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China may begin to sell oil using Yuan?

sell oil using yuan? primary oil currency

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#1    Karlis

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Posted 29 September 2012 - 02:02 PM

Bypassing the US Dollar?

On June 1, 2012, China and Japan agreed to establish a direct yen / yuan exchange rate. Prior to this agreement, businesses in both countries were forced to first convert their currencies to U.S. dollars in order to buy either yen or yuan as needed to complete sales transactions between the two countries.



Lindsey Williams: "The most significant day in the history of the American dollar, since its inception, happened on Thursday, Sept. 6. On that day, something took place that is going to affect your life, your family, your dinner table more than you can possibly imagine."

"On Thursday, Sept. 6... just a few days ago, China made the official announcement. China said on that day, our banking system is ready, all of our communication systems are ready, all of the transfer systems are ready, and as of that day, Thursday, Sept. 6, any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do using the Chinese currency, not the American dollar

This announcement by China is one of the most significant sea changes in the global economic and monetary systems, but was barely reported on due to its announcement taking place during the Democratic convention last week. The ramifications of this new action are vast, and could very well be the catalyst that brings down the dollar as the global reserve currency, and change the entire landscape of how the world purchases energy.
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#2    questionmark

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Posted 29 September 2012 - 02:30 PM

If that extends beyond the Japan/China commerce it would be significant. It is known that in the long term China wants to establish the Yuan as reserve currency to underline their super power status. But they are at least 10 years away from being able to do that. And ten years is a long time in the economy of the world.

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#3    Hippycrite

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Posted 29 September 2012 - 08:17 PM

View Postquestionmark, on 29 September 2012 - 02:30 PM, said:

If that extends beyond the Japan/China commerce it would be significant. It is known that in the long term China wants to establish the Yuan as reserve currency to underline their super power status. But they are at least 10 years away from being able to do that. And ten years is a long time in the economy of the world.
Having only read a little on this (and plan to research more), what might the consequences be for our economy if this happened? I've read that the dollar being the reserve currency is the reason we can print mountains of money.


#4    questionmark

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Posted 29 September 2012 - 08:31 PM

View PostHippycrite, on 29 September 2012 - 08:17 PM, said:

Having only read a little on this (and plan to research more), what might the consequences be for our economy if this happened? I've read that the dollar being the reserve currency is the reason we can print mountains of money.

The dollar keeps its value because most governments have an interest in keeping it valuable, after all they have a lot of greenbacks in their vaults, sometimes even to back their own currency.

So now imagine that the raw material producers suddenly did not want dollars anymore? there would be a dramatic loss in value as nobody needs to get dollars to buy his raw material needs anymore. The New York foreign trade clearance organizations would loose its purpose and there would be a run to exchange the "reserve dollars" as fast as possible for whatever the new currency reserve is. That all would make the dollar go on a downward spiral like the Turkish Lira in the second half of the last century.

Not only that, but as the US is pretty short on currency reserves there would be a problem sourcing raw materials for lack of payment possibilities. In a country that has not have a positive payment balance in 20 years that could end up in quite a disaster.

What would be positive is that, at least for a short time, the US exports would be unbeatable low in price, which in the medium term would balance the the effects mentioned before if they can be produced without exterior sources of raw materials.

In any case, much of the US clout in the world would be lost. It is not so important anymore who can destroy somebody else but who can control trade. And that is always who has the reserve currency.

Edited by questionmark, 29 September 2012 - 08:40 PM.

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#5    Hippycrite

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Posted 29 September 2012 - 08:37 PM

Could bring us back to a manufacturing-based economy, instead of the consumer-based we seem to have now?


#6    questionmark

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Posted 29 September 2012 - 09:00 PM

View PostHippycrite, on 29 September 2012 - 08:37 PM, said:

Could bring us back to a manufacturing-based economy, instead of the consumer-based we seem to have now?

America always was a consumer based economy. It just manufactured most of what it consumed at home. That has not been the case recently. And the big American Industrial Revolution, about at the beginning of last century, had only one aim: produce more wares that people at home could consume.

In the 80s of the last century somebody decided that producing was kind of tedious and just put all the gears towards consuming whatever was produced abroad. In the short term it makes you much more money. In the long term it makes the country bankrupt.

Now, I guess your question is: Would America have to produce more again? That will have to happen whether the greenback is the reserve currency or not. There are not many other possibilities.

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#7    Hippycrite

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Posted 29 September 2012 - 09:53 PM

Yes, that was the gist of my question. And I've observed the steady decline of local manufacturing over the last few decades, along with a rise in retail and service type industries. The geo-economic/political shift toward Asia, and the peak and decline of oil seem to have been forecast as far back as the late '50's by an economist/mathematician (sorry, don't recall the name-and too lazy to look it up just now). Wonder if anyone is following those models as we head in that direction.


#8    shaddow134

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Posted 30 September 2012 - 02:20 AM

View Postquestionmark, on 29 September 2012 - 02:30 PM, said:

If that extends beyond the Japan/China commerce it would be significant. It is known that in the long term China wants to establish the Yuan as reserve currency to underline their super power status. But they are at least 10 years away from being able to do that. And ten years is a long time in the economy of the world.

Already Wages in China are rising so much that US manufacturers are considering heading back home,in a another 3 or 4 years the Chinese manufacturing base could easily start to Shrink.This could actually ripple across Asia.

Edited by shaddow134, 30 September 2012 - 02:21 AM.

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