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Thread: China, Russia quit dollar

  1. #41
    Enemy Combatant
    Kandahar's Avatar
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    Jul 2005
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    10-15-13 @ 06:47 PM

    Re: China, Russia quit dollar

    Quote Originally Posted by j-mac View Post
    No, it really isn't separate when you consider that these moves are designed, or at least a side benefit of them is to weaken the dollar.

    Sigh...where to begin.

    Why would Russia and China want to weaken the dollar? Did you completely miss that Russia and China both criticized our OWN efforts to weaken the dollar via quantitative easing less than a month ago?

    Did you miss the fact that the yuan is pegged to the dollar, and therefore it is IMPOSSIBLE for them to weaken the dollar by switching from the dollar to their own currency?

    Why are Russia and China under any moral obligation to use the dollar for their mutual trading, any more than the US and Canada use the euro when trading with one another?

    Does your "Cold War" analogy have any substance at all, beyond the fact that you saw the words Russia and China and detected some vague conspiracy against the United States? Do you even know the history of the Cold War? Russia and China were hardly allies for the vast majority of it.
    Last edited by Kandahar; 12-01-10 at 01:29 AM.
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  2. #42
    Lord Tammerlain's Avatar
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    Today @ 12:17 AM

    Re: China, Russia quit dollar

    Quote Originally Posted by Aunt Spiker View Post
    I'm less concerned about their dive in/out of using our currency - seeing as how many other countries don't use it, either, I really don't comprehend the implication and can't realize if it's good or bad. (ignorance yes - bliss maybe).

    But this part I quoted is notably disturbing to me.

    If our one major fall-back bailout ally is now saddled with our constant grudge then what does that make them - and what does that make them and us?

    I think we're going to suffer the consequences of assuming we're "squared away with Russia" - and I note the significance behind this announcement coming *from* St Petersburg.

    Many countries use the USD to settle international trade. For example China buys coal from Australia in USD, oil from Russia in USD, ir.on ore from Brazil in USD.

    The same pattern is repeated in many different countries as a means of exchange of goods and services for currency. This requires a country maintain a supply of USD so that its banks can settle those trades for the companies they deal with. In general a country should maintain a reserve of USD equal to a few months of normal trade levels that require USD settlement to account for any potential shocks. This eats up some of the "supply in USD" in the world, and causes the USD to be valued higher then it normally would be. However given that both China and Russia have very large USD reserves, the change in using RMB or Rubles as a means to settle trade between the two is not going to effect the USD from an economic standpoint. China and Brazil have already set something up like what China and Russia have done.

    So in the short term this means nothing to the USD, in the long term however is sets the foundation for the USD to be replaced or at least be significantly reduced as the worlds reserve currency. The USD being the worlds reserve currency is one of the forms of power the US has in geopolitics.

    So short term it means nothing, long term a possible reduction in US geopolitical power.

    It also helps ensure that should China or Russia find themselves short of USD they will still be able trade without having to borrow USD from the US fed or Treas ( for example if China decided to buy a significant amount of US federal government land, and the Palin admin needed the money to pay down debts.
    Conservatives believe the government is incompetent, and seek to elect people who will prove it
    Ignorance is Bliss Bliss is the same as happiness US Christian conservatives are the happiest in the US according to studies Do you see a connection?

  3. #43
    Tavern Bartender
    American's Avatar
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    Today @ 02:25 PM

    Re: China, Russia quit dollar

    Quote Originally Posted by Manc Skipper View Post
    They tell you to pay off your notes in a currency that's worth something.
    Really? Tell them they can sue.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)

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