Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Joined: Aug 12, 2004 Posts: 1180 Location: England
Posted: Sun Jan 09, 2005 7:19 am Post subject:
MonteQuest wrote:
This shows the power of exponential growth. It is interesting to note that a devaluation of the dollar is technically the same as the USA defaulting on it's debts. Why? Because as the dollar declines, its purchasing power for the holder of dollar denominated debt drops as well.
For example, Wimpy buys hamburgers from the EU in dollars. The EU loans Wimpy $10 on Friday to buy two hamburgers until next Tuesday. On Tuesday Wimpy pays the EU back the $10, but over the weekend, the dollar declines 50% against the euro. The EU is technically paid back, but now the $10 will only buy one hamburger.
I am convinced this is why OPEC is cutting production to jack up the dollar denominated price. At one time 1 Euro cost 80 cents(US), not it costs them somwhere between 1.30 - 1.35. With analysts predicting further declines in the dollar, I think OPEC are pre empting this with production cuts.
For example, Wimpy buys hamburgers from the EU in dollars. The EU loans Wimpy $10 on Friday to buy two hamburgers until next Tuesday. On Tuesday Wimpy pays the EU back the $10, but over the weekend, the dollar declines 50% against the euro. The EU is technically paid back, but now the $10 will only buy one hamburger.
It's just a matter of time. It will happen...and when it does.
World: Signs Grow Of Dollar Losing Favor As World’s Reserve Currency
Quote:
For years, central banks around the world have held most of their foreign currency reserves in U.S. dollars. Now, there are signs that central banks are shifting away from dollar assets and into other currencies, such as euros. That's mainly because the dollar's value has fallen so much in the past three years. Experts say the gradual shift away from the U.S. currency is likely to continue -- suggesting there's more dollar weakness ahead.
Hungary and Poland both to enter the EURO currency by 2010 (adding 48 million more people).
Though I'm not sure there would be a complete switch over from $ to Euro, I would have thought the future might be bilateral or multi-lateral.
But if it remains single petro currency, the question now is how long could OPEC go on without switching over? _________________ We have no Plan B. Haven't we?Discuss!
India and China banks cut dollar exposure
By Steve Johnson
Published: March 8 2005 02:00 | Last updated: March 8 2005 02:00
The extent to which Indian and Chinese banks are cutting their exposure to the ailing US dollar was revealed yesterday in data from the Bank for International Settlements.
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The Asian central and commercial banks covered in the BIS data held only 67 per cent of their deposits in dollars as of September 2004, down from 81 per cent in the third quarter of 2001, said the Basel-based bank. The data indicate the shift out of the dollar was most evident in India, where dollar holdings fell from 68 per cent to 43 per cent during the three-year period. Chinese banks have reduced their dollar share from 83 per cent to 68 per cent - mostly before the third quarter of 2002.
The greenback remained under pressure after Tuesday’s sell-off, although there was little consensus as to why this was so. Uncertainty prior to Friday’s US trade data was cited by some as an explanation, particularly as this once again focused attention on the structural woes of the US, rather than the rather more dollar-positive cyclical factors.
Comments from Zhou Xiaochuan, the governor of the People’s Bank of China, revealing that the PBOC has been studying the option of moving from a dollar-peg to a basket arrangement, further damped sentiment.
Technical factors have also played their part, with the dollar index having falling below a key support level. This in turn encouraged momentum-driven hedge funds to exploit the breach, leading Tim Fox, head of market strategy at National Australia Bank, to suggest the euro could rise to $1.35 or $1.36.
The dollar fell Y0.6 to Y103.95 against the yen and 0.3c to a fresh-two-month low of $1.3372 against the euro.
The yen was buoyed by solid economic data, with the diffusion index of leading economic indicators rising to 55 in January, the first 50+ reading since August 2004. This supported hopes that Japan may be climbing out of its shallow recession. The yen strengthened Y0.5 to Y139.01 against the euro.
China Reduces Dollars in Reserves, Increases Euros, Lehman Says
March 11 (Bloomberg) -- China's central bank cut the share of its currency reserves held in dollars and raised its holdings of euros, according to an estimate by Lehman Brothers Holdings Inc.
Seventy-six percent of China's reserves, the world's second- largest, were in dollars last year, down from 82 percent in 2003, Lehman said in an analysis yesterday of figures published by the People's Bank of China. Lehman is the fifth-largest U.S. securities firm. The rest are in euros, Lehman said.
...
China spent 1.6 trillion yuan ($193 billion) buying foreign currency in 2004 to maintain the yuan's fixed exchange rate at about 8.3 per dollar, 41 percent higher than 2003, the central bank said on Feb. 28. Foreign reserves rose to a record $610 billion, according to People's Bank of China figures.
Lehman predicts China will allow the yuan to fluctuate by the end of June.
Accumulating Treasuries
Chinese investors, including the central bank, are the second- largest foreign holders of Treasuries, with $194 billion in December, according to the U.S. Treasury Department. Holdings of Treasuries almost doubled from $118.4 billion at the end of 2002. Japanese investors are the biggest with $712 billion.
China doesn't provide details of the composition of its reserves. Sood said she based her study on the increase in both reserves and foreign currency purchases conducted by the central bank as well as movements in exchange rates between 1996 and the end of last year.
Lehman's currency strategy team was the most accurate forecaster of exchange rates in the third quarter of 2004, based on a Bloomberg survey of 50 companies. The firm was ousted last quarter by FxMax, a currency forecasting company based in Sydney.
Dollars accounted for 63.8 percent of the world's currency reserves at the end of 2003, down from 66.9 percent two years earlier, according to International Monetary Fund figures released in April last year. ...
50% is critical mass right now we are close to 55%
First of all, the article was written in 1999. Much has changed since then. And it was written or published by the Federal Reserve Bank of Minneapolis. No bias here!!!
In that period when the euro was a fetus (between conception and "birth" as a cash currency) the American media was the only media in the world mocking the concept of the euro. Someone then knew what was in store for the dollar, especially the petro-dollar system once the euro matured.
It will have a major effect on GDP. It will effect the GDP of the US via the way US debts are secured and the way the US economy is financed. US businesses that can't secure financing and US consumers that are bankrupt won't be in a position to consume or produce in excess.
On the other hand, with the US producing most of it s goods in China, the GDP may not be affected. But, the US economy sure will.
I am glad he wrote that, and it’s on the record. It just shows how much he knows. . There was an article by a US navy war college prof. (2003) dismissing the argument that US went to war to protect the petrodollar as "internet based conspiracy theory" that too shows who was right.
People I think we are a lot closer to the truth than you think.
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. There was an article by a US navy war college prof. (2003) dismissing the argument that US went to war to protect the petrodollar as "internet based conspiracy theory" that too shows who was right. 
