China lays path to make Yuan an international currency

[dc2k08]

Market Skeptics: *****China makes Yuan an international currency*****

I link to a blog instead of the news reports because I think the poster makes some interesting observations:

My comments on the story:

1) These announcements were made on Christmas to avoid tanking the dollar.

2) If yuan becomes an international currency, there will a massive migration by central banks from dollar reserves into yuans, because the China's fundamentals are so strong compared to the US.

3) China's announcement that they will not " promote export through currency depreciation" means Chinese financing of our trade deficit is about to come to a very nasty end.

4) From the articles I have read, it is apparent that Chinese exporters are screaming at their government to internationalize its currency so they can bill in yuan instead foreign currencies. Their desire is completely understandable. After all, how would you like to be paid in monopoly money (US dollar)?

5) If the yuan is allowed to compete freely with the dollar, our currency will get crushed.

 

[TropicalBob]

It's been fun ... those blog comments are devastating ... "a severe decrease in the standard of living for 95% of Americans."

Words for the Great Depression II: Hey bud, got a cart?

 

[robw]

I cant find a news source on this, are you sure this is not just a opinion article rather than something based on fact?

 

[tonyph]

it has to be an opinion article. Such a decision been made public would have massive effects on the global economic situation. There have been hints about regional trading with the yuan and lots of similer speculation.
I find chris mastertons site Chris Martenson | Information on the global economy, environment, and our energy challenges. Real estate, oil, community, homes, money. one of the best places to keep track on this stuff. His crash course series is realy well done.

 

[dc2k08]

I cant find a news source on this, are you sure this is not just a opinion article rather than something based on fact?

I am also surprised that this story did not receive wider press coverage. I waited a few days before I posted, just to see how other news outlets would react. The blog post contains the copied and pasted contents of three reports, the links to the sources are at the top of each.

Two of these reports are from the Xinhua News Agency (the official press agency of the government of China) and the other is from AFP, the oldest news agency in the world and one of the Big three so the story seems to be legit unless it's a ruse on behalf of china.gov.

 

[tonyph]

I am also surprised that this story did not receive wider press coverage. I waited a few days before I posted, just to see how other news outlets would react. The blog post contains the copied and pasted contents of three reports, the links to the sources are at the top of each.

These things are rarely reported in main stream or even specialised media.
There are quite a few stories on the regional use of the Yuan for foreign exchange but they are in parts of the world where it more immediately relevant. Lets face it most people here are interested in news about sales discounts not that the people who are making the stuff are starting to worry about how they are getting paid.
China makes yuan an international currency-India Business-Business-The Times of India
Channelnewsasia.com
Pinoy x-sa KSA: Yuan, the New International Currency ?
http://www.lankanewspapers.com/news/2008/12/37166_space.htm

 

[TropicalBob]

Thanks for the links.

This is .. easily .. the most troubling thread on this forum. Very few items have the potential to dramatically change our lifestyle. This is such an item. It does not deserve to be "bumped" down by some joking post. Thanks for the initial tipoff, DC.

 

[slianfoxob]

okay, i understand that this will obviously have some seriously negative effects on the US but would anyone care to explain how all that works...

I'm kind of in the dark on this sort of stuff. educate me!


Foxy

 

[tonyph]

okay, i understand that this will obviously have some seriously negative effects on the US but would anyone care to explain how all that works...

I'm kind of in the dark on this sort of stuff. educate me!


Foxy

The previous link I gave to Chris Martenson | Information on the global economy, environment, and our energy challenges. Real estate, oil, community, homes, money. where he does the crash course is outstanding for a simple to understand explanation. More simply if the fed just keeps printing money, the west just keeps borrowing and consuming somebody is going to question what they are been paid with. The problem with this stuff is as TB pointed out it can be seriously scary. Heres a set of old clips and see how the mainstream treat peter schiff. Not somebody who I think has the answers but somebody who saw the problems.
Where are they Now? Peter Schiff ridiculed about his dead-on prediction of future economy Dvorak Uncensored: General interest observations and true web-log.

 

[dc2k08]

I'm no economist foxy, but think of this as a warning shot. China has decided to to allow some trade to be settled with the yuan. This is to start a process to gear it to be ultimately accepted as a freely convertible currency and allow exporters to charge for all of their goods to all markets in Yuan.

currently most of china's export deals are settled in dollars or euro but exporters are worried that they will make a deal in one of these currencies only to find the next week that their value has tanked but that they still have to supply on their agreement. It is far safer for them to finalise their deals in yuan. This also shows that China no longer trusts the dollar and probably very worried about their US assets.

what this means in the long run is that china is trying hard not to have their economy come along for the ride. if it decides to accept all transactions in yuan, then as the dollar deprecates, the cost of products from China will increase also - a double blow for consumers. So how then is their economy going to grow if there is less demand for the products they make ?

From the BBC:

A document released after a meeting of China's State Council on Wednesday announced more measures to stimulate domestic consumption.
These include subsidies to rural households for the purchase of household appliances and other goods, and the setting up of new stores and distribution centres in rural areas

This is evidence that China is moving away from its reliance on exports for economic growths towards a more consumer driven economic model.

also:

The state news agency Xinhua said the government intended to raise export tax rebates for high-technology products, to encourage foreign investment, extend customs and inspections services, lower inspection fee for exports and strengthen trade relations in emerging markets.

 

[trog100]

at the moment the US dollar is riding high.. the dollar was going down but for the last few months its gone the other way relative to other world currencies..

take the pound.. it was 2 dollars to the pound back in the summer.. its now 1.43-ish... anything i now buy from china costs me over 30% more than it did a few months back.. if the pound ever hits parity with the dollar its kind of end of the world time for the UK..

all the assets (stocks shares whatever) sold of to pay debts have resulted in a flow of dollars back into the US.. the general belief is when this flow stops the dollars will tank.. possibly collapse big time..

and whatever the source its all a matter of opinion.. simply because no one knows for real what the f-ck is going to happen during the next six months..

LIVE! streaming real-time gold price quotes

a real time chart.. the UK pound being the greatest casualty at the moment..

i know u like to trust your source bob.. but its all uncharted waters dragons beware territory.. we are going places no man has been before..

china is trying to open up asian markets which is what the trade in its own currency is all about.. ready for when the US does collapse.. most informed opinion seems to think it will..

interesting time are ahead..

trog

ps.. china is in the sh-t.. its totally dependent on a rich western world buying all the junk its factories are churning out.. its also ...... of cos it thinks we have made a pigs ear of things.. it aint far wrong either..

ps 2 if u have some spare cash its time to buy gold.. and not the paper stuff ether..

 

[Di]

dammit,
I just gave away all my chinese yuan,

Di .......

 

[TropicalBob]

I'm as concerned about this, and have been, as I guess you are, Trog. I read DC's link and that's a doomsday scenario worse than a Pakistan-India nuclear exchange. What it seems to portend is the collapse of America as the world's premiere superpower, a drastic decline in the value of the dollar and the standard of living of those who earn and spend it, and a rearrangement of the world's giants. You agree?

Yep, that worries me.

 

[Frankie]

Well, if that is the truth, it would not have to be really bad. Balance of power was missing in the world for decades resulting in several major wars, unchecked use of lethal force whenever needed for the US goepolitical reasons and/or natural resourses and at least two or three genocides. Restoring it at the cost of those who earn and spend dollars and who profited for long years from the only superpower-bully status of the issuer of their money would not be the worst thing this planet can suffer. You know, almost half the world's population lives on less than a dollar a day...

 

[dc2k08]

yup, I think there is little reason to be hopeful that what just happened to Iceland won't be happening to a few more by the end of 2009.

 

[trog100]

for what its worth i think we are looking at a collapse or total lack of faith in what we call money.. nobody has any real idea of what anything is worth any more..

take oil.. its was 150 dollars a barrel its been down as low as 34 dollars a barrel..

what is oil worth.. its the same oil.. the oil hasnt changed.. its the money tokens that have changed.. money is just a faith based belief system.. once that faith is lost so is the value system based on it..

there is one theory that says the only way to put things back together is to go back to a gold standard.. it cant simply be printed at will to suit.. the modern day alchemists have managed to turn base metal into gold.. something the real ones never ever managed to do... we all could be about to pay the price for all the illusory base metal alchemist created wealth thats been floating about for the last few years..

trog

 

[Mscoffee]

The previous link I gave to Chris Martenson | Information on the global economy, environment, and our energy challenges. Real estate, oil, community, homes, money. where he does the crash course is outstanding for a simple to understand explanation. More simply if the fed just keeps printing money, the west just keeps borrowing and consuming somebody is going to question what they are been paid with. The problem with this stuff is as TB pointed out it can be seriously scary. Heres a set of old clips and see how the mainstream treat peter schiff. Not somebody who I think has the answers but somebody who saw the problems.
Where are they Now? Peter Schiff ridiculed about his dead-on prediction of future economy Dvorak Uncensored: General interest observations and true web-log.

I've been watching Peter Schiff predictions for over a year.

Chris Martenson, I would highly recommend his video course, wont cost more than a little of your time.

My take on the economy, IMHO the best investment out there is 3 Bs, Beans, Bullets n bandages
.

 

[Trumpybloke]

I may have to order a GOLD plated Screwdriver to stave off wall street I reckon Whaddya reckon Trog ???

 

[dc2k08]

I agree with you about the gold standard Trog. When there is nothing to back a currency up and it is printed to suit, the wheels will inevitably fall off at some stage. Banks always worry about too many people withdrawing their money at the same time. They can only operate successfully as long as this doesn't happen. but now the entire economy is stuck because too many people are reneging on their debts at the same time.

They have been conjuring money out of thin air all based on people's debt for too long, all aided and abetted by our governments. all of this money was made to appear only based on peoples' promise to pay back loans with interest but now with so many people unable to do so, it is almost like the opposite of a run on the bank. the illusion of wealth is being seen for what it is. People who foretold of this outcome were called crazy before (like Ron Paul) but now it is happening, they are welcomed onto the same news channels that mocked them. too little, too late.

As for the oil though, I think the price drop has more to do with supply and demand, speculation of the market and fear rather than the value of the currency it is bought in.

 

[slianfoxob]

Yahoo! just put this up although it was reported on the 19th. Saxo Bank has proposed possible scenarios for 2009.

Outrageous Prophecies