dollar’s reserve status.

He recognized two ways that US power is enhanced in the world economy by the greenback’s dominant role, which he doesn’t see challenged in the next 25 years.  

First, the $3.2 trillion in official reserves that China has accumulated in maintaining the yuan's semi-fixed peg to the dollar tie Beijing's policy hands. That is because any hostile gesture, such as a threat to shift out of dollars, would destroy Chinese wealth.

Second, because of the extensive private use of the dollar globally, the United States is better able to enforce a financial embargo such as the one now directed against Iran.

China also faces risks including foreigners reinvesting their yuan back into China’s security markets.  Such inflows may alter exchange rates and interest rates and would weaken the Communist Party’s grasp on their economy which would create an unpredictability that is against the iron rule it enjoys.

Currency wars are not new and often rising economies show their resentment of incumbents, notably the USA, who they view as printing money first and worrying about the effect on the global economy later.

Surjit Bhalla, Indian economist and author of "Devaluing to Prosperity” feels the massive undervaluation of the yuan was a major reason for China's meteoric rise and the deep economic imbalances that led to the 1997/98 Asian financial crisis and the 2008 global crash.

He sees little merit in greater international use of the yuan but expects Beijing to push up its real exchange rate by 3-5% a year in order to help lift private consumption to at least 50 percent of national output over time from around just 35 percent now.

"This will be one of the most remarkable win-win situations of recent times," said Bhalla, chairman of Oxus Investments, a New Delhi hedge fund. "Currency peace is breaking out. There have been currency wars, but now is time to enjoy the peace."

For breaking news and commentary on financial markets and gold, follow us on Twitter.


Gold holds ground; eyes on central banks, U.S. data - Reuters

Gold inches up, long-term prospects seen promising – Market Watch

Gold rises after U.S. job data, defies drop in oil - Reuters


Analysis: China's currency foray augurs geopolitical strains – Reuters

Back to Gold – Eventually
– Asia Times

Silver - The People's Metal
– Financial Sense


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Thu, 10/04/2012 - 10:31 | 2855685 Lohn Jocke
Lohn Jocke's picture

They DID invent the printing press... or did they?

Thu, 10/04/2012 - 10:46 | 2855726 Pladizow
Pladizow's picture

De Gaulle knew in 1965:

Lohn Jocke: I think it was the Germans that invented the printing press and the Chinese who had the first paper fiat currency.

Thu, 10/04/2012 - 10:53 | 2855770 Deo vindice
Deo vindice's picture

Either way the middle class is under attack.

It is either death by a thousand cuts or death by a thousand taxes.

The end game for them is still death of middle class society.

Thu, 10/04/2012 - 11:02 | 2855789 Landotfree
Landotfree's picture

The article is stupid.

China can stop all international trade if it wants, collapse of the global credit system would be fairly quick... then they would have to start rolling out the tanks to smush their people.  

The system unable to exponential expand, not much the US can do about it other than to delay as much as possible... collapse is always the end result of using the equation.

I figure 100-400 million unfunded China men are going to have to go... everyone loves the party, not many like the liquidation.  China has resorted to building cities with no people in it to try and delay the unavoidable.  I am sure they will try other things as well... eventually they will try and burn the empty cities so they can just build over it again.   


Thu, 10/04/2012 - 11:04 | 2855818 Clint Liquor
Clint Liquor's picture

Claiming the USD is 'too big to fail' is historically ignorant. World commerce will continue (after some adjustment) as it has throughout the centuries whenever a currency loses it's reserve status.

Thu, 10/04/2012 - 11:27 | 2855914 nope-1004
nope-1004's picture

The article is "stupid" only if you believe the rest of the world will sit back and take the idiocy coming from the Fed.  Other countries are starting to say ENOUGH!  Why does China and Brazil need the US dollar anyway?  What good is it to them, other than it causes all kinds of currency conversion issues and inflationary pressure? 

This is the trend going forward.  The US dollar will not be sole reserve currency.  This is the story of the decade and has much larger bearing than most understand.  US middle class earnings will most definitely fall - they have to, because you will be compared with producing somehting that someone else will do for much less pay in another nation.

Only 3,300 views of this topic when I chimed in, and the topic is way down the page already, shows me many don't understand or care.  This is the black swan for the middle class, if there ever was one.


Thu, 10/04/2012 - 11:51 | 2855999 LawsofPhysics
LawsofPhysics's picture

so, remind me.  How is replacing one fiat by another fiat "winning" again?

Thu, 10/04/2012 - 13:15 | 2856281 nosesocks
nosesocks's picture

It changes who "wins".

Thu, 10/04/2012 - 13:31 | 2856337 LawsofPhysics
LawsofPhysics's picture

No it doesn't.  Unless you are suggesting the "elite" families will somehow change.  

Thu, 10/04/2012 - 16:12 | 2857129 ultimate warrior
ultimate warrior's picture

China and Russia have alot of gold. The new reserve currency will be backed by gold.

Thu, 10/04/2012 - 11:44 | 2855960 Landotfree
Landotfree's picture

"Claiming the USD is 'too big to fail' is historically ignorant. World commerce will continue (after some adjustment) as it has throughout the centuries whenever a currency loses it's reserve status."

I never claimed any such thing, the whole system will fail.   The global credit system will collapse and China will roll out thier tanks not against other countries but to smush their people, been there done that... this time they will have to do it on a massive scale.

Thu, 10/04/2012 - 12:38 | 2856130 MeBizarro
MeBizarro's picture

Wins the award for the most ignorant and misguided comment in the thread which flies in the face of history.  Go look at what happens to trade levels historically when there is an issue with the dominant form of currency used for transactions & trade levels. 

Hell, just look most recently at the sterling and world trade levels. After the sterling lost its reserve currency position after WW1, global trade levels didn't approach pre-WW1 levels after well into the mid-1950s. 

Thu, 10/04/2012 - 20:33 | 2857933 Tompooz
Tompooz's picture

The empty cities are a central planner's wet dream. The migration from countryside to cities is still in full swing. Empty cities will allow for all kinds of novel (competitive) social experiments.

Thu, 10/04/2012 - 10:58 | 2855796 richard in norway
richard in norway's picture

i want to ask a stupid question, looking at the collape of the iranian rail how long is it before they issue a gold backed currency, is that possible, but i cant see that they have a choice, but they would then have problem  of gold rising  in price, swaping inflation for deflation. am i missing something?? like ddo tthey hhave enough gold to back a currency

Thu, 10/04/2012 - 10:59 | 2855807 Landotfree
Landotfree's picture

The current system runs on credit not money.   Going to some other standard is not going to work.  Sorry, the unfunded liabilities are going to have to be liquidated first.  

Thu, 10/04/2012 - 11:05 | 2855823 CommunityStandard
CommunityStandard's picture

Wealthy leaders will never support a gold standard.  It prevents them from extracting wealth from the people through inflation, which more subtle than direct taxation.

Thu, 10/04/2012 - 11:12 | 2855851 ParkAveFlasher
ParkAveFlasher's picture

They'll support it when they realize that the end of every currency is starvation for them too.

Thu, 10/04/2012 - 11:42 | 2855961 Landotfree
Landotfree's picture

Whether you are on a gold, silver or dirt standard is irrelevant as long as you attach interest to your medium of exchange.

Thu, 10/04/2012 - 11:52 | 2856005 kridkrid
kridkrid's picture

Yup. Exactly as unsustainable when you add interest and leverage. The only the a gold standard does is provide an air of legitimacy. Any other benifit exists in any other system (I.e convertibility). People should be converting their paper money for hold today, just as if the money was backed by gold.

Thu, 10/04/2012 - 11:52 | 2856007 dark pools of soros
dark pools of soros's picture

you mean imperialists.. Gaddafi had no desire for fiat or debt

Thu, 10/04/2012 - 12:05 | 2856040 CommunityStandard
CommunityStandard's picture

Gaddafi took the other approach.  He just nationalized the oil industry and killed anyone who disagreed.  No debt necessary.

Thu, 10/04/2012 - 12:45 | 2856162 Anusocracy
Anusocracy's picture

Sort of like the large chunk of a person's income that most countries nationalize and that can cause your death if you resist.


Thu, 10/04/2012 - 16:13 | 2857134 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Yep, nationalized it, the returned more of the oil wealth to the people than any other ME ruler. Free education, free healthcare, free electricity, and the highest wages in the area:

He was about to receive a UN humanitarian award, right before we bombed him. Might have been because he loaned billions to Unicredito and they didn't feel like paying it back. Or the fact he was running around Africa proposing a gold-backed dinar.

Thu, 10/04/2012 - 14:30 | 2856581 NoTTD
NoTTD's picture

You're thinking of spaghetti.  Same thing.

Thu, 10/04/2012 - 16:09 | 2857112 MillionDollarBoner_
MillionDollarBoner_'s picture

Blankfein commenting on risk from the Fiscal Cliff?

That's rich...he and his buddies fucking caused it!!!

Thu, 10/04/2012 - 10:31 | 2855688 mayhem_korner
mayhem_korner's picture



Fiat rattling.  Next phase of the nouveau cold war.

Thu, 10/04/2012 - 10:40 | 2855715 kridkrid
kridkrid's picture

It won't be cold forever.

Thu, 10/04/2012 - 10:33 | 2855696 Boilermaker
Boilermaker's picture

Yes, yes...China...they are so much better.  No worries there.

Thu, 10/04/2012 - 10:37 | 2855709 fuu
fuu's picture

Still waiting for the pre-2:30 smack down.

Thu, 10/04/2012 - 10:37 | 2855712 LawsofPhysics
LawsofPhysics's picture


I am sure China (a communist, state-run, centrally planned society) will be considerably more transparent.


Will everyone soon be working for Chinese wages?  Now that is the dream of the "elites" and another story altogether.

Thu, 10/04/2012 - 10:41 | 2855724 fonzannoon
fonzannoon's picture

My wife is a designer. Her assistant just quit recently to work in Manahattan. She has been interviewing lately and she keeps complaining that no one wants the job. I was surprised and asked why that was. She said their company is offering crappy pay. I asked what they offered (my guess was around 40k). She said they will pay $12/hr with no benefits. I was floored. So yes you are correct that is the plan....

Thu, 10/04/2012 - 10:53 | 2855768 fuu
fuu's picture

I thought you were going to say she made $89/hr.

Thu, 10/04/2012 - 11:03 | 2855816 RSBriggs
RSBriggs's picture

From home.  On her keyboard/webcam.

Thu, 10/04/2012 - 16:16 | 2857146 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

I'm thinking of a name for my new wifi netrwork at hime. My son proposed the following:

1. Surveillance Van

2. Really, asshole? Curry again?

3. Shower Cam Live Feed

But we settled on BarkingDogsSuck

Thu, 10/04/2012 - 10:54 | 2855774 HelluvaEngineer
HelluvaEngineer's picture

Shit, for that I'd rather stay at home, wait on my EBT refill, and chat on my Obama Phone.

Thu, 10/04/2012 - 10:40 | 2855714 pndr4495
pndr4495's picture

" It's our currency and your problem. " At that time we could still wield this idea like a sword - now though it has become a dented and increasingly precarious shield. We need a new sword as well as a new shield.

Thu, 10/04/2012 - 11:19 | 2855877 Withdrawn Sanction
Withdrawn Sanction's picture

Wasn't Connally in the front seat of JFK's limo (Nov 1963)? 

Thu, 10/04/2012 - 10:41 | 2855721 dmger14
dmger14's picture

This article sounds way to optimistic to me.  China can let its US treasury holdings mature and not roll them over, slowly exiting the dollar.  When the cost to China of holding dollars and treasuries exceeds the benefits, they will slowly exit the scene.  It's already underway...

Thu, 10/04/2012 - 10:42 | 2855727 dmger14
dmger14's picture

China is no savior, but the US is no safe haven either.  In the short-run everything is relative, but the long-term trend is down, down USA!

Thu, 10/04/2012 - 10:53 | 2855769 KidHorn
KidHorn's picture

So China gets USD when the bonds mature. What do they do with the USD?

Thu, 10/04/2012 - 11:09 | 2855824 RSBriggs
RSBriggs's picture

Buy more gold?  Buy even more of the US west of the Mississippi?  They're already heavily buying farmland in the US and doing it just as fast as they possibly can.

Thu, 10/04/2012 - 12:03 | 2856038 LawsofPhysics
LawsofPhysics's picture

correct.  Funny how they only hire chinese though.  Apparently they haven't learned about affirmative action yet.  This should get interesting.

Sat, 10/06/2012 - 15:01 | 2863144 mkkby
mkkby's picture

They'll buy as much gold and land as they can.  A lot will be left over, but that makes no difference.  They already have captive within their borders the productive capacity of every fortune 500 company, plus Europe and Japan's.  When the time comes, they won't care if some lousy fiat devalues to nothing.

The west is gutting itself, and shipping everything of value to China.  When the scale tips far enough, the US will become second rate, like England did, and China will be the strong man left standing.  All they have to do is sit back and wait.

Thu, 10/04/2012 - 10:42 | 2855722 Cognitive Dissonance
Cognitive Dissonance's picture


Not the Reserve Currency!


Thu, 10/04/2012 - 10:47 | 2855729 Democratic koolaid
Democratic koolaid's picture

China ia buying half of America with their imaginary currency based on the amount of sand granules in the Gobi Desert.


Thu, 10/04/2012 - 10:48 | 2855749 LawsofPhysics
LawsofPhysics's picture

The elite in both countries have been on the same page for quite a while now.  All according to plan.


Thu, 10/04/2012 - 11:17 | 2855864 reload
reload's picture

We keep seeing that the US will get agressive immediately any state shows a desire to trade in a currency other than the USD. We all know that the end of the USD as the worlds reserve currency is the end of American ability to run Greek style defecits, who wants to be on watch when the end comes? I think it is inevitable but that does not mean it happens withought a fight.

As a side note more than one Banker has suggested to me that thay found the recent SEC aggression towards HSBC and Standard Chartered interesting because it came very shortly after the City of London announced an agreement with the Chineese to start trading the Yuan in London. Who will be the biggest traders? right, Standard and HSBC.  

Thu, 10/04/2012 - 11:24 | 2855903 Withdrawn Sanction
Withdrawn Sanction's picture

It was in 2002 that Saddam announced he was going to trade his oil for non-dollar currencies (euro as I recall).  Presto, 2003 US invades Iraq.  Purely coincidental no doubt.  Last year, Qadaffi makes rumblings about trading his oil for a gold dinar and presto...he dies of acute lead poisoning.  2 Observations, we have a line; w/3 we have a pattern.

Thu, 10/04/2012 - 10:44 | 2855734 Insideher Trading
Insideher Trading's picture


China doesn't even have drinkable water

Thu, 10/04/2012 - 10:46 | 2855746 new game
new game's picture

if china has half an intent; back with gold and quite dancing with tiny tim in the tulips...

Thu, 10/04/2012 - 10:48 | 2855753 richard007
richard007's picture

This too will happen suddenly - after Revelation's 2nd Seal War when Iran takes peace from the earth.

Thu, 10/04/2012 - 10:56 | 2855786 Quinvarius
Quinvarius's picture

Too late.  George Bush found the second seal 12 years ago in September.  He thought it was his Christmas present and he couldn't wait.  So he opened it early.

Thu, 10/04/2012 - 11:26 | 2855908 ParkAveFlasher
ParkAveFlasher's picture

lmao ... "What's this waxy doohickey?  Feels like Girl Scout cookie.  Wonder if it's crispy too."

Thu, 10/04/2012 - 12:42 | 2856142 MeBizarro
MeBizarro's picture

Sadly there are a ton of people who believe this nonsense both in the U.S. and globally.  Never understood the appeal of fatalism but I guess I enjoy waking up each day. 

Thu, 10/04/2012 - 14:28 | 2856572 NoTTD
NoTTD's picture

It's apostasy like that which will bring forth the apocalypse.

Thu, 10/04/2012 - 10:54 | 2855776 Schmuck Raker
Schmuck Raker's picture


We could use the work.

Thu, 10/04/2012 - 10:55 | 2855782 apberusdisvet
apberusdisvet's picture

There is no doubt that the Chinese are positioning themselves for an alternative to the petro dollar; witness all the changes in trade payments with many nations which are yuan based.  And then there are the massive gold purchases over the last two years (and maybe more).  But TPTB that rule the planet will risk WWIII before they willingly cede the global reserve status of the USD, especially given that the unlimited printing by the global banking cartel ensures the world wide capture of corrupt politicians, and the never ending debt enslavement of the masses.

Thu, 10/04/2012 - 10:57 | 2855792 youngman
youngman's picture

"First, the $3.2 trillion in official reserves that China has accumulated in maintaining the yuan's semi-fixed peg to the dollar tie Beijing's policy hands. That is because any hostile gesture, such as a threat to shift out of dollars, would destroy Chinese wealth"


This is so wrong to believe this...and trust me the Chinese are working on this...they are thinking longterm...

Thu, 10/04/2012 - 11:16 | 2855865 _underscore
_underscore's picture

I tend to agree. The mistake the article makes, imho, is that it says $ reserve paper = wealth. It's only 'wealth' when it buys something tangible (as many prudent savers have found to their cost - and China has been the most prudent, so far). Turning their $reserves into something real won't upset the USA - think about it: why would the US govt. make a deal of that, since that would only hasten its own demise, so the US govt. will play along & facilitate that strategy as quietly as possible. This probably isn't entirely de-coupled from Chinese acquisition/accumulation of gold either - maybe the nice govt. men have been holding the gold price so China can indulge.


Thu, 10/04/2012 - 11:17 | 2855872 Vincent Vega
Vincent Vega's picture

You are correct Sir. The Chinese are holding reserves that are being devalued on a daily basis; which is a zero sum game.

Thu, 10/04/2012 - 11:20 | 2855880 Panafrican Funk...
Panafrican Funktron Robot's picture

"That is because any hostile gesture, such as a threat to shift out of dollars, would destroy Chinese wealth"

Relative to what?  "Destroying" USD-denominated "wealth" doesn't necessarily result in destruction of actual wealth.

Thu, 10/04/2012 - 11:31 | 2855926 Withdrawn Sanction
Withdrawn Sanction's picture

"Destroying" USD-denominated "wealth" doesn't necessarily result in destruction of actual wealth.

Partly true...from a forward-looking perspective.  But the Chinese accumulated those dollar positions by trading real wealth (stuff....some of it admittedly junk, but still, compared to dollars...).  So when the unit they are paid in depreciates, a part of their blood, sweat, and capital that went into making those goods evaporates w/it. 

Thu, 10/04/2012 - 14:19 | 2856509 ChacoFunFact
ChacoFunFact's picture

isn't most of that admitted junk somewhere in a landfill in NJ?

Thu, 10/04/2012 - 10:59 | 2855806 Sizzurp
Sizzurp's picture

China is the originator of paper money.  They know all about it, and can't wait to get a piece of the action.  Trading real goods and commodities for worthless unbacked paper, hey what could be better?  I think China is a little late to the party however.  The world is about to shun paper money and the Yuan is no better than any other paper.  So stick that commie paper where the sun don't shine.

Thu, 10/04/2012 - 11:11 | 2855848 Nehweh Gahnin
Nehweh Gahnin's picture

" investors await more clues from central banks on further stimulus plans"???


What, QEternity wasn't sufficient information for them?


"...because of the extensive private use of the dollar globally, the United States is better able to enforce a financial embargo such as the one now directed against Iran" and "now is time to enjoy the peace"


Someday, this will all be explained to the Iranian children...

Thu, 10/04/2012 - 11:34 | 2855942 Just Ice
Just Ice's picture

"...investor's await", indeed...more like hypesters cannot refrain from daily atwitter-ance of China-stimulate-me with Draghi's behemoth bazooka for QEternity... 

Thu, 10/04/2012 - 11:11 | 2855849 VonSalza
VonSalza's picture

People's Currency FTW!

Thu, 10/04/2012 - 11:21 | 2855887 Jason T
Jason T's picture

M. Armstrong says not till 2032 .. just 20 years from now.. will the RMB be reserve currency.. their debt is not deep enough.


US has a monoply on the debt.. $16 trillion in treasuries makes it the biggest more liquid market in the globe thus why US dollar is reserve currency ..for now.  

I still think China has the  most potential.

Thu, 10/04/2012 - 11:27 | 2855912 ParkAveFlasher
ParkAveFlasher's picture

<<< Armstrong is still a monk

<<< Armstrong is now a muppet

Thu, 10/04/2012 - 11:25 | 2855904 Harriet Wanger
Harriet Wanger's picture

WTF does "wean out" mean?

Thu, 10/04/2012 - 13:34 | 2856303 akak
akak's picture

"Wean out" is the mattering 'american' citizenismistic thing when you blob-up the graviting crustiest bit of it by monolizing the speeching means through 'american' farming of the poor and extorting of the weak via unchecked 'american' consumptionalizingisticalism and magical flying rickshaw of 'american' fabled past Easter Island US Citizenism time-traveling invasionism.

Make me laugh!

Thu, 10/04/2012 - 13:56 | 2856411 Jam Akin
Jam Akin's picture

Excellently expressed Chinese citizenism, my friend.

Thu, 10/04/2012 - 14:25 | 2856557 NoTTD
NoTTD's picture

See my comment below, Wanger.

Thu, 10/04/2012 - 22:52 | 2858200 Harriet Wanger
Harriet Wanger's picture

Thanks. That one really threw me.

Thu, 10/04/2012 - 11:35 | 2855948 whoknoz
whoknoz's picture

maybe China is lying about gold purchases...who is the seller of all these tons of gold they report is only as good as the faith in the fungible, but wha honest person would ever trust the Chinese?

Thu, 10/04/2012 - 11:43 | 2855965 AnAnonymous
AnAnonymous's picture

More of them coming.

No surprise, as 'american' economics is all about consumption, 'american' think tanks are busy consuming, and creating their own justification for consuming.

Noticeably, the topic is wealthy in opportunity:
what would a world look like with USD and Euro currencies as reserve currency?
What would a world look like with USD, Euro, Yen as reserve currency?

That is how 'american' think tanks keep consuming, performing their 'american' consumption duty.

Thu, 10/04/2012 - 11:49 | 2855992 LawsofPhysics
LawsofPhysics's picture

one fiat (backed by nothing), challenging another fiat (backed by nothing) - FAIL.

"all your consumption is belong to us?"

Thu, 10/04/2012 - 11:50 | 2855996 q99x2
q99x2's picture

I think that was Saddam Hussein's idea right before Bush got elected.

Thu, 10/04/2012 - 12:02 | 2856032 Go Tribe
Go Tribe's picture

When our currency goes bust, will we still get a trophy for participating?

Thu, 10/04/2012 - 12:09 | 2856048 RSBriggs
RSBriggs's picture

A prize, maybe.  In the form of a $5,000 iPhone7 along with $1,000 / month data plans.

Thu, 10/04/2012 - 12:13 | 2856055 GoldmanBaggins
GoldmanBaggins's picture

Money power has a plan. They also have unity regardless of what you hear from media outlets or even reported here. Money power allways tells the world what will happen before it does. They get off on this sort of thing. The messages are often shrouded in symbolism. China will be the next reserve currency that will be blown up. Money power is a parisite via debt money. When the host dies they move on. Yes the goal is one world currency but no way that would go off right now regardless of how bad things get. China will be raped 1st. See example of here:

Thu, 10/04/2012 - 12:36 | 2856122 WhiteNight123129
WhiteNight123129's picture

Recently there were steps taken in Brasil where it is now very easy for people investors, corporations to own Chinese Yuan. Tombini at the Brasilian central bank has been facilitating that. Logical, Brasil exports raw materials to China and China exports manufactured goods to Brasil, why on earth would they kepp paying Segniorage to Uncle Sam on those transactions? For the right to have a military base in Australia overlooking the South China Sea payed for by China itself....

The move will take a lot of time but Brasilians have no issues holdings some Yuans... and do not care about transparencey or whatever or human rights or whatever propaganda crap..... not even a single bit.



Thu, 10/04/2012 - 12:43 | 2856146 jomama
jomama's picture

why would they force the issue when they can continue to buy PMs at a discounted price currently?

US dollar hegemony will fall apart very soon on its own.

Thu, 10/04/2012 - 12:53 | 2856186 Nobody For President
Nobody For President's picture

Very, very dumb fuck question, but it seems like something I should know, and I don't:

How do you pronounce 'yuan' ?

Phonetically please. Like 'You-anne'? Like ... what?

Thu, 10/04/2012 - 12:56 | 2856193 Ignorance is bliss
Ignorance is bliss's picture

It depends:

If your chinese they pronounce it "weee waun"

If your American then you pronounce it "U won"

Thu, 10/04/2012 - 13:11 | 2856267 WhiteNight123129
WhiteNight123129's picture

Very good... LOL...

Thu, 10/04/2012 - 16:55 | 2857292 Nobody For President
Nobody For President's picture

That was funny.

But not helpful, 'cause I am serious ignorant and don't watch TV, where it is probably prounounced from time to time.


Thu, 10/04/2012 - 17:07 | 2857347 akak
akak's picture

I have heard it pronounced both "You-ahn" and "Wahn", but I don't know if one pronunciation is more correct than the other.

What I can't figure out is why the Chinese have two totally different names for their currency (Yuan and Renminbi).  Maybe it is like the British with their "pound" and "sterling"?

Thu, 10/04/2012 - 21:00 | 2857989 Tompooz
Tompooz's picture

What I can't figure out is why the Chinese have two totally different names for their currency (Yuan and Renminbi).  Maybe it is like the British with their "pound" and "sterling"?

Somewhat. The pound being the unit and "sterling" a quality of the currency. (or the quality of the silver of which the currency consisted).

The Yuan being the unit and "Renminbi" the name of the currency. "Fiat of the People".

Thu, 10/04/2012 - 13:54 | 2856401 SmittyinLA
SmittyinLA's picture

Actually China prefers a Dollar reserve currency status, they have a 600B annnual and growing Dollar surplus every year from America alone, along with dollar trade surplusses from nearly all their trading partners, should the dollar ever lose its reserve status....

They'd lose their 600B Annaul dollar income along with all their trading partners running a surplus with America, everybody's fuel costs worldwide would rise in something other than dollars-real coin willl be demanded.

China will do everything in its power to assure a dollar reserve currency, and our printers know this.

This is why we can essentially run all over the middle East, central Asia, and most of north Africa uncontested with no manpad interference from the Russians or Chicoms, we work for them  or they us or.....

We're the goons with the guns, we're the global Pinkertons.  

Thu, 10/04/2012 - 14:23 | 2856541 NoTTD
NoTTD's picture

You do not "wean" things out.  You do "winnow" them out.    Geez, do I have to do everything around here?

Thu, 10/04/2012 - 14:30 | 2856579 Mr. Hudson
Mr. Hudson's picture

As long as OPEC sells their oil for U.S. dollars, I don't see China or anybody else taking away the dollar's world reserve status.

Thu, 10/04/2012 - 15:22 | 2856874 Theosebes Goodfellow
Theosebes Goodfellow's picture

What a bunch of whining weenies! First they get to join the rest of the civilized world thanks to Americans coming in and teaching them modern industrial ways. They then peg their currency to an artifically low value relative to the dollar that lets them export for cheap to the rest of the world. Now they bitchin' and fussin' that they want to lose the dollar as WRC.

Well, here's the news, China. You can't have it both ways. De-peg your currency from the USD and let it rise to it's true relative value to other currncies. Then you get to play One World Reserve Currency, not before. But a strange thing will happen if you try to do this. Your currency, and your country, would implode. So please, be our guest, and jump all over that whole world reseerve currnecy poison pill. Please. Pretty please?

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