If the world lost faith in the dollar overnight..

zod

say the chinese dumped all their US currency or some other event caused a run on the dollar

1. Would the Euro immediately become the world reserve currency and if so would it be likely to remain so for long ?

2. What would happen to euro and other non us interest rates ?

3. What other effects would this have ?

thx!

Capt'n Midnight

Oil is purchased in dollars as are many other commodities so unlikely to plummet.
Also something like 40% of dollar notes are held abroad.

Why would the chinese do this , they need dollars to buy oil

Some reckon that they got rid of Saddam because he was tying to setup oil trading in Euro.

ionix5891

Capt'n Midnight unfortunately you are very much wrong




Chinese are already doing everything possible to move away from the dollar

they are buying up any metals they can get hands on
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5160120/A-Copper-Standard-for-the-worlds-currency-system.html

and hugely increasing their gold reserves
http://www.ft.com/cms/s/0/1d23f80c-30aa-11de-bc38-00144feabdc0.html

they also are making a play for the IMF SDR reserve currency with Russia
http://experts.foreignpolicy.com/posts/2009/04/22/reserved_for_china
http://www.bis.org/review/r090402c.pdf?noframes=1

RMB being positioned as replacement for the $ in 5 chinese cities
http://www.chinadaily.com.cn/china/2009-04/09/content_7660017.htm

and spending their useless paper dollar in return for guaranteed supplies of energy
http://www.telegraph.co.uk/finance/newsbysector/energy/3277587/Russia-strikes-lucrative-oil-deal-with-China.html


they understand that the dollars days are numbered and dont want to be caught with their pants down


theres only one way for the dollar, down

Black Swan

The dollar would probably be replaced by a stable currency like the euro, stability in the currency markets being key.

Joey the lips

ionix5891 wrote: »

Capt'n Midnight unfortunately you are very much wrong




Chinese are already doing everything possible to move away from the dollar

they are buying up any metals they can get hands on
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5160120/A-Copper-Standard-for-the-worlds-currency-system.html

and hugely increasing their gold reserves
http://www.ft.com/cms/s/0/1d23f80c-30aa-11de-bc38-00144feabdc0.html

they also are making a play for the IMF SDR reserve currency with Russia
http://experts.foreignpolicy.com/posts/2009/04/22/reserved_for_china
http://www.bis.org/review/r090402c.pdf?noframes=1

RMB being positioned as replacement for the $ in 5 chinese cities
http://www.chinadaily.com.cn/china/2009-04/09/content_7660017.htm

and spending their useless paper dollar in return for guaranteed supplies of energy
http://www.telegraph.co.uk/finance/newsbysector/energy/3277587/Russia-strikes-lucrative-oil-deal-with-China.html


they understand that the dollars days are numbered and dont want to be caught with their pants down


theres only one way for the dollar, down

Spot on ionix sorry capt your mistaken, I was buying from the chinese up until I lost my job and for the last year they have been getting me to buy in euro. In there words.

Chinese Rep "See that container there,

Me yes!

Chinese Rep: that for ireland! see those 32 containers there?

Me: yes!

Chinese Rep: that for france, france pay euro, you pay euro or your container goes to france

Me: Feck off and stick your cheap container up your wozoo!.... I dont think so!

The last line excluded this was the conversation with a chinese rep last year!

As for commedity buying, I keep track of a lot of economics( I know a boreing subject) Last time I looked the chinese were the biggest buyers of precious metals,inc gold!

Good to see the humble euro doing well aint it!


"Investors should pay special attention to what Asian gold investors are doing. Ironically while Asia is one of the biggest buyers of gold, media coverage is sparse and sometimes ignored. Why would a gold investor ignore what the buyers are doing?

As gold has risen past $750, gold equities in many major Asian exchanges, particularly in Shanghai and Hong Kong, have risen 300-400%. Needless to say, China is one of the biggest buyers of gold and Asian investors are betting that stock prices will continue to rise. Comparatively since the rate cut on September 18th, 2007, US Gold equities have risen 20-50%. While 20-50% is a great increase, it pales in comparison to the typical 300-400% gains we are seeing in Asia. What this spells out is a difference in expectations. Money is flowing into the mining industry and into gold shares in Asia. Let’s look at Zhaojin Mining (1818.hk), a leading Chinese gold miner I would compare to Barrick Gold ABX or Newmont Mining NEM."

justfortherecor

Ionix, decent points but to say the chinese are doing everything they can to move away from the dollar is rather sensationalist. I think a lot of this recent speculation is due to the working paper released by the governor of the Chinese central bank a few weeks back.

The Economist addressed the issue in one of its "Economics Focus" sections and suggested the Chinese may be simply diversifying their dollar holdings rather than heavily winding down their investments in the dollar. Equity investments in Blackstone and MS were the most high profile of these new strategies. Also the Chinese foreign holdings authority is very secretive about the nature of its foreign exchange holdings so most speculation arises from the figures released by the American Treasury. This only reveals holdings acquired through American intermediaries, not those that were acquired, say, in London.

Finally, if the Chinese authorities wish to maintain the depressed value of the Yuan to maintain their export led economy they need to buy large holdings of foreign currency. If China wishes to maintain a competitive Yuan-Dollar rate for its exports, a large proportion of its holdings will inevitably end up in Dollars.

To say the dollar's days are numbered is way wide of the mark, I thought I'd stumbled into the conspiracy theory forum for a minute there.

Joey the lips

^^^^ Interesting, where do I find more information ^^^^

zod

https://www.youtube.com/watch?v=hMwk4P1Kuzk

eamonnm79

The quantitive easing in America should have had an emmidiate devaluing of the dollar, Since the chinese have lots of dollars obviously they are very concerned. Trading them in for comodities would seem a prudent option ffor them even though they have relied on America for much of their exports.
I think this new world reserve currency is going to happen.
The Chinese have the Americans over a barrel on this.
Its about time the yanks lost this unfair advantage anyhow.

zod

https://www.youtube.com/watch?v=qPCJx78YLcs

zod

hmm tanking now

https://www.youtube.com/watch?v=rWnT_lY-g2U

https://www.youtube.com/watch?v=vzg3EuRW2a4

ctrl-alt-delete

Im not big into economics,

But what i read a while ago - and in line with the above is that the chinese are worried about the dollar - very worried and are doing what they can to offload the amount they have and their reliance on it,

It also suggested that within the next decade the dollar would not be the currency a barrell of oil is priced at any more, because of the US response to the current climate and its subsequent instability.

zod

geithner on his way to China next week

https://www.youtube.com/watch?v=_QA7hskCExo

zod

sachs :

https://www.youtube.com/watch?v=VSwWy4E6I04