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China And Japan Dropping Dollar Cross Rate System, Will Transact Directly
While various three letter economic schools of thought continue sprouting left and right, in an attempt to validate endless spending predicated on one simple thing: transitory reserve currency status, and we emphasize transitory, reality moves on, oblivious of what economic theoreticians believe it should be doing. As Yomiuri Shimbun reported last night, China and Japan are set to launch direct currency trading, bypassing the dollar, and the associated benefits and risks, entirely. "But how can that be?" dollar purists will scream. After all, when one bypasses the dollar, one commits blasphemy to a reserve currency. Somehow we think China gets that. From the AP: "Japan and China are expected to start direct trading of their currencies as early as June as part of efforts to boost bilateral trade and investment, according to reports. With the planned step, exchange rates between the yen and the yuan will be determined by their transactions, departing from the current "cross rate" system that involves the dollar in setting yen-yuan rates, Kyodo News said on Saturday."
More specifics on how the world's second and third largest economy will just say no to dollar hegemony:
The two governments are eyeing setting up markets in Tokyo and Shanghai, the Yomiuri Shimbun said.
The yen-yuan exchange system would help businesses in the world's second- and third-largest economies reduce risks associated with exchange rate fluctuations in the dollar and cut transaction costs, Kyodo said.
It will be the first time that China has allowed a major currency except the dollar to directly trade with the yuan, Kyodo said.
As usual, why spend time commeting with words, when a simple chart will suffice.
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China will continue to launch direct currency trading with all its trading partners, bypassing the dollar. It will happen step by step.
The dollars will continue to be debased as the US increases money supply.
Buy Silver, now!
An interesting trial, expanding the trade with Russia and finally EU will make RMB the new reserve currency, as at that point other energy/resource producer nations practically have to join.
Of course the question is: how can USA best torpedo this, because that is 100% in their interests.
Wanna trade with China? Yep, use the RMB. Using the USD to do trade with a country whos currency that has been increasing in value is just stupid. Yes, there is still some inflation on China, but it has been compounded by the exchange rate as well. Doing it directly avoids a lot of that hassle.
Can't wait to see a Germany/China deal setup similarly down the road as well.... you know it's just a matter of time. Then poof goes the dollar.
The real question is what is the next step?
The dollar and Euro are being exposed as "not all they were cracked up to be".
I still don't see the Renminbi as the solution.
The next step must surely be the rise of other currencies especially commodity producing nations, especially those with minimal debt.
Which would force those states to debase the money ... crack-up boom ...
The biggest economy, or economies, will necessarily have to be the basis for any new reserve.
Because Japan's fundamentals are so sound ... and China's are even better.
Pot-Kettle-Black
Perhaps the people will wake up and stop playing by Central Bank rules altogether!
How? It's already started...by stashing savings in hard assets.
Regarding poisonous concentrations of wealth:
Consider how the 'system' is constructed. We live under the Federal Reserve system, of course.
You can think of it as a modern feudal system with Banks as King as they literally own the currency. The serfs pay tribute (interest) to the King for use of the King's currency in our debt-based money system. It's trickle down economics on the grandest scale.
In our debt-based system - money is ONLY created as loans from the King (banks). Therefore, the banks solely determine where new money gets allocated (think largest corporate borrowers). Is it no wonder we have such poisonous concentrations of wealth in our society.
Now, say the gov't wants to stimulate a lagging economy. In our system, the money gets allocated to the banks. In a non-debt based system, you could send a stimulus check to every household and then the stimulus would actually work and get to Main Street.
Folks, the problem is with the very core of our financial system - the Banker as King - Federal Reserve system.
Jamie Dimon is using the newly created money to refresh his banks 'excess reserves' so as to maintain bank "solvency" and perpetuate the Banks as King system status quo.
The people get the bill in the form of a devalued dollar (devalued savings, commodity inflation) -- you see, the newly printed money is free for the King Bank but is a costly tax on the population.
It's all a rather simple exercise -- the parasitic banks steal from We the People. But our country is so complacent and dumbed down -- that MBAs and Economics majors are, ironically, the last people to recognize what's going down because they have been indoctrinized and go on television blathering on about the failures of We the People rather than helping the public understand that they are being stolen from. PATHETIC!
Interestingly, Ron Paul has consistently won the 30 and under vote in the primaries.
The young instinctively know that they have been born into debt servitude. They may not be able to explain all the details - but they know, instinctively, that Ron Paul is fighting for We the People, rather than the status quo system of Fed Bankers as King.
It used to be that only the man of the household had to work to comfortable support a household. Federal Reserve theft has gradually devalued the dollar so that now, generally, both spouses have to work.
There is nothing 'American' about the FED. The Constitution says 'all men created equal' Folks, the Federal Reserve Act of 1913 created a superior class of citizen - the banker class. the Act gave ownership of the currency and financial system to a cartel of private bankers. It is, literally, unconstitutional.
The Federal Reserve system is a poison to Americans' standard of living - to the benefit of the banking class.
Why is that AP article claiming that this is the first time China has directly traded with any other currency??
HSBC says Austrailian dollar will be at .95 in a few months..and i cant argue with them..here's 240minute chart
http://mlatrader.com/?p=47