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Dollar's future in US hands
By Henry C K Liu
Since 2008, I have been widely recognized on the Internet as the person who changed China's policy regarding the US dollar by advocating since 2002 that Chinese exports should be denominated in yuan. Chinese readers doing a Google search on my Chinese name will find numerous posts to that effect.
The issue is not whether Asian central banks will continue to have confidence in the dollar, but why Asian central banks should see their mandate as supporting the continuous expansion of the dollar economy through dollar hegemony at the expense of their own non-dollar economies. Why should Asian economies send real wealth in the form of goods to the US for foreign paper of declining value instead of selling their goods in their own economy?
Without dollar hegemony, Asian economies can finance their own economic development with sovereign credit in their own currencies and not be addicted to export for fiat dollars that repeatedly lose purchasing power because of US monetary and fiscal indiscipline. As for Americans, is it a good deal to exchange your job for lower prices at Wal-Mart?
A long quote follows, ending with:
That was written in 2004. Now, at long last, jolted by the global financial crisis that began in July 2007, China is finally demanding that its export be paid in Chinese yuan. But this demand should not be interpreted as a push to make the yuan a reserved currency for international trade. China only wants to denominate its bilateral trade in yuan. It has no desire in making the yuan a reserve currency for international trade in which China is not directly involved. Because of the size of the economy, the dollar will continue to serve as a preferred reserve currency, but only if the US puts its own financial house in order.
Full article at:
http://atimes.com/atimes/China_Business/KG02Cb01.html
By Henry C K Liu
Since 2008, I have been widely recognized on the Internet as the person who changed China's policy regarding the US dollar by advocating since 2002 that Chinese exports should be denominated in yuan. Chinese readers doing a Google search on my Chinese name will find numerous posts to that effect.
The issue is not whether Asian central banks will continue to have confidence in the dollar, but why Asian central banks should see their mandate as supporting the continuous expansion of the dollar economy through dollar hegemony at the expense of their own non-dollar economies. Why should Asian economies send real wealth in the form of goods to the US for foreign paper of declining value instead of selling their goods in their own economy?
Without dollar hegemony, Asian economies can finance their own economic development with sovereign credit in their own currencies and not be addicted to export for fiat dollars that repeatedly lose purchasing power because of US monetary and fiscal indiscipline. As for Americans, is it a good deal to exchange your job for lower prices at Wal-Mart?
A long quote follows, ending with:
That was written in 2004. Now, at long last, jolted by the global financial crisis that began in July 2007, China is finally demanding that its export be paid in Chinese yuan. But this demand should not be interpreted as a push to make the yuan a reserved currency for international trade. China only wants to denominate its bilateral trade in yuan. It has no desire in making the yuan a reserve currency for international trade in which China is not directly involved. Because of the size of the economy, the dollar will continue to serve as a preferred reserve currency, but only if the US puts its own financial house in order.
Full article at:
http://atimes.com/atimes/China_Business/KG02Cb01.html