I feel that something big is happening behind the scenes -- either a
world-wide row or an agreement.
Larry Summers, Obama's chief economic advisor was in Beijing three weeks
ago (but has now resigned from Obama's cabinet). Three weeks ago,
half-a-dozen of the major Western banks, such as HSBC and JPMorgan, are now
joining with China promoting the renminbi as an international trading
currency. Tim Geithner, the US Treasury Secretary was in Beijing last
Thursday. Meanwhile, Premier Wen has visited France and Germany for the
second time in the last two or three weeks. Subsequently, the European
Monetary Fund has said that there'll be no more quantitative easing (while
America can think of no other policy). China is laying down massive port
facilities in Greece and also buying their euro bonds (and probably also
those of Spain and Portugal if necessary). Last week, 24 countries devalued
their currencies in attempts to maintain trade surpluses -- a war that
could expand to many other countries and continue to the bottom very
quickly. Hedge funds, investment funds and pensions funds are buying gold
now whenever there's a momentary dip, as are China, Russia and some of the
Middle East countries, all with plenty of dollar funds (while they have any
value at all!). Consequently the price of gold is rising at a fast rate --
but steadily. Two days ago, the (Washington dominated) IMF is saying that
they want a world currency (and they want to be in charge of it! -- that
is, with America in charge, which of course China would never agree to!).
Meanwhile, all Western currencies are spiraling downwards in value (against
commodities) and it's debatable whether any Western country can ever
recover from their government debts, even with years of austerity, and will
soon start double-dipping into a Japanese style deflation.
We are now close to a world-wide economic crunch more severe than that of
2008/9 so it seems to me that there are two alternatives, which will become
very clear quite soon:
1. Some sort of world trading currency is in the offing to replace the
American dollar, probably based on a revised price of gold (so that, at its
institution, all government debts can be wiped out);
2, An increasing de-coupling of trade between America and the rest of the
world will be taking place from now onwards with the major Western banks
increasingly servicing the latter, and America experiencing the same sort
of downgrading that the UK did (and still does) during the decline of the
British Empire.
Keith
Keith Hudson, Saltford, England
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