The only reason the dollar hasn't totally collapsed is because its biggest holders are pumping it full of embalming fluid. As Bloomberg's William Pesek points out, "the dollar has become the world’s biggest Ponzi scheme...[it] isn’t crashing because those invested in it are propping it up and adding to their holdings. After all, the magnitude of Asia’s foreign-exchange holdings means it can’t dump the dollar without shooting its economies in the foot. Asia should indeed be plotting how to reduce its dollar holdings. Those trillions of dollars would be better used in Asia to pay for better roads, bridges, airports and power grids and improved education and health care."
Huang Xinyuan, vice president of a Chinese company that conducts business across China’s border with Vietnam says he no longer wants payment in U.S. dollars and prefers the yuan. Sales using the dollar dropped to 30 percent of contracts in 2008 from 87 percent in 2007, according to Bloomberg. The yuan, which has gained 21 percent since it was allowed to strengthen against the dollar starting in 2005, offers greater stability, he said.
“In recent years, the dollar has gone in only one direction and that is down,” said Huang, 45, in his second- floor office in Pingxiang, three kilometers from Vietnam. “Settling our orders in yuan removes a major risk.”
Banks in China and Hong Kong began wiring Chinese renminbi directly to one another on Monday to settle payments for imports and exports, according to the New York Times. Despite Vice Foreign Minister He Yafei telling reporters China supports the dollar as the main world reserve currency, China moves closer each day toward establishing the yuan as an international alternative to the dollar.
Meanwhile GATA reports Sprott Investment Management's chief investment strategist, John Embry predicts that once gold clears $1,000 it will never look back.
No comments:
Post a Comment