Tuesday, July 7, 2009

TBAR: Texas, China, & a New Currency, Part 3

The Chinese government is definitely putting an end to the US dollar's reign as the reserve currency for the world. After Bretton Woods, the dollar became the reserve currency for the world. Since all governments hold dollars in their exchange reserves, the dollar became indispensable and governments were stuck with it when the US would run it down. This made it easier to sell debt (US Treasury securities) around the world and run an unbalanced budget. These days are coming to an end.

The New York Times reports on Tuesday, July 7, 2008, in the article, "In Step to Enhance Currency, China Allows Its Use in Some Foreign Payments," by Brad Bradsher, that China is not waiting for a synthetic currency to replace the dollar. The Chinese government is starting to introduce their currency, the renminbi, for foreign trade.

The whole world is concerned that the Federal Reserve Bank is beginning the destruction of the U.S. dollar. To protect the wealth poured into China by American businessmen, the Chinese government must break the world's dependence on the dollar and transfer their wealth into other currencies. This has been discussed in Part 1 of this series of articles. I mentioned in Part 2 of this series of articles that Plano, Texas, should participate in the creation of a new synthetic currency to replace the dollar in international trade.

If Texas participates with China in creating and managing a new reserve currency for the world, Texas will become influential in world finance and increase prosperity in Texas.

Robert Canright

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