China Calls For New World Currency to Replace Dollar
In February communist China warned Democrats not to discard the stable state of bilateral relations by following a “whatever-not-Bush” economic policy. Russia’s Putin warned Democrats about socialism.
But, Democrats went ahead with their historic spending bills anyway.
These moves by democrats now have China concerned that skyrocketing inflation is on the way.
In response, China called for a new reserve currency to replace the dollar.
The Financial Times reported:
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.
Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.
“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.
Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.
“The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system,” Mr Zhou wrote.
Related… According to the CBO, the Obama administration lowballed its deficit forecast by $482 billion over the next four years and $2.3 trillion over the next 10.