China Asking For ‘Super-Sovereign’ Currency ?
Some very interesting news over the wires this morning. China, who are pretty smart, are starting to see what is happening to the US dollar.
These guys are surely on edge, and I bet they cringe each day as they bring up a chart of the US dollar. WHY? Well they know that the US dollar is in trouble. Experience teaches them a hard lesson, and they went through the same thing back in the early 1990′s.
But it was interesting to see the dollar drop after China’s central bank reiterated a call for a worldwide currency. Remember years ago when those conspiracy nuts were calling for a one world currency and a New World Order. These people were called insane, or psychopathically unstable conspiracy nutters. Forward to 2009 and the credit crisis looms on. The beginning stages of high regulation of the banking and financial system is coming about, and the US dollar and other currencies are in a lot of trouble. The perfect recipe to introduce a some of these massive changes.
Anyway…
The chinese are very smart. They think differently than alot of countries, not only that, they own alot of US dollars. They know it’s doomed!!! They are angry at the moment, and here is why!
1) The massive amount of US dollars they hold is devaluing as the price of the US dollar falls!
2) If they decided to sell a large portion or their (USD) holdings it would cause a panicked sell off by other countries further collapsing the dollar before they could exit their entire position.
So yes, they are stuck between a rock and hard place right now. It’s like one of those catch 22 situations.
China is likely to emphasize that it wants to see changes take place over the long run in an effort to shield the dollar in the short term.
But the push is nonetheless likely to weigh on the greenback and could have a significant impact on currency markets as traders attempt to gauge the potential reduction of the dollar’s role and what currencies will take its place.
China right now, must feel like they are screaming at a misbehaving boy who has his fingers in his ears, and rolling his eyes back.
