China Calls For New Reserve Currency, And New World Order

We assume it is a coincidence that on the day in which we demonstrate China’s relentless appetite for gold, driven by what we and many others believe is the country’s desire to have a call option on a gold-backed reserve currency when the time comes, just posted in China’s official press agency, Xinhua, is an op-ed by writer Liu Chang in which he decries the “US fiscal failure which warrants a de-Americanized world” and flatly states that the world should consider a new reserve currency

“that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.”

Of course, if China were serious, and if the world were to voluntarily engage in such a (r)evolutionary reserve currency transition, then all Magic Money Tree theories that the only thing better than near infinite debt is beyond infinite debt, would promptly be relegated to the historic dust heap of idiotic theories where they belong.

Some of China’s (which as a reminder is the single largest offshore holder of US Treasury paper, and the second largest of all only second naturally to the Federal Reserve whose $85 billion in monthly monetizing “flow” is what is keeping rates from exploding higher) thoughts as captured in the Xinhua Op-ed:

Reform of the world’s financial system should include the introduction of a new internatonal reserve currency to replace the U.S. dollar.

The international community could thus permanently stay away from the spillover of intensifying domestic political turmoil in the U.S.

Fiscal impasse in the U.S. is a good time for “befuddled world” to start considering building a “de-Americanized world”.

Impasse has left many nations’ dollar assets in jeopardy and the international community agonized.

Other cornerstones should be laid to underpin a de-Americanized world, including respect for sovereignty, recognizing authority of UN in handling global hotspot issues and giving developing and emerging market economies more say in major international financial institutions.

Purpose of such changes is not to “completely toss the United States aside,” rather to encourage Washington to play a much more constructive role in addressing global affairs.

Of course, if and when the day comes that the USD is no longer the reserve currency, kiss America’s superpower, or any power, status, which is now based purely on the USD’s reserve currency status, and the ability to fund half the US budget deficit with debt promptly monetized by the Fed, goodbye…