by Tyler Durden
October 13, 2013
We assume it is a coincidence that on the day in which we demonstrate
China's relentless appetite for gold,
driven by what we and many others believe is the country's desire to have a
call option on a gold-backed reserve currency when the time comes, just
posted in China's official press agency, Xinhua, is an op-ed by writer
Liu Chang in which he decries the "US
fiscal failure which warrants a de-Americanized world" and flatly
states that the world should consider a new reserve currency,
"that is to be created to replace the
dominant U.S. dollar, so that the international community could
permanently stay away from the spillover of the intensifying domestic
political turmoil in the United States."
Of course, if China were serious, and if the
world were to voluntarily engage in such a (r)evolutionary reserve currency
transition, then all Magic Money Tree theories that the only thing
better than near infinite debt is beyond infinite debt, would promptly be
relegated to the historic dust heap of idiotic theories where they belong.
Some of China's (which as a reminder is the single largest offshore holder
of US Treasury paper, and the second largest of all only second naturally to
the Federal Reserve whose $85 billion in monthly monetizing "flow" is what
is keeping rates from exploding higher) thoughts as captured in the Xinhua
Reform of the world’s financial system
should include the introduction of a new international reserve
currency to replace the U.S. dollar
The international community could thus
permanently stay away from the spillover of intensifying domestic
political turmoil in the U.S.
Fiscal impasse in the U.S. is a good
time for “befuddled world” to start considering building a
Impasse has left many nations’ dollar
assets in jeopardy and the international community agonized
Other cornerstones should be laid to
underpin a de-Americanized world, including respect for sovereignty,
recognizing authority of UN in handling global hotspot issues and
giving developing and emerging market economies more say in major
international financial institutions
Purpose of such changes is not to
“completely toss the United States aside,” rather to encourage
Washington to play a much more constructive role in addressing
Of course, if and when the day comes that the
USD is no longer the reserve currency, kiss America's superpower, or any
power, status, which is now based purely on the USD's reserve currency
status, and the ability to fund half the US budget deficit with debt
promptly monetized by the Fed, goodbye.
Finally, as a reminder...
fiscal failure warrants a de-Americanized world
As U.S. politicians of both political parties are still shuffling back
and forth between the White House and the Capitol Hill without striking
a viable deal to bring normality to the body politic they brag about, it
is perhaps a good time for the befuddled world to start considering
building a de-Americanized world.
Emerging from the bloodshed of the Second World War as the world's most
powerful nation, the United States has since then been trying to build a
global empire by imposing a postwar world order, fueling recovery in
Europe, and encouraging regime-change in nations that it deems hardly
With its seemingly unrivaled economic and military might, the United
States has declared that it has vital national interests to protect in
nearly every corner of the globe, and been habituated to meddling in the
business of other countries and regions far away from its shores.
Meanwhile, the U.S. government has gone to all lengths to appear before
the world as the one that claims the moral high ground, yet covertly
doing things that are as audacious as torturing prisoners of war,
slaying civilians in drone attacks, and spying on world leaders.
Under what is known as the Pax-Americana, we fail to see a world where
the United States is helping to defuse violence and conflicts, reduce
poor and displaced population, and bring about real, lasting peace.
Moreover, instead of honoring its duties as a responsible leading power,
a self-serving Washington has abused its superpower status and
introduced even more chaos into the world by shifting financial risks
overseas, instigating regional tensions amid territorial disputes, and
fighting unwarranted wars under the cover of outright lies.
As a result, the world is still crawling its way out of an economic
disaster thanks to the voracious Wall Street elites, while bombings and
killings have become virtually daily routines in Iraq years after
Washington claimed it has liberated its people from tyrannical rule.
Most recently, the cyclical stagnation in Washington for a viable
bipartisan solution over a federal budget and an approval for raising
debt ceiling has again left many nations' tremendous dollar assets in
jeopardy and the international community highly agonized.
Such alarming days when the destinies of others are in the hands of a
hypocritical nation have to be terminated, and a new world order should
be put in place, according to which all nations, big or small, poor or
rich, can have their key interests respected and protected on an equal
To that end, several corner stones should be laid to underpin a
For starters, all nations need to hew to the basic principles of the
international law, including respect for sovereignty, and keeping hands
off domestic affairs of others.
Furthermore, the authority of the United Nations in handling global
hotspot issues has to be recognized. That means no one has the right to
wage any form of military action against others without a UN mandate.
Apart from that, the world's financial system also has to embrace some
The developing and emerging market economies need to have more say in
major international financial institutions including the World Bank and
the International Monetary Fund, so that they could better reflect the
transformations of the global economic and political landscape.
What may also be included as a key part of an effective reform is the
introduction of a new international reserve currency that is to be
created to replace the dominant U.S. dollar, so that the international
community could permanently stay away from the spillover of the
intensifying domestic political turmoil in the United States.
Of course, the purpose of promoting these changes is not to completely
toss the United States aside, which is also impossible. Rather, it is to
encourage Washington to play a much more constructive role in addressing
And among all options, it is suggested that the beltway politicians
first begin with ending the pernicious impasse.