Am I over reacting? Or simply stating fact?
China is actively seeking to change the U.S. dollar from the reserve currency of the world. The Middle Kingdom has set up direct currency deals with Japan, Russia, Brazil, and Indonesia. They are also in talks with Australia.
According to the Global Times:
China has been taking steps to internationalize the yuan, facilitating the use of the yuan in cross-border trading and investment, and signing currency swap agreements worth at least 1.5 trillion yuan (238 billion US dollars) with a dozen of countries.
Cutting the greenback out as the middle man for trade is one thing; but in order to increase the viability of the Chinese yuan, the country needs to free its currency from its dollar peg.
For those who don’t know, many emerging market countries link their currency to the U.S. dollar for trade stability.
The downside is that when a country matures, it is subject to the whims of Ben Bernanke and his ilk.
The ramifications of the fall of the dollar as the worlds reserve currency are too broad to go into in this briefly, but some repercussions:
- drastic price increases of all goods imported and domestically produced,
- exploding interest rates,
- bankruptcies, both personal and corporate,
- shortages of consumer goods,
- inflation like we have not seen in decades
- and the resulting civil unrest are just a few of the results of the dollar’s crash…………
Finally, when you have a population that has been coddled and told that they are entitled, that they are owed something (or everything) how will this population react to reality? Not well my friends, not well…