Friday, April 17, 2009

May I get paid in Yuans, por favor?

President Obama is trying to apply Band-Aids to the gaping wounds that Bush and his criminal conspiracy inflicted upon our relations with Central and South America. But Obama is being outflanked by China who has been passing out billions in foreign aid to offset the damage the current economic collapse has inflicted on our nearest neighbors.

In a new twist China is giving 10 billion dollars' worth of currency to Argentina. Notice I said "10 billion dollars' worth"; it’s not in dollars; it’s in Chinese currency. This will get Argentina out from under the thumb of US banking interests that have ruined their economy.

In return China is securing access to all manner of raw materials that it needs and it is leaving the US dollar behind. Obama will have an uphill battle explaining to these countries why they should continue to trade with the US. China makes all the manufactured goods we have to trade and will buy everything South America produces. China also offers the added benefit of not trying to overthrow their governments.

Drug lords will probably continue to do business with the US but they will probably start wanting to be paid in Chinese currency. Hell, even economic correspondents want to be paid in Chinese currency.


Ronmac said...

Maybe Obama should start looking at new strategies to make the U.S. dollar more attractive. For instance, instead of having all those newly printed billions being printed on sheets how about puting them on rolls like toilet paper. That way if the dollar tanks, you can always find another use for it, something more practical.

Bukko Boomeranger said...

Interesting speculation about the yuan, or renminbi, or whatever they're calling it, P2. However, if you look at the quantum physics of finance, you'll see that China has also been debasing its money to keep it from rising against the U.S. toilet paper (or "poo tickets" as TP is sometimes called down here.) Any fiat currency is subject to scamming, if the people who govern the currency system are crooked enough. And large amounts of money always breeds crookedness. So if I was in any of the countries that China has done a "your goods for our money" deal, I'd be on guard.

Not that I'm advocating a return to the gold standard. I've studies enough history to know the meaning of William Jennings Bryan's speech about how "you shall not crucify mankind upon a cross of gold."

IIRC, China used to have one form of currency that was used within the country, and another that was used for international trading. The international one was the "real" currency that was pegged to actual value, and the internal currency was the one that could be hyper-printed and manipulated. I could see this happening world-wide -- pegged currencies for external deals, worthless crap for what you buy locally. That would be a great way to have "monetary protectionism" as all major currencies inflate and make themselves worthless to anyone living outside the border.