Friday, September 25, 2009

Dollars? For what? Wallpaper?

Chinese Premier Wen Jiabao expressed concern as early as March over the safety of his country's huge US bond holdings now worth more than 800 billion dollars, making it the largest creditor to the United States.

Then, Chinese central bank governor Zhou Xiaochuan, who supervises more than two trillion dollars worth of dollar reserves, the world's largest, raised the stakes by calling for a new reserve currency in place of the dollar.
We can accuse the Chinese of doing a lot weird and senseless things but they ain't stupid. The US is on a debt path that absolutely can not be sustained and the Chinese know it. They believe the dollar is seriously in danger of becoming worthless and they could be right.

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