This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Renminbi Relentlessly Replacing Dollar as Reserve Currency

VANCOUVER ( Bullions Bull Canada) -- It is no secret that China is replacing the U.S. dollar with its own currency in more and more of its bilateral trading. It's apparent to all that the renminbi will soon have (at least) a co-equal status with the dollar as the global "reserve currency."

Yet, what is rarely, if ever, discussed in the mainstream media are the enormous economic repercussions of a world suddenly awash in a massive glut of surplus dollars.

In most respects economics mirrors one of the basic principles of physics: For every action there is an equal-and-opposite reaction. If farmers produce a bumper crop of wheat and supply soars, then the price falls. Similarly, if the demand for wheat suddenly collapsed, the price would also fall. Both a jump in supply and/or a plunge in demand result in the same state: abundant/excessive supply. The consequence of excessive supply is always a fall in price.

This economic "physics" applies in an identical manner to the world of currencies...eventually. In a global economy ever more corrupted by serial market-rigging, nowhere is this manipulation more blatant than in the world's forex markets.

Indeed, the world's nations have openly declared they are all competitively engaged in currency manipulation as denoted by the euphemistic term "competitive devaluation."

Through destroying the value of one's own currency, the wages of workers in real dollars are driven steadily toward zero, and so (supposedly) this will allow a nation to undercut its trade partners and export more goods.

The sick joke here is that with all nations destroying the value of their currencies (and the wages of their workers) simultaneously, no nation gains any "advantage" and the wages of workers are being destroyed for no reason whatsoever. This does, however, produce the paradigm of all currencies simultaneously falling in value. Only the rate of decline of this paper-destruction varies.

This is why anytime we see some talking head refer to a currency as "rising in value" it is an implicit admission that the person has no understanding of the global economy. If two people jump off the roof of a 100-story building at the same time, and while on the way down one individual climbs on top of the shoulders of the other, that person hasn't "risen." He will merely go "splat" on the pavement a millisecond later.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%
YHOO $44.52 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs