Tuesday, April 7, 2009
WSJ Mistitles Article!
"China called for the creation of a new currency to eventually replace the dollar as the world's standard, proposing a sweeping overhaul of global finance that reflects developing nations' growing unhappiness with the US role in the world economy. ... This time, China is on the offensive, backed by other emerging economies such as Russia in making clear they want a global economic order less dominated by the US and other wealthy nations. ... Central banks around the world hold more US dollars and dollar securities than they do assets denominated in any other individual foreign currency. ... Chinese officials are frustrated at their financial dependence on the US, with Premier Wen Jiabao this month publicly expressing 'worries' over China's significant holdings of US government bonds. ... Moving to a reserve currency that belongs to no individual nation would make it easier for all nations to manage their economies better [Zhou Xiaochuan, Chinese central bank governor] argued, because it would give the reserve-currency nations more freedom to shift monetary policy and exchange rates. ... In reent weeks, senior Obama administration officials have sought to reassure Beijing that the current US spending spree is a short-term effort to restart the stalled American economy, not evidence of long-term US profligacy. ... 'The outbreak of the crisis and its spillover to the entire world reflected the inherent vulnerability and systemic risks in the existing international monetary system,' Mr. Zhou said. The increasing number and intensity of financial crises suggests 'the costs of such a system to the world may have exceeded its benefits.' ... 'The dollar reserve system is part of the problems,' Joseph Stiglitz, the Columbia University economist, said in a speech in Shanghai last week, because it meant so much of the the world's cash was funneled into the US. 'We need a global reserve system,' he said in the speech", my emphasis, Andrew Batson at the WSJ, 24 March 2009.
The WSJ does it again. This article was titled, "China Takes Aim at Dollar". A better title would have been: "Zimbabwe Ben Convinces China Dollar is Doomed". Disagreeing with Zhou, moving to the "reserve currency", he's thinking of would make it more difficult for any country to manage its economy. Zhou, study your Marx! Off to a reeducation camp! See my 17 September 2007 post: http://skepticaltexascpa.blogspot.com/2007/09/belated-admission.html. Short-term effort? Compared to what? The number of years it took to create the Grand Canyon? No Stiglitz, we need GOLD! It's GOLD that will be our "Great Leap Forward".