Quote:
Originally Posted by Neuling
I just heard of a surprise agreement between the 2nd and 3rd largest economies. It was announced today as the Japanese leader is visiting China. They will start to do their bilateral business directly in their respective currencies, bypassing the dollar and euro to both countries' advantage.
Will other countries follow that example? I guess it was Iran that already announced some time ago that they will stop selling their oil in dollars. Given the euro uncertainty, maybe they too will use the yuan instead  Same goes for Venezuela.
Such developments and the sheer size of the the expanding Chinese economy could well mean that the yuan will become the dominating currency of the future, say, 20 years from now.
What, if anything, would that mean for everyday life in Europe or the US?
Few news on it so far...
http://www.nytimes.com/2011/12/27/wo...-security.html |
Why are you surprised?
That was inevitable.
Let's be realistic, and that is there will eventually be a "one-world currency." It isn't personal, it's just the way of the world. I speak Romanian, but I have no illusions that one day in the far distant future, no one will speak Romanian. If it wasn't for Romanians and the Goral people up in the Tatra Ranges (Polish-Slovakian border) no one would know the Dacian language or Dacian words.
Just as everyone will be speaking English one day, everyone will also be using a single currency. It is a matter of practicality and common sense. Will this happen tomorrow, the week after, next month, next year?
No, it will take decades, probably a couple of centuries realistically speaking, when every country reaches the same level of economic development. By that time, you'll have stagnation, not only in terms of economics but in terms of population as well.
So, all these people peeing their pants over "population-growth" are just panicking. As a given society becomes more affluent, its birth-rate naturally declines.
Eventually world population will peak at, I don't know, let's call it 30 Billion, and when that happens, you'll have mostly economic parity among all States, and that would be facilitated by a unified common currency.
As we progress toward that, you'll see currencies merge in common markets. You already have the EU and the Euro. A unified Asian currency is the next logical step, and you'll probably have a unified Central Asian currency based on the Ruble, a unified African currency, at least for sub-Saharan countries (North African countries will go with the Euro), and then of course, a unified currency for the Americas (I suppose the "Amero") or at least for North America (with or without O Canada! who should go with the Euro).
Iran will continue to sell oil in US Dollars, but not exclusively. The Kish Island Exchange is intended to operate in basket currencies, so you can buy commodities on the world market in most major currencies, including US Dollars, but also including Euros, Rubles, Yuan, Swiss Francs and other [stable] currencies.
As far as what it means, currencies have value because of Supply & Demand and to a lesser extent, confidence in the government.
Norwegian Kroners are worth more than Zimbabwe Dollars, mostly because there is high confidence in the Norwegian government, and low or no confidence in the Zimbabwean government.
Even so, at 1 Kroner = $0.17 or you can say a Kroner is worth 1/5th of a US Dollar, because the worldwide demand for US Dollars is far greater than the worldwide demand for Norwegian Kroners.
And why is that? Because nearly all commodities on the world market are bought/sold in US Dollars and not in Norwegian Kroners.
The introduction of the Euro had a tremendous negative impact on the US Dollar. World demand for US Dollars declined as fewer countries use or trade with US Dollars. Russia sells all 9.1 Million barrels of oil per day in either Euros or Rubles, but not in US Dollars. That decreases demand for US Dollars and increase demand for Rubles and Euros, which causes the US Dollar to decline in value.
What impact would this Chinese-Japanese deal have? None really, at least not negatively against the US Dollar at first. Over the long term, it could affect the US Dollar and cause it to loose value.
Would the Euro be negatively affected? No, because more Asian countries trade in US Dollars than in Euros, and not only do they buy/sell in US Dollars but the volume of commodities bought/sold in US Dollars is very high comparatively to the Euro.
What you would see is the Chinese Yuan/Japanese Yen strengthen in value against the US Dollar.
China is no threat to the US militarily or politically, or even a threat to the American way of life, but it is a threat to the Extravagant American Life-Syleâ„¢.
You can't have 30 Billion people on Earth living like Americans, but you can have 30 Billion people living like Japanese, and I wouldn't consider Japan to be the ass-end of the Universe.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
