Is A New Global Reserve Currency In The Works?
The Dynamic Wealth Report
June 22, 2011
by Karl Stevenson, Editor
It’s an average day here in New York City… tumbleweeds can be seen
blowing down the sidewalks of Wall Street. Everywhere you look, the
spaces once filled with taxi cabs, trench coats, street vendors, and
bumper to bumper traffic, are now filled with overgrown weeds and
debris. And it all exists as a chilling reminder of the once powerful
United States economic dominance…
Wait a second… are you reading the introduction to a new sci-fi
thriller?
No. Not in the least. But could you imagine such a scene?
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Is it possible Wall Street could one day become obsolete? Could
the balance of economic power really shift away from the US?
Well… the Chinese think so!
And they’ve put plans in motion to make it happen.
China’s setting up to attempt the single greatest coupe of power in the
history of the world. This power grab would make the Chinese the most
powerful they’ve ever been.
They’ll become greater than the once dominant Roman Empire… or the even
mighty Egyptians.
All while the US is too busy looking the other way worrying about Greek
default, US debt ceilings, and our own housing market meltdown to bother
doing a thing about it.
Sadly, even if we stopped to notice, could we keep the Chinese from
world domination?
I’m not sure… But what really worries me is no one is screaming into a
megaphone saying, “Hey… someone in power… do something!” Well, I’m on as
big of a microphone as I can get my hands on right now. And I’m
screaming at the top of my lungs!
What the Chinese are attempting to pull off is huge, and we need to get
ready for the backlash.
So what am I talking about? What’s the big deal?
The Chinese are working to transform their currency, the Yuan, into the
world’s reserve currency…
Some of you may be saying, “Yuan? Reserve currency? Who cares?”
Here’s what you need to know…
The US Dollar is the world’s reserve currency. As such, it’s held in the
vaults of central banks around the world. Holding a reserve currency
provides financial security, much like holding gold. It also allows
countries to transact business in international markets. If you’re using
the most liquid currency in the world, you’re able to do business
anywhere.
Right now, many commodities and other products are valued in US Dollars.
There’s no arguing, the US Dollar is the most widely used of all
currencies… You can buy or sell any amount of US Dollars at any time.
So when the Chinese announce they’d like to see the Yuan as the world’s
reserve currency, I find it both shocking and scary at the same time.
My shock comes from knowing how the Yuan has been manipulated by the
Chinese for such a long time.
How could we possibly trust a country to control the world’s reserve
currency when they’ve manipulated it in the past?
It’s a great question, but what’s even more concerning are the actions
the Chinese have taken to get this plan in motion…
You see, the Chinese are already swapping currencies with countries on a
one-on-one basis. They’ve exchanged currencies with Brazil, Argentina,
Hong Kong, Indonesia, Malaysia, and South Korea. Now there’s nothing
wrong with countries exchanging currencies outside the US Dollar.
But these “beta tests” look more like the development I’m all fired up
about… Shanghai as a financial center instead of New York or London.
The Chinese are serious about this plan…
According to Bloomberg, a senior official from of the Shanghai branch of
the China Banking Regulatory Commission confirmed a 2020 date. The
vice-head, Zhang Guanping, told reporters that this date would fall in
line with the timetable China has set for making Shanghai a major
financial center… just like New York, or London. And if the Yuan became
the reserve currency, Shanghai’s transformation would eventually eclipse
all other financial centers.
The bottom line is this…
If China were to take over as the primary reserve currency, and remain
the leader in global trade, they could start setting the rules for the
global economy!
More importantly, a Yuan as the world’s reserve currency would make the
Fed powerless. We’d see the Chinese determining growth rates, interest
rates, and virtually every important financial decision around the
globe. Could you imagine your mortgage rate determined by the Bank of
China?
I could go on and on speculating at the shockwaves of such a move…
The good news is we won’t see this happen overnight. They have many
hurdles to clear, including giving up control of the Yuan trading. And
it’s not something the authoritarian Chinese government would be willing
to do very easily.
Just so you don’t think I’m pumping a conspiracy theory, the Chinese
have actually started taking quiet steps to set this plan in motion.
They’re trading out their long term US debt into shorter term debt.
Effectively allowing them to slowly sell off $2 trillion dollars of US
debt…
As an American, I hope we can turn our country around so there is no
need for foreign countries to look elsewhere for a reserve currency.
We may be the global financial giant right now, but without financial
vigilance, we too may be written up in the history books as just another
great self-destructive society...
• Crude Oil (Near $94/barrel)
Crude oil has seen continued selling pressure. As the US Dollar
strengthens and global growth shows signs of slowing, the world’s
primary energy source is falling in price. Oil may continue to slide in
coming months as the US Dollar continues a trend higher.
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