The former chief economist at the World Bank, Justin Yifu Lin, is advising the Chinese government that the time has come for a single global currency. Lin, who is also a professor at Peking University, says that the U.S. dollar “is the root cause of global financial and economic crises” and that moving to a “global super-currency” will bring much needed stability to the global financial system.
Considering how recklessly the Federal Reserve has been pumping money into the global financial system and how recklessly the U.S. government has been going into debt, it is hard to argue with his logic.
Why would anyone want to trust the United States to continue to run things after how badly we have abused our position? The United States has greatly benefited from having the defacto reserve currency of the planet for the past several decades, but now that era is coming to an end.
In fact, the central bank of China has already announced that it will no longer be stockpiling more U.S. dollars. The rest of the world is getting tired of playing our game.
Our debt is wildly out of control and we are creating money as if there was no tomorrow.
As the rest of the world starts moving away from the U.S. dollar, global power is going to shift even more to the East, and that is going to have very serious consequences for ordinary Americans.
Sadly, most Americans don’t even realize what is happening. These comments by a top adviser to the Chinese government should have made front page news all over the nation.
You would have needed to go to China Daily to find the following excerpt…
The World Bank’s former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
“The dominance of the greenback is the root cause of global financial and economic crises,” Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. “The solution to this is to replace the national currency with a global currency.”
Lin, now a professor at Peking University and a leading adviser to the Chinese government, said expanding the basket of major reserve currencies — the dollar, the euro, the Japanese yen and pound sterling — will not address the consequences of a financial crisis. Internationalizing the Chinese currency is not the answer, either, he said.
And this is not the first time that we have heard these kinds of comments coming out of China. For example, Xinhua News Agency called for a “de-Americanized world” back on October 14th…
“It is perhaps a good time for the befuddled world to start considering building a de-Americanized world.”
That particular news agency is controlled by the Chinese government, and if the Chinese government did not approve of that statement it never would have made it into the paper.
Then in November, the central bank of China announced that it is going to stop stockpiling U.S. dollars.
Most Americans don’t want to hear this, but what we are witnessing is a massive shift in global power. China is catching up to us in a multitude of ways, and they are getting tired of playing second fiddle to the United States. In fact, China is already surpassing the U.S. in a number of key areas…
- -China accounts for more global trade than anyone else in the world.
- -China imports more oil from Saudi Arabia than anyone else in the world.
- -China imports more oil overall than anyone else in the world.
- -It is now being projected that Chinese GDP will surpass U.S. GDP in 2017.
When the rest of the world quits using U.S. dollars to trade with one another and quits lending our dollars back to us at ultra-low interest rates, things are going to start changing very rapidly.
So the days of piling lots of cheap plastic stuff made in China into your shopping carts is coming to an end.
And as the rest of the globe moves away from U.S. debt, interest rates are going to go much higher than they are today. Eventually, the U.S. government will be paying out more than a trillion dollars a year just in interest on the national debt and all loans throughout our entire financial system will have higher interest rates. This is going to cause economic activity to slow down dramatically.
It has been a very good thing for the U.S. economy that the federal government has been able to borrow money cheaply, because the interest rate on 10 year U.S. Treasuries affects thousands upon thousands of other interest rates throughout our financial system. For example, as the rate on 10 year U.S. Treasuries has risen in recent months, so have the rates on U.S. home mortgages.
Our entire way of life in the United States depends upon this game continuing. We must have the rest of the world use our currency and loan it back to us at ultra low interest rates. At this point we have painted ourselves into a corner by accumulating so much debt. We simply cannot afford to have rates rise significantly.
As the rest of the globe moves away from the dollar, demand for the dollar is going to go down and that is going to cause a lot of inflation – especially for imported goods.
Meanwhile, China is also rapidly catching up to us militarily.
At a time when U.S. military spending is actually decreasing, China is spending money on the military aggressively.
In 2014, Chinese military spending will rise to $148 billion, which represents an increase of 6 percent over 2013.
The balance of power is shifting right in front of our eyes.
The world is changing, and the United States is not the only superpower anymore. China is thriving and Russia is also on the rise. Five years from now, the world is going to look far, far different than it does today.
In the end, most Americans will have no idea what is happening until it is far too late to do anything about it.