Author: abramicus

CHINA'S BID TO BECOME AN IMF RESERVE CURRENCY IS A FALSE GOAL. [Copy link] 中文

Medal of honor

Post time 2015-5-3 21:23:29 |Display all floors
Reminder: Author is prohibited or removed, and content is automatically blocked

Use magic tools Report

Medal of honor

Post time 2015-5-3 21:23:39 |Display all floors
Reminder: Author is prohibited or removed, and content is automatically blocked

Use magic tools Report

Medal of honor

Post time 2015-5-3 21:36:52 |Display all floors
Reminder: Author is prohibited or removed, and content is automatically blocked

Use magic tools Report

Medal of honor

Post time 2015-5-3 21:47:43 |Display all floors
Reminder: Author is prohibited or removed, and content is automatically blocked

Use magic tools Report

Rank: 8Rank: 8

Post time 2015-5-4 05:40:59 |Display all floors
This post was edited by abramicus at 2015-5-4 06:17
HailChina! Post time: 2015-5-3 21:36
China is not trying to replace the USD but use power to bring in a fair and just reserve unit that ...

DO YOU MEAN THAT WWIII HAS ALREADY BEGUN IN THE CURRENCY MARKETS?

Finding articles on what you referred to as the "sacrifice throw" of BRICS to replace the dollar is very hard, as it has not been reported in the Western media at all, despite its apparent importance.

Can you confirm if the following report is true, that on January 1, 2014, President Xi Jinping, opening the impromptu press conference called for that day at Dolco Chantilly, outside Paris, France, together with Putin, and the leaders of India, Brazil, and South Africa, said the following, which if true, means that the world is in economic war as of that date, and which can explain the dramatic drop in oil prices, the impeachment rallies in Brazil, and the Modi vacillation, plus the Russian embargo, which all occurred after that?

"Initially, each country will continue to use its own currency. In the course of the coming years we may decide to also issue the Bricso as a paper currency for all member currencies, similarly to the euro.  Fornow, we believe, each member country will have to adapt its economy to certain established parameters of economic viability - criteria that were not followed seriously enough by the Euro member countries.   The recently created BRICS Development Bank will initially act as the BRICS CentralBank, issuing guidelines and norms of economic and financial viability, foreach member country to adopt, so as to create coherence among them and facilitate trading within, as well as outside the Bricso domain.  As our economies evolve, we may consider other steps to adjust to the new dynamics, like - as mentioned before - issuing common paper money. The BRICS Central Bank will also act as a bank of last resource for the member countries, lending to their respective national central banks at inter-bank rates. We have also decided on an initial exchange rate between the US dollar and the Bricso - one Bricso equals 10 US dollars. This is roughly the relation of the outstanding debt - or unmet obligations - in proportion of the respective GDPs - of the US and the combined BRICS.


The second important step we are announcing - also as of January 1, 2014, the BRICS, Iran and Venezuela will sell their hydrocarbon - primarily oil and gas -in Bricsos, in a newly created Shanghai Oil Bourse. In fact, all countries, oilproducers and otherwise, wishing to trade in other currencies than the USdollar may do so at the Shanghai Oil Bourse, or in short the SOB. The reason for abandoning the dollar as an oil trading currency is its volatility.In fact, the dollar has lost its value - and its trust - over the past decades; it is beset by enormous debt and has no real economic backing. Many oil producers see their hydrocarbon wealth at risk.

That is all for tonight. I wish you a fun-filled transition into 2014 and a happy New Year."


Of course, this move by the BRICS nations followed the massive printing of money that had already been done by the current issuers of international reserve currencies, like the dollar, the euro, the yen, and the pound, from 2008 to 2013, reducing the purchasing power of the foreign currency reserves of China, Russia, India and Brazil, who were therefore very unhappy with their losses, not in nominal currency amounts, but actual purchasing power.

Your article then throws light on why China is willing to reduce its dollar reserves, even as Putin predicted that their value will eventually approach zero, causing even Russia, a member of the BRICS bank, enormous economic losses.

If so, then maybe WWIII has already started, with currency wars triggered by the QE moves of the four major currencies that serve as reserve currencies for all the countries of the world.  It is gradually moving from the markets to the masses, step by inexorable step.

Use magic tools Report

Rank: 8Rank: 8

Post time 2015-5-4 06:08:29 |Display all floors
EVEN MORE REASONS FOR CHINA TO DEVALUE THE YUAN TO A MARKET-FRIENDLY 6.50 YUAN/DOLLAR EXCHANGE RATE TODAY.

GIVEN what HailChina! has said, and the fact that the overvaluation of the Yuan has caused contraction of China's manufacturing sector that is the source of its productivity, the value in fact of its currency, the popularity of the Yuan as a trading reserve currency by all countries that import from China, the integrity of its banking industry which is tied to the solvency of Chinese factories and businesses that borrowed from Chinese banks, the livelihood of hundreds of millions of Chinese who work in factories and businesses, and above all, the peace and order situation in every city, town and village, as hungry men become desperate and indifferent to the rule of law when they need to feed their families, where should China go from here?

If China were to maintain the overvaluation of the Yuan, then it would have eroded the manufacturing advantage of China to the point of wrecking it, once factories shut down, workers are laid off, and social unrest occupies the central and local governments over and above the problems of the economy.  In turn, it would erode the basis for the Bricso, the new currency of the BRICS Development Bank, which as Xi emphasized, should be based on the economic strength of the founding countries.  But if China's exports plummet, domestic unemployment skyrockets, and streets are filled with protesters, then the Yuan's position within the BRICS currency, and the position of the BRICS currency within the international currency market, will all drop.  In short, continued overvaluation of the Yuan would not only harm China, but also harm the BRICS currency.

Therefore, it is not true that in order for the BRICS currency to establish itself, and maintain its value, that China has to overvalue its Yuan irregardless of the pernicious effect of such overvaluation to its economy and that of the BRICS central bank.  It is one thing to argue that the Yuan exchange rate should be stable, which is desirable, but not an absolute necessity for China to continue to support the BRICS currency, which should be allowed to fluctuate according to supply and demand if it is to be sustainable, and another thing to argue that the Yuan must be overvalued at a stable range, which spells disaster for both China and BRICS.

Now that we have debunked the myth that the Yuan needs to be overvalued in order for the Yuan to become an IMF reserve currency, we should not fall for the opposite fallacy, that the Yuan needs to remain overvalued in order for the Brisco to become an international reserve currency based in large part on the Yuan.  Neither are necessary, and both prescribe the same destructive course for the Yuan, which is to be overvalued to the point China's exports fail, its domestic production fail, its domestic consumption also fail due to unemployment, and in short, the economy completely fails.

On the other hand, there is nothing wrong with a devaluation of the Yuan to a market-based exchange rate where the exports of China are sold out, and the import demands of other countries that need cheap goods to prevent inflation, especially resource-rich countries that produce oil, iron, copper, and precious metals, are fully satisfied, in a fair exchange of the effects of their nature-given comparative advantages.

The return of the Yuan to 6.50 CNY/USD is not really a devaluation per se, but a revaluation of the Yuan so that it takes advantage of the market supply and demand, instead of fighting it, at its own expense, of buying Yuans that it could print for pennies, with hard earned dollars from its foreign currency reserves.

It is time to kick out the Economic Hit Men that have caused China losses that are mounting each year, much of which are hidden losses due to exports not made, but given to Japan, to the tune of hundreds of billions of dollars each year.  China can definitely find good use for these missing billions of dollars in importing more oil, minerals, and technology, or in giving aid to needy countries, or in funding infrastructural projects through the AIIB, without in any way reducing the value and effective of the Bricso as an alternative international reserve currency.  In fact, the dollars it can contribute to the BRICS Development Bank cannot but bolster its ultimate exchange value, under all scenarios.



Use magic tools Report

Rank: 8Rank: 8

Post time 2015-5-4 06:23:32 |Display all floors
FOR SOME REASON, MY EARLIER POST DISAPPEARED, SO I AM PUTTING THE QUESTION TO HAILCHINA! IF THE FOLLOWING SPEECH INDEED HAD OCCURRED ON JANUARY 1, 2014, AT DOLCO CHANTILLY, FRANCE, WHEN THE LEADERS OF CHINA, RUSSIA, INDIA, BRAZIL AND SOUTH AFRICA CALLED AN IMPROMPTU PRESS CONFERENCE WITH PRESIDENT XI ANNOUNCING SOME VERY IMPORTANT STATEMENTS OF WORLDWIDE IMPORTANCE:

"Initially, each country will continue to use its own currency. In the course of the coming years we may decide to also issue the Bricso as a paper currency for all member currencies, similarly to the euro.

For now, we believe, each member country will have to adapt its economy to certain established parameters of economic viability - criteria that were not followed seriously enough by the Euro member countries.

The recently created BRICS Development Bank will initially act as the BRICS Central Bank, issuing guidelines and norms of economic and financial viability, for each member country to adopt, so as to create coherence among them and facilitate trading within, as well as outside the Bricso domain.

As our economies evolve, we may consider other steps to adjust to the new dynamics, like - as mentioned before - issuing common paper money. The BRICS Central Bank will also act as a bank of last resource for the member countries, lending to their respective national central banks at inter-bank rates.

We have also decided on an initial exchange rate between the US dollar and the Bricso - one Bricso equals 10 US dollars.

This is roughly the relation of the outstanding debt - or unmet obligations - in proportion of the respective GDPs - of the US and the combined BRICS.

The second important step we are announcing - also as of January 1, 2014, the BRICS, Iran and Venezuela will sell their hydrocarbon - primarily oil and gas - in Bricsos, in a newly created Shanghai Oil Bourse. In fact, all countries, oil producers and otherwise, wishing to trade in other currencies than the US dollar may do so at the Shanghai Oil Bourse, or in short the SOB.

The reason for abandoning the dollar as an oil trading currency is its volatility. In fact, the dollar has lost its value - and its trust - over the past decades; it is beset by enormous debt and has no real economic backing. Many oil producers see their hydrocarbon wealth at risk.

That is all for tonight. I wish you a fun-filled transition into 2014 and a happy New Year."

Use magic tools Report

You can't reply post until you log in Log in | register

BACK TO THE TOP
Contact us:Tel: (86)010-84883548, Email: blog@chinadaily.com.cn
Blog announcement:| We reserve the right, and you authorize us, to use content, including words, photos and videos, which you provide to our blog
platform, for non-profit purposes on China Daily media, comprising newspaper, website, iPad and other social media accounts.