I think the Federal Reserve’s decision to buy a Trillion of American Treasury Bonds, in a naked attempt to monetize or “print the money” has pretty much pushed the rest of the world over the top. Now the Chinese equivalent of our Federal Reserve Chairman, Zhou Xiaochuan , has called for the formation of a new global reserve currency. This means dumping the US Dollar for a goofy IMF scheme that’s risky at best: and at worst is yet another world economic meltdown in disguise. (In addition to being a solid step toward World Government)
China holds a huge amount of our dollars and is concerned that our willingness to print a trillion dollars, at the drop of a hat, will mean that all those dollars are, and will continue to be, dropping in value at a precipitous rate. I wish I could say that China is wrong but I’m afraid the fault lies with the American Politicians and of course the nefarious Federal Reserve System who always follows its own twisted motives behind a cloak of secrecy.
Our Political system appears to be broken and the nation seems leaderless as the feckless Barak Obama says one thing and does another. The Congress is out of control, spending like theirs no tomorrow, and it seems determined to replace Capitalism with Socialism and the Constitution with Mob Rule. At this critical time in our history we’re now finding that our own corrupt politicians have become the most powerful special interest group in the nation and their interests and those of the American People are diametrically opposed. We don’t want more bail outs bigger government and more spending but that just doesn’t matter to our paternalist politicians who seem to think that what’s ours is theirs!
What we need is the disempowering of our own political class and a massive cut in government spending, size, and scope at the federal and state levels and often at the city level as well. We need for the democrats: who today have become outright socialists, if not communists, to stop the spending and the remaking of American into yet another failed socialist state.
The very soul of our nation is at stake as the Chinese Equivalent of Ben Bernanke, the head of the Chinese Central Bank, calls for a new world reserve currency and the ouster of the US Dollar. Below is a story from the Financial Times concerning our death warrant as a nation. Dollar dumping now will destroy our currency. A depression is bad enough but to add the stress of a currency collapse can add untold horrors to our children’s future. This is probably our last wakeup call and if we miss this big reality check from China we’re well and truly up a nasty smelly creek without a paddle.
Here’s the URL for the Financial Times Story: http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html
China calls for new reserve currency
By Jamil Anderlini in Beijing
Published: March 23 2009 12:16 | Last updated: March 24 2009 00:06
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.
Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.
“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.
Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.
“The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system,” Mr Zhou wrote.
China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars, and this is unlikely to change in the near future.
To replace the current system, Mr Zhou suggested expanding the role of special drawing rights, which were introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate regime but became less relevant once that collapsed in the 1970s.
Today, the value of SDRs is based on a basket of four currencies – the US dollar, yen, euro and sterling – and they are used largely as a unit of account by the IMF and some other international organisations.
China’s proposal would expand the basket of currencies forming the basis of SDR valuation to all major economies and set up a settlement system between SDRs and other currencies so they could be used in international trade and financial transactions.
Countries would entrust a portion of their SDR reserves to the IMF to manage collectively on their behalf and SDRs would gradually replace existing reserve currencies.
Mr Zhou said the proposal would require “extraordinary political vision and courage” and acknowledged a debt to John Maynard Keynes, who made a similar suggestion in the 1940s.