Author: abramicus

GREECE IS CRYING OUT LOUD FOR A WILLING RESERVE CURRENCY - WHY NOT RENMINBI? [Copy link] 中文

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Post time 2015-6-29 13:17:41 |Display all floors
THE RATIONALE FOR MAXIMALLY SELF-SUSTAINED ECONOMIES

China, for the greater part of if its 5,000 year history was a self-sustaining economy that had no need for foreign trade, and until it opened its ports to European and then Japanese trade, that invited foreign pressures to accept unwanted imports (of opium) and forced exports (of silver), was in the early 19th Century, the richest country on earth.

Countries that depend on exports to earn foreign currencies with which to import their necessities, or countries that depend on imports by forcing other countries to accept their fiat currencies as payment for their wants and needs, are vulnerable to foreign intrigues and interference.

The current web of globalization in the case of the Asian Currency Crisis of 1997, and now in the case of the Greek debt crisis of 2015, has proven to be a trap for weaker countries to be fed upon by stronger ones, instead of being a web of safety for the weak protected by the strong.

Greece is shouting for help, as its elderly and sick are demanded to be sacrificed, in order that their strong and rich may be spared being eaten alive by their creditors.  The web of a common currency has proven to be a chain, rather than a lifeline for its people.  If Tsipras is serious about freeing his people from their bondage to a foreign currency, then he has no time to waste in issuing Drachmas for deposits previously made in Euros, either using the original exchange rate of June 19, 2000, of 340.75 Drachmas/Euro, or simply creating a new Drachma, at a 1-to-1 exchange rate of 1 Drachma/Euro, and demanding that all loans and trades use only Drachmas at this exchange rate.  Businesses that refuse to accept Drachmas will not receive any loans, or loan extensions.  Those that accept Drachmas will be given preferential treatment when they apply for credit or loans from Greek banks.

Free trade (without tariffs that is) is not free, if it uses a currency controlled by an entity that is not subject to the command and authority of the people who entrust the fruits of their labor and the treasures of their natural resources to the issuers of such a currency.  They have been looted of their labor and their resources in the name of "Free" Trade.  Free trade has never been free.  The burden of such a trade is borne by those who accept an external fiat currency as payment for their labor and their goods.  It is time that Greece sets an example of Freedom, by issuing its own sovereign currency, and mandating its use by its own people in exchange for all that they labor for and all that they own, as a social contract with one another, to honor the value of the service and produce of their brothers and sisters, as they expect their own service and produce to be valued.

Shut the gates!  The barbarians are at the gates!  Issue Drachmas today!




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Post time 2015-6-29 13:36:53 |Display all floors
This post was edited by abramicus at 2015-6-29 13:39
Zhou_Suzhou Post time: 2015-6-29 12:25
This crisis has exposed the major flaws in the Euro economic model.  The Greeks exploited those flaw ...

Well said.  Greece is no damsel in distress, and China cannot save Greece, and if it could, it could not be sure that Greece with repay its goodwill with timely repayment of its loans.  On the other hand, the PBOC has gone overboard in courting the favors of the IMF, voluntarily overvaluing the Yuan to the point that its manufacturing sector is contracting, its GDP falling, its exports dropping, its foreign currency reserves dwindling by 300 billion dollars in one year, its unemployment rate and labor-related strikes escalating exponentially, all for the dubious vanity of being included as one of the five currencies used to finance the IMF's SDR's, which account for no more than 4% of the total reserve currencies held by central banks around the world, and of which, China cannot hope for funding more than 6% as a developing nation, equivalent to an astounding accomplishment of the Renminbi accounting for no more than 2.4% of the reserve currencies of the world.  So much sacrifice for so little benefit to China, benefiting mainly Japan, which has been devaluing its currency while China has been sweating blood overvaluing its Yuan, leaving hundreds of billions of dollars of forfeited export earnings on the table for Japan to pick up for free, for at least 3 years running.

The PBOC has gone to bed with the IMF and BOJ and does not deserve the trust and support of the Chinese government.  The Queen must not only be innocent, but she must be above suspicion.  And in this case, one cannot even vouch for the former.

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Post time 2015-6-29 13:49:26 |Display all floors
Sure, absolutely true.  But shutting the gates is going to be very, very painful in a modern, integrated economy.  The Greeks are going to be damned if they bow to the IMF and the rest of the Euro zone and they will be damned if they go it alone and start the printing presses.  Greece doesn't have the natural resources of a country like China.  When they close the gates, they are going to lose access to many, many things they need.  Most of their factories will rely on parts manufactured outside of their borders - they will close when they can't order new parts.  What about much needed medicine that is manufactured in other parts of Europe? Nope. The Europeans, who are imposing this pain, are not going to accept a Greek currency as payment.  It's either horrible economic pain through austerity or horrible economic pain by being excluded from capital markets and the inability to buy the basics of life.

There is no help coming.  Not in this new world order.  The poor will suffer, the weak will suffer and the rich will ride out the wave of pain on their Swiss bank accounts reserves.  I wouldn't be surprised if they all start fleeing the country immediately to avoid the public outrage.  This is capitalism at its worst.  Winners and losers, and it's obvious which side the Greeks are standing on. Not a good day to be a working class Greek citizen.  

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Post time 2015-6-29 14:45:59 |Display all floors
Zhou_Suzhou Post time: 2015-6-29 13:49
Sure, absolutely true.  But shutting the gates is going to be very, very painful in a modern, integr ...

The irony of it all is that the ECB has been lending fiat money to Greece that cost it at most the paper it was printed on, supposedly worth some 240 billion euros of goods and services that Greece can buy from the developed countries, like German and France.  And Greece did just that, but because it is really not competitive against Germany and France, it really did not not have much to sell to them in return.  What it could produce could only be sold in the domestic market, such as services, small agricultural produce, and retail distributorships.  From these transactions, the Greek government was supposed to extract taxes to pay its loans from the IMF and ECB with.  But, these taxes are barely enough to pay for its social welfare and pension benefits.  Thus, in effect, Greece had to cut off its own arm to feed its creditors.  Greece, in retrospect, should never have borrowed from the IMF and ECB.  The normal recourse for a country like Greece would have been to raise the tariffs on all imports, but this was precisely what the Eurozone system took away from its members. Thus, like opium that is grown for pennies and sold for dollars, the Euro was printed for pennies, but now used to extract lives and limbs from its borrowers, like Greece.  The opium or Euro addict, Greece, is to blame for its addiction, but since its ports of entry have been forced open by the Eurozone Treaty, just as China's ports were forced open by the Treaties of Nanjing and Tientsin, the ECB and IMF were even more so to blame for making the poor Greeks, not only poorer, but also sicker and less productive as their addict.  Greece has become the Sick Man of Europe, and the method by which this was accomplished was by a modernized version of the old sleight of hand, called Free Trade.

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