China proclaims to USA – “Goodbye Dollar and Hello Renminbi” – China officials want to offer renminbi yuan as world reserve currency
Chinese Renminbi Yuan versus the American Dollar
China officials want to offer renminbi as world reserve currency
Wu Xiaoling, deputy director with the finance and economic committee of the National People’s Congress, stated that Chinese authorities should raise the profile of the remninbi during the global financial turmoil and get ready for the currency’s full convertibility.
Comments from senior Chinese officials are rarely, if ever, made without an intention to signal a message.
Is it surprising that Ms Wu’s comments on November 19 at a Beijing seminar have not been more widely discussed? Two days before Wu made her comments, Jin Liqun, the supervisory board chairman of the mainland’s $200 billion sovereign wealth fund, said that Beijing would demand a more significant role in the global financial system if it was to inject additional capital into the International Monetary Fund (IMF). What exactly is that role to be?
Currency analysts believe these viewpoints represent a significant position for China. According to Yiping Huang, Asia-Pacific economist at Citi, there is a clear consensus among policymakers that full convertibility is necessary – even urgent – and is a key to the eventual development of the renminbi as an alternative reserve currency. What exactly does that mean for America?
China wants and needs an alternative to holding its vast foreign exchange reserves in US dollars and needs to encourage foreign investors to hold more renminbi-denominated assets.
Dominant Social Theme: A little tweaking and the Chinese will integrate just fine.
Free-Market Analysis: There is an increasingly contagious supposition that the Chinese, sooner or later, are fixing to offer the world the next reserve currency – and it is obviously being fanned by the Chinese themselves. But not so fast. We believe that Chinese currency, like the Chinese economy – will be a bigger factor in the future, but it is certainly something of a stretch to believe that the renminbi is about to become a common, universally accepted, currency worldwide. Or is it a stretch? After all, the Chinese hold $1.2 TRILLION DOLLARS of U.S. reserves.
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So what exactly is a reserve currency anyway? Simply put, it is a currency accepted everywhere. But like everything else within a central banking economy, a “reserve” currency is more complicated than it sounds. It has been floated – and made complex – like almost everything else in this day and age, in an attempt to distract attention from the inflation hedge and usefulness of gold and silver. Does that mean there could be a huge upswing in gold prices shortly?
According to Switzerlands Daily Bell:
“It bears repeating (we can never repeat it too much since hardly anyone else mentions it at all) that throughout history a gold and silver market standard comprised money – a real reserve currency, if you will – with each metal trading in a ratio with each other that, if disturbed, indicated some kind of funny business among the leadership of a given economy.
But the central banking economy of the 20th and now the 21st century has done everything but figuratively stand on its head to distract people from the reality that a perfectly good alternative to elite monetary control of the financial markets exists – honest money. Yes, gold and silver indeed comprise the true “reserve” currency, accepted everywhere, a universally valued, honest-money standard that cannot be compromised, misunderstood or easily diddled with.
Yet for just this reason, because gold and silver are universally available and can be dug out of the ground, these precious metals have proven far too plebian for the advanced and sophisticated operators who run high finance in the modern era. These individuals have taken it upon themselves to refine a more modern and malleable kind of financial system that is backed only by the full faith and credit of a given nationality and allows for the printing of as much money as is deemed necessary without the trouble of digging it up or refining it.”
Everybody knows though, that fiat funny money is prone to collapse. It’s not a matter of “if” but “when” the money will collapse. Many in the USA believe we are right in the middle of this systematic dollar collapse right now. There is more trouble yet to come.
The Federal Reserve of the United States, The Masters of the Universe, in order to salvage their particular brand of money, have now taken to printing huge gobs of fiat money, especially the dollar, which means down the road King Dollar will be worth a good deal less than it is now, compounding the problem. Does China really want to continue to hold depreciating American dollars?
The Chinese believe they have better prospects to turn their own money into a world currency rather than continue in the dog & pony show of the Federal Reserve printing presses.
Conclusion: China is basically proclaiming to the world: “Goodbye Dollar and Hello Renminbi.” The Chinese want to replace the American dollar with their own currency.
If the Chinese leadership seeks to back their currency with gold or silver – imagine the implications on the value of gold!
However, for honest money lovers – let’s not get our hopes up. The Chinese have had at least six episodes of fiat money in their many thousand year history – and the rise and fall of their monetary systems should have provided an object lesson to the current leadership. The poison trap of fiat money is just too strong for governments around the world. China is no exception.
The central banking economy will keep the myth going that money creation is good for China’s billion plus population. And the rulers at the top, the ones who make the money, will continue to benefit. It is a most unfair and unstable system, and the Chinese involvement, will not make fiat money any more viable. Investors who can look past the size and might of the system – like the proverbial boy watching the ruler walk by – should bear in mind that the Emperor has no clothes. And a fiat money system is a terrible way to pay for them.
One day, the collapse of worldwide money based on fiction and money creation will inevitably lead to a disaster. China can nip this problem right now by simply backing it’s money with gold and silver.
If the Chinese will adopt Gold and Silver as legal tender, surely China will have the new world reserve currency.
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if people save money as a gold an siver there is not a problem at all.