Streams

Leaving The Dollar Behind

Tuesday, April 07, 2009

Joshua Cooper Ramo, partner at Kissinger Associates and author of The Age of the Unthinkable, discusses China's efforts to divorce itself from the dollar and the future of US-China economic relations. And Lulu Wang, Chief Executive Officer of Tupelo Capital Management L.L.C and founding member of the Committee of 100, on how Chinese-American businesses are straddling the divide.

Guests:

Joshua Cooper Ramo and Lulu Wang
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Comments [10]

B. from NYC

Fact is that there is nothing about this that does get tied into knots. The Chinese fuel'd the consumerist rapaciousness that was buying the cheap goods the produced the jobs that the Chinese needed to employ their growing population that needs the money that is produced by selling the products that the United States buys that lead to the decline of the industrial base that lead to the decline in industrial jobs that paid Americans well enough that they didn't have to fuel their lifestyles by living on credit that created the debt that America funded by selling the T-Bills that the Chinese bought.

Did I get it right? Mmm... I don't think so. Will anybody else?

Apr. 07 2009 01:44 PM
kai from NJ-NYC

Agreed superf88. Not only does China have an GREAT stake in American economic health in numerous ways, but they also are reaching their natural limits to maintain and benefit their populations' well being.

Much of their land is turning to desert, water quality is generally very poor, and air pollution is choking everything. In short, they need help themselves.

Apr. 07 2009 10:43 AM
superf88

(As a creditor to the tune of $1 Trillion, China has as much or arguably more of a stake in the short/medium term health of the US economy than its US debtors.

To me that's the most interesting and under reported element of this. As well as the US's fanciest bargaining chip).

Apr. 07 2009 10:34 AM
superf88

For example:
Chinese Farmers Seek To Till African, South American Soil

http://chinabystander.wordpress.com/2009/01/31/chinese-farmers-seek-to-till-african-south-american-soil/

Apr. 07 2009 10:32 AM
Alison from NYC

Up until this past November (2008) *JAPAN* remained the largest holder of US Treasuries. (Then China surpassed them)

As for another world currency in East Asia isn't the yen the obvious choice?

Where do your guests think Japan is in all this? And why do American commentators (at least in the last decade) seem obsessed with China to the exclusion of Japan?

Apr. 07 2009 10:30 AM
kai from NJ-NYC

The US may currently be inflating the dollar, but the Chinese have been making the mistake of buying so many T-bills and fueling rapacious American consumption. If China does start selling off their dollars and diversifying, which they will and should, it will be over a long period, just as the guest stated.

The Chinese are just starting the dialogue on this matter and sending notice to the rest of the world, especially the US.

Apr. 07 2009 10:29 AM
superf88

Leave the dollar behind? Great idea, I hear Moon dollars are big right now in Bejing.

Seriously, though, there is something the Chinese value more than dollars, and will want even more in a few years.

It's called our farm land, once theirs is shot and their coasts flooded (currently China is 50% desert, up from 30% just a few yrs ago).

Apr. 07 2009 10:24 AM
Jeff Putterman from Queens

The United States is well on its way to becoming a third world country. One of the seeming prerequisites for this category is to destroy your own currency. Thanks to Alan Greenspan, Bush, and now Geithner, we are doing a superb job of creating a massive deflation of the US dollar. Inflation will destroy what remains of the american dream.

Apr. 07 2009 10:21 AM
hjs from 11211

will we know when they start selling their dollars (if they have not started)

Apr. 07 2009 10:19 AM
Tony from San Jose, CA

Back in the early 1970's the US had a huge trade deficit with France, in addition, the war in Vietnam was draining the Treasury. However, France demanded to be paid in gold, precipitating the end of the convertibility.

Now, China gets paid in paper, and the Fed has printed has much money in a few months as China amassed in years. No wonder they are pissed off.

If China drops the dollar, what do they use instead? Their currency would double in value, their economy would collapse. On top of this, it would mean that the Renminbi would float freely.

Apr. 07 2009 10:19 AM

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