9 Signs That China Is Making A Move Against The U.S. Dollar (generation, suspect)

[CDusr]

9 Signs That China Is Making A Move Against The U.S. Dollar
quote:
#1 Chinese credit rating agency Dagong has downgraded U.S. debt from A to A- and has indicated that further downgrades are possible.
#2 China has just entered into a very large currency swap agreement with the eurozone that is considered a huge step toward establishing the yuan as a major world currency. This agreement will result in a lot less U.S. dollars being used in trade between China and Europe...

[Hoonose]

Originally Posted by CDusr

9 Signs That China Is Making A Move Against The U.S. Dollar
quote:
#1 Chinese credit rating agency Dagong has downgraded U.S. debt from A to A- and has indicated that further downgrades are possible.
#2 China has just entered into a very large currency swap agreement with the eurozone that is considered a huge step toward establishing the yuan as a major world currency. This agreement will result in a lot less U.S. dollars being used in trade between China and Europe...

Meanwhile China surges in the third quarter with their US Treasury purchases. How does one reconcile this reality?

http://www.scmp.com/business/economy...d-china-buying

The reality is that although they have started laying the groundwork, the Yuan and China are not ready to change the world.

There are not nearly enough Yuan out there, and most importantly there is miniscule Yuan denominated debt outside of China. Right now China buys US Treasuries to weaken their currency. They need a weak Yuan so that they can continue to dominate the world with their exports. Now when China decides that it is ready for a more consumer oriented economy things may well change. But not soon or overnight. Maybe in the 10 year to a generation time frame. How do you suppose China will create all the Yuan and Yuan denominated debt in the future?

An excellent and related text:

Avoiding the Fall: China's Economic Restructuring: Michael Pettis: 9780870034077: Amazon.com: Books

[fibonacci]

Meh. Maybe it is good for the world economy to not be dominated by one country. When that country f*cks up the whole world goes to hell. It's better to have diversity to insulate the global economic system from systemic shocks.

[CDusr]

Originally Posted by Hoonose

Meanwhile China surges in the third quarter with their US Treasury purchases. How does one reconcile this reality?

Risk of United States debt default has not stopped China buying Treasuries | South China Morning Post

The reality is that although they have started laying the groundwork, the Yuan and China are not ready to change the world.

There are not nearly enough Yuan out there, and most importantly there is miniscule Yuan denominated debt outside of China. Right now China buys US Treasuries to weaken their currency. They need a weak Yuan so that they can continue to dominate the world with their exports. Now when China decides that it is ready for a more consumer oriented economy things may well change. But not soon or overnight. Maybe in the 10 year to a generation time frame. How do you suppose China will create all the Yuan and Yuan denominated debt in the future?

An excellent and related text:

Avoiding the Fall: China's Economic Restructuring: Michael Pettis: 9780870034077: Amazon.com: Books

Well making moves is one thing. No need to reconcile. Realities are realities. Bitcoin has happened very quickly, as well. The article I linked to doesn't omit USD realities.

However, observations shouldn't be denied.

[EmeraldCityWanderer]

Why would China be trying to devalue the US currency when they are our largest creditor?

That's like the bank bankrupting their biggest account when they have no backup plan or insurance.

I know conspiracy theorists love schemes that would make Saturday morning cartoon villains look like Einsteins, but this is absurd.

[dsjj251]

9 Signs That China Is Making A Move Against The U.S. Dollar

1. They said they would do this 20 years ago
2. They said they would do this 15 years ago
3. They said they would do this 10 years ago
4. They lobbied the international community in front of the UN
5. ....................

Why is anyone surprised China is doing this and pretending this is the first time it has been mentioned ???

[saxondale351]

I think if anyone made a move against the us dollar it was ted cruze

[Arlanynna]

Originally Posted by CDusr

9 Signs That China Is Making A Move Against The U.S. Dollar
quote:
#1 Chinese credit rating agency Dagong has downgraded U.S. debt from A to A- and has indicated that further downgrades are possible.
#2 China has just entered into a very large currency swap agreement with the eurozone that is considered a huge step toward establishing the yuan as a major world currency. This agreement will result in a lot less U.S. dollars being used in trade between China and Europe...

well they did just call to de americanize the world economy last week, they arent really hiding it ;-)

[Hoonose]

Originally Posted by CDusr

Well making moves is one thing. No need to reconcile. Realities are realities. Bitcoin has happened very quickly, as well. The article I linked to doesn't omit USD realities.

However, observations shouldn't be denied.

I would never deny the possibilities. IMO movement in China's direction is inevitable. Barring them overshooting and crashing, or some other unforeseen Black Swan. Just not anytime soon.

#1 Chinese credit rating agency Dagong.

Unbiased no doubt!

#2 Europe and China have agreed a currency swap deal to boost trade and investment between the regions.

$61 billion!

#3 Back in June with GB:

$35B!

There is between 1/2 to a $1T of USD denominated debt bought/sold/traded daily in an $83T market. So $61B + $35B = 0.1%.

#4 China currently owns about 1.3 trillion dollars of U.S. debt. Actually they just added another $0.36T the last quarter.

Less than 8% of USD denominated debt.

#5 China may decide to completely stop buying U.S. Treasury bonds.

When is first decides it no longer cares to sell all its stuff to the US. China is hooked on us and the USD for the foreseeable future!

#6 China's $3.66 trillion of foreign exchange reserve.

40% is in USD. So they're already diversified.

#7 "The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy"

i.e. It's the annual political charade that is the problem. China already undestands the problem is not the volume of USD debt. After all, in a parallel universe how could China serve as a world reserve without the creation of huge amounts of new Yuan to trade out into the world?

#8 "was no more than prolonging the fuse of the U.S. debt bomb one inch longer."

Oh it's been ticking for quite awhile now:
–Federal Debt: A “ticking time bomb” «#Monetary Sovereignty - Mitchell #Monetary Sovereignty – Mitchell

And in the future do you suspect that somehow Chinese Debt has no fuse?

#9 So exactly what would happen if the Chinese announced someday that they were going to back their currency with gold.

Pegging to gold would instantly cancel their possibilities as a world reserve. Their exporting capability would crash as the Yuan strengthens. Unless the whole world decided all at once to peg to gold and could agree on a set balance between all curently used currencies.

[freightshaker]

If the dollar loses its status on the world markets, we are all screwed.