Sunday, July 10, 2011

Is the Dollar Dead?

It's looking mighty pale at least. The Chicago Mercantile Exchange will launch renminbi trading on 8/22. The Chinese government had pegged the renminbi 1:1 to the dollar to improve exports. The massive devaluing of the dollar the last couple of years has put pressure on China to attempt to establish the RMB as a new reserve currency. If this happens, the USD will crash.

Unfortunately for China, they may crash as well. Their all-too-often cheap, crappy goods will still be crappy but no longer cheap. The question will be whether they can sustain their own economic base internally. No doubt that would be possible in the long-term under stable global conditions. However, they may have only the short-term to do or die, and they are certain to face serious global turmoil as the euro and the EU threaten to break down.

Another factor is the debt deal, or lack of one, and Obama scheduled to read some words off the TOTUS in the morning, at 11:00am Eastern. Things could get really interesting by tomorrow noon.

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