"The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations and rely only on their own currencies."
If the People's Daily story sparks momentum that influences international leadership to remove the dollar peg from commodities like oil, the time to bail out of all U.S. dollar-investments might be immediately. Right or wrong, if the rest of the world perceives this mess as America's fault, then it is America's fault... if only for a day; that's the power of perception. Consider it a demonstration of the importance of confidence (or lack thereof) in today's violently shaky economic reality. Never mind the wealth that the rest of the world accumulated from buying into the 'relative strength' of dollar assets; few ask questions about where the money's coming from while they're getting rich. No one forced China to peg their currency to the dollar when money was flowing like wine. Everyone benefited then. But their question today is, "what have you done for me lately?"
We humans are a fickle bunch.
So the official newspaper of China's ruling Communist Party accuses the U.S. of plundering the whole world's wealth. Is China's goal to incite a global reaction? Worse, if global reaction becomes call to action, then we could be witnessing the 21st century's shot heard around the world. If all dollar pegs are removed, China would take an almost incalculably huge loss if their stake in hard currency, US Treasuries, Bonds, et cetera, collapses--not to mention losing their biggest export customer, the United States, if Americans' purchasing power evaporated. To suggest such an action tells me they must see such incredibly hard times on their relatively prosperous booming economic horizon such that cutting their losses now would benefit them in the long run.
These events could well play out as the economic version of natural selection. If so, then the U.S. is no longer at the top of the financial food chain. As the global economic contraction metes out its unexpectedly savage punishment, which of our newly dominant predators -- yesterday's allies -- will feast first on the entrails of capitalism?
LET THE FREAKOUT COMMENCE!
U.S. has plundered world wealth with dollar: China paper
BEIJING (Reuters) - The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.
http://www.reuters.com/article/forexNews/idUSTRE49N1XX20081024
Hat tip to Cumbersome for the Calvin and Hobbes art.
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1 comment:
The National Debt Counter frightens me. Like a Democrat with an NRA membership!
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