Uh-Oh! China Wants a G8 Debate on a new global currency. That’s the take-away from this story: China requests reserve currency debate at G8.
In my opinion, July 9th is NOT Dollar Doomsday, at least not in the way of a particular day being a day of total doom. Nothing will happen at the G8 meeting (probably). Instead, the significance of this story is that China is pressing ahead with its plan for a new global currency. We either accommodate China … over the course of the next couple years, probably … or China will make plans without us.
What comes next? Well, the Chinese will come out and say that they really like the U.S. dollar and holding all those Treasuries! Why would they say something so contradictory? You mean like on Monday, when they contradicted their dollar-bearish statement of last week.
There are a few potential reasons China keeps contradicting itself …
- There are conflicting factions within the Chinese government
- China needs more time to use its own dollars to buy more hard assets, so it keeps making soothing noises to stabilize/prop up the dollar
- China is manipulating the currency and commodity markets, playing them like a fiddle by saying one thing one day and another thing the next day.
You may have a fourth possibility. If so, please write in and let me know what you think.
I talk a lot about China, gold and the dollar in my new gold report, “Gold Fever.” It’s probably the story of the next decade.
Bullish for gold? Most definitely.
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I have worked in China and dealt with them .. humm, not sure if you watch Kind of the Hill but there was a really funny episode where Hank’s neighbour (an Asian) mortages his house to buy a Car Wash … long story short … he gets too greedy and has to end up sellng a majorty stake to a rich Red neck and ends up working for him …
The Chinese are spoilt … they have tasted being rich for a brief while like everyone did in 1999 - 2000 and now they want it all again … China Growth Cannot Save The World … China is maybe one fifth the size of Europe’s economy. China can’t save the world, no matter what they do. They are investing in their own economy and have huge reserves and huge savings, The World Bank has predicted that in 2020, China will be the world’s largest economy. But the World Bank has never been right about anything. It could well happen in the next 10 or 20 years, but on a per capita basis probably not within my lifetime, unless the U.S. really collapses and China really booms.
Things are going to backfire … China is going to do everything it can to lower the dollar so that their own currency goes down and allows their exports to increase …. they will stop buying US Treasuries … that’s what they think is going to work ….
I think G8 should ask China to re-valuate their currency. Thay can even force to do so. I feel what china is showing is like swelling not strngth. we are fedup with low cost and lo quality chines products. I don’t want China to become super power. Why we always compare interms of %, let us compare in absolute terms.
Also your columns draw too rosy picture of China, I am not sure why!.
To me China is going towards difficult times. let us wait and see.
Yep … the China idea is just to easy …. investing is not easy …. as soon as Money Supply goes down … there goes China ..