Do They Really Yuant a Higher Yuan?

[GRG55]

Let's see now...G20 meeting scheduled to start in Toronto in one week.

Yep, right on que...

Peg is dead as China vows yuan flexibility

Michael Wei and Benjamin Kang Lim
BEIJING
Sat Jun 19, 2010 8:48am EDT

(Reuters) - China will gradually make the yuan's exchange rate more flexible, the central bank said on Saturday, indicating that it was ready to break a 23-month-old dollar peg that has come under intense fire from abroad.
The People's Bank of China all but ruled out the one-off revaluation or major appreciation hoped for by critics, saying there was "no basis for big fluctuations or changes" in the exchange rate...

[BiscayneSunrise]

Re: Do They Really Yuant a Higher Yuan?

i suppose an advantage to a higher yuan is to give China some extra pricing power when searching the globe for bargains over the next 10 years.

[jk]

Re: Do They Really Yuant a Higher Yuan?

it says "flexible," not "higher." how about pegging it [again] to a basket prominently including the euro. then its value might drift lower for a while.

[GRG55]

Re: Do They Really Yuant a Higher Yuan?

it says "flexible," not "higher." how about pegging it [again] to a basket prominently including the euro. then its value might drift lower for a while.

Brilliant...

[bill]

Re: Do They Really Yuant a Higher Yuan?

Agenda for G-20 comes from FSB.
http://www.foxbusiness.com/story/mar...g-interrupted/

"It was a substantive meeting," Mario Draghi, governor of the Bank of Italy and chairman of the FSB.
He said the FSB "prepared the groundwork" for the heads of the G20 governments to "take decisions" on regulatory reform of the global financial sector. Work will continue in the weeks before the G8 and G20 summits to be held in the Toronto area later this month, he added.

They want an alternative reserve currency.
Also see:http://www.itulip.com/forums/showthr...-4-24?p=159403

http://www.cigionline.org/publicatio...ntries-and-g20

Wednesday, June 16, 2010
The G20 presents opportunities and poses challenges for China and other developing countries. As new partners at the global table, they can both raise and pursue issues in the medium to longer term that are central to their continued growth and development.
Equally, new rules or arrangements stemming from the Financial Stability Board or the Sustainability Initiative applied uniformly across both developed and developing countries will encounter the issue of sharp differences in financial structures between these economies. Equally, approaches to deal with African and other developing countries that are excluded from the G20 may well differ between developed and developing countries.
China has been growing rapidly and is aware of the increasing power provided by its rapid growth. China is developing strong links with other emerging economies in the G20, and is likely to continue its policy of trying to change the rules at the major economic governance institutions in concert with these other developing countries. The relationships between China and India, China and Brazil, and China and Russia are all very complex and often complicated by prior conflicts, but are deepening rapidly. China-India trade has grown by 33 times between 1985 and 2007.
China is especially conscious of the potential for the G20 to rewrite the rules governing the operation of the world economy in the medium to longer term, particularly the role of the major economic governance institutions. China, together with other important developing country members of the G20 such as Brazil and India, has the opportunity to shape the rules of international economic governance in ways that reflect their own interests. A major interest of the G7 was to avoid policies that resulted in large misalignments of exchange rates and interest rates. Developing countries would like the institutions of international economic governance to be more responsive to their needs for development, and so one may expect a shift in the focus of discussions at the G20 as compared to the G7.
Policy makers in developing countries have in the past expressed their disquiet about the limited voice of developing countries currently in the international economic organizations, a view expressed strongly by both India and Brazil. The Chinese have been in the forefront of voicing concerns about the stability of the value of the US dollar in the face of the large deficits in the US budget and the need for an international currency in which countries could hold reserves rather than having to hold dollars. Lack of any other international currency apart from the dollar implies that countries can only fulfill their desire to build up their foreign exchange reserves of US dollars if the US runs a balance of payments deficit. Thus the developing country view is that if the desire of countries to build up their reserves contributes to the global imbalances, then an end to the global imbalances would seemingly require an alternative international currency.
Chinese policy makers, though expressing their conviction that an alternative international currency is needed, have not acted to disrupt the foreign exchange markets and there has, for now, been only a small reduction in their holdings of US government treasury bills. The Chinese policy makers have behaved responsibly in sustaining the current system and have done nothing to jeopardize its working. Many developing countries, including China, have been diversifying their reserve holdings and holding fewer dollars, but very gradually. Other developing countries are likely to adopt a similar approach as they favour multilateralism.
Developing countries will likely support reforms of the global regulatory and supervisory system. Until recently, the US and China had not participated in the Financial Sector Assessment Program (FSAP) managed jointly by the IMF and the World Bank that sought to improve supervision of the financial and banking systems and of capital markets and insurance companies. The FSAP also seeks to assess the resilience of the system to shocks. Developing countries have argued that the assessment should extend to all countries, and now the US and China have agreed to be covered by the FSAP.
In the years ahead the G20 policy makers in developing countries are likely to consult extensively with both developed countries and developing countries as they seek feasible reforms in the system of international economic governance. China can be expected to be at the centre of negotiations on reshaping of the international governance system. With strong economic links to both developed and developing countries, and a strong interest in a well-functioning international economic system, it can play a pivotal role in determining the outcome.

http://www.cigionline.org/g20


November G20 meeting in Korea should be interesting.
http://www.koreatimes.co.kr/www/news...123_67838.html

06-17-2010
Korea's top financial regulator Chin Dong-soo has made a brisk trip to Canada and the United States to sign a comprehensive agreement for a joint effort to bring stability to the global financial sector.

The Financial Supervisory Commission (FSC) said Thursday that Commissioner Chin visited Toronto, Canada, to attend the Financial Stability Board (FSB) meeting ahead of the G-20 meeting there.

Chin hopped over to Washington to have a meeting with Ben Bernanke, the U.S. Federal Reserve chairman, for in-depth discussions over regulatory matters on a bilateral and global level.

[ThePythonicCow]

Re: Do They Really Yuant a Higher Yuan?

They want an alternative reserve currency (with a link to a thread discussing SDR's).

Besides SDR's, there is also the Wocu, discussed on the iTulip thread Don't hold your breath waiting for Bernanke to raise rates - Eric Janszen.

[bill]

Re: Do They Really Yuant a Higher Yuan?

Besides SDR's, there is also the Wocu, discussed on the iTulip thread Don't hold your breath waiting for Bernanke to raise rates - Eric Janszen.

One reason I hold sing dollars.
BTW check this out:http://www.cigionline.org/sites/defa...20report_2.pdf

[medved]

Re: Do They Really Yuant a Higher Yuan?

Besides SDR's, there is also the Wocu, discussed on the iTulip thread Don't hold your breath waiting for Bernanke to raise rates - Eric Janszen.

What makes SDR's or Wocu different from Euro? They will fail in absolutely the same way, because the countries supporting them have the same problems: A)they all want to have fiat currencies controlled by gov'ts B) different countries/gov'ts have different interests, different fiscal/monetary policies etc.

The only positive I see in SDR/Wocu solution is a gold buying opportunity. If any "solution" of this kind is announced, gold will drop for a while, but then everything will return on its circles. SDR/Wocu will go into crisis mode and gold will go up.

[ThePythonicCow]

Re: Do They Really Yuant a Higher Yuan?

What makes SDR's or Wocu different from Euro?

SDR's and Wocu's aren't normal currencies. They are (rather, might become) reserve currencies.

I think we're greatly misunderstanding this matter.

The essential property of a currency is stability. It needs to be a rock of stability, a granite island in a turbulent ocean.

It's "real value" to the one holding it, to the one contracted to pay it in the future, and to the one contracted to receive it in the future, should not change. Through thick and thin, through the rise and fall of families, corporations, nations, and civilizations, it should remain firm.

Now, so far in reading my post, your mind has shouted the word "gold" at least five times.

But our problem now is not the physical measure of wealth, rather the integrity of the "standards" body. No measure, not the length of a silver bar in Paris (once the "standard" meter) nor the frequency of a cesium beam (the basis for the atomic clock) can stand given a sufficiently powerful and corrupt standards body.

When the United States held the bulk of the worlds central bank gold and the bulk of the worlds economic, manufacturing, technological, monetary and military power at the end of World War II, it was that sufficiently powerful body. We've been working on the sufficiently corrupt part since then, and are making great progress.

Gold this last century has not been a particularly stable store of wealth. One can pick a few points on the curve and draw a straight line and claim stability, but only by ignoring the ups and downs between. This last decade it is not been stable; it has been gaining. In the two decades previous, gold lost value.

A granite island may seem like a rock of stability in a stormy sea; but in a rising sea (the sort that Al Gore warns of -- don't worry c1ue -- I don't agree with Gore) a granite island eventually sinks below the waves. One wants a giant man made ship in that situation.

So long as the current oligarchy holds sway (a week? a millenia? likely in between?) they will seek to shift back and forth between various monetary systems, as they do between various political powers, in order to maintain and extend their control. All our meter sticks, even those crafted from the finest gold and silver, will be but chewing gum and bailing wire. The more respected monetary experts will work to craft a "finer floating ship", a monetary system that more smoothly and robustly integrates the economic power of human civilization for its basis. The most powerful sociopathic oligarchs will use and abuse these monetary efforts as one instrument for their der Wille zur Macht. The debt-based monetary systems, by which families such as the Rothschild's have funded the wars and social programs of nations, have been the main form of these monetary systems.

The Euro, SDR and Wocu are evolving from the debt-based systems to economic power based systems. Debt based currency comes into existence using double entry bookkeeping. Each dollar is someone else's debt. The powers that be will, I predict, seek to overlay national debt-based currency with a distinct world reserve currency. As noted a half century ago by Triffin, one currency cannot long stand as both a national currency and as the world's reserve currency. The Dollar is coming to the end of its reign as such a dual purpose currency. The national currencies, including the Dollar, will remain debt-based, as debt is one of the means, along with taxes, regulations, propaganda, surveillance and laws, by which the powerful control the masses. The inter-national reserve currency, used to settle accounts between the central banks of nations, will become, I forecast, a power based currency, such as the Wocu, which is balanced long term (every six months) on the basis of the IMF's reports of national product (GDP), and balanced short term (real time) on the basis of foreign currency markets (Forex.)

[c1ue]

Re: Do They Really Yuant a Higher Yuan?

A granite island may seem like a rock of stability in a stormy sea; but in a rising sea (the sort that Al Gore warns of -- don't worry c1ue -- I don't agree with Gore) a granite island eventually sinks below the waves. One wants a giant man made ship in that situation.

Actually, sea level is rising. Just not as fast as AG says, furthermore it started before mass CO2 emissions and the recent rate of increase has decreased.

sl_noib_global_sm 062010.jpg

But back on subject: if I read what EJ noted in response to my question - the context appears to be a return to a Bretton Woods type arrangement.

In this respect then both concepts could be correct: a new international reserve currency AND a currency backed by gold.

The difference might simply be that the new reserve currency is not issued by any individual country, nor would it be exchangeable for gold by private citizens or necessarily even used by any but the CBs.

I'm now examining the trade flows vs. gold reserves to get a sense of what this might mean.

For example: The US' relatively large gold reserves unfortunately aren't that large in the context of $350B annual trade deficits: 8300+ tons of gold is not even ONE year's worth.

In comparison: Japan, EU, and selected other countries...

http://stats.oecd.org/Index.aspx?DataSetCode=MEI_BOP

Country		Q2-2008	Q3-2008	Q4-2008	Q1-2009	Q2-2009	Q3-2009	Q4-2009	Q1-2010
Austria	EU	811	1870	3180	4500	-116	298	4048	..
Belgium	EU	2599	-8603	-5805	-1963	4946	-1366	950	..
CzechRepublic	EU	-1954	-456	-1959	1176	-1573	-1327	-428	860
Denmark	EU	3239	3172	1544	638	3319	4558	4118	..
France	EU	-20790	-16823	-18852	-8490	-19306	-6487	-24827	-7086
Germany	EU	68433	52420	52117	29295	32144	36900	70031	43467
Greece	EU	-15089	-8275	-13470	-9496	-9796	-5364	-12388	-13794
Hungary	EU	-2283	-3347	-3117	-975	210	511	676	..
Ireland	EU	-3168	-4346	-439	-3307	-1640	-1290	-245	..
Italy	EU	-20202	-12851	-25276	-24636	-17296	-9399	-16471	-22341
Luxembourg	EU	349	799	436	1238	-620	1473	892	..
Netherlands	EU	10485	11193	4638	10000	10194	8352	14255	..
Poland	EU	-7919	-6069	-6356	-40	-1481	-1656	-4030	..
Portugal	EU	-8420	-6598	-7136	-6200	-6015	-4585	-6581	-5324
SlovakRepublic	EU	-2585	-1406	-1683	-783	-471	-455	..	..
Spain	EU	-43605	-34169	-31092	-28690	-16373	-14406	-19208	-24132
Sweden	EU	10004	12513	9047	7301	8726	7420	6519	8846
Australia		-13507	-10772	-5744	-3584	-8555	-12743	-17837	-14115
Canada		6044	5302	-6562	-7636	-9559	-10784	-10443	-10267
Chile		585	-2609	-2101	889	1743	574	1011	1523
Finland		-737	2926	2673	-64	-1501	1114	3892	48
Iceland		-1665	-1133	4	-189	-182	-256	186	-213
Japan		36681	38984	18381	27092	33398	42825	37885	54107
Korea		-412	-8330	7831	8618	13097	10396	10557	1335
Mexico		-2082	-4413	-6722	-1329	265	-3860	-657	-765
NewZealand		-2971	-4311	-2297	-362	221	-1069	-2601	..
Norway		23099	21302	20672	9994	14180	12057	17281	..
Switzerland		6416	-5918	5783	6977	10420	12157	11899	..
Turkey		-15582	-8038	-5965	-1979	-5407	-2031	-4544	-9890
United States		-189674	-205680	-154213	-86517	-98375	-119243	-115733	..
UnitedKingdom		-12942	-14483	-11264	-7023	-8393	-10355	-2944	..
EU		-30095	18)">-20976	-44223	-30432	-15148	13177	17311	-19504
				EU 2009				-15092
				US 2009				-419868
				UK 2009				-28715
				JP 2009				141200
							All units in 1 million US$

Note of course only 17 EU nations listed. But still, the EU as a whole isn't that badly off; the US is ugly and so is the UK.

[gnk]

Re: Do They Really Yuant a Higher Yuan?

I may believe 20% of what international bankers and governments say at these meetings (IMF, G20, etc...) I'm not saying they are lying, or they don't genuinely believe in the implementation and success of a future reserve currency.

What I am saying is that national security, and jockeying for power and access to resources and markets trumps everything. And in that regard, cooperation is thrown out the window.

Gold will play a role. And one or a group of countries will throw a monkey wrench into whatever "plans" the G20 or IMF publicly support.

The last 2 great monetary paradigm shifts were more or less dictated to the world:

1) Bretton Woods - only the US, secured by the Atlantic and Pacific oceans, was unscathed from WWII amongst the developed nations, and had the most gold in the world at that time - 22 thousand tons. The US dictated the terms of the new monetary standard, and yes, with some consideration from others.

2) Paper Standard after Nixon - the US told the world - "No More!" and promptly engaged in a Middle East policy of oil at any cost and petrodollar recycling. The USSR, China, India, etc.... were irrelevant to the western world then. They were far from MFN status and consumed very little of the world's resources. It was the cold war, and Europe, Japan, and others needed the support and defense of the US - so they all complied. Paper sounds good to me, boss!

Today, the world is much more different. The US is far from a position of power enjoyed in 1944 and 1971. I don't count the US out, either, we have 8,100 tons of gold - but per capita, we also have the most debt. But we prefer to stay with paper as long as we can. Someone else - Russia? China? The Market? will force our hand one day to go gold.

And all the brilliant blackboard ideas espoused by the hard working academics at the IMF will have to accomodate the new reality.

Global monetary systems are rarely agreed upon peacefully, if they ever were... they are earned by those that can earn them and dictated to the rest.

[medved]

Re: Do They Really Yuant a Higher Yuan?

SDR's and Wocu's aren't normal currencies. They are (rather, might become) reserve currencies.

Same as gold under Bretton-Woods agreement. Gold was not even allowed to be traded as currency in the US, yet, it was the base of the reserve currency system. Still, it did not help. US broke the BW system and the rest of the world silently accepted it. The same will happen with any currency system designed by a committee.

The essential property of a currency is stability. It needs to be a rock of stability, a granite island in a turbulent ocean.

It's "real value" to the one holding it, to the one contracted to pay it in the future, and to the one contracted to receive it in the future, should not change. Through thick and thin, through the rise and fall of families, corporations, nations, and civilizations, it should remain firm.

Now, so far in reading my post, your mind has shouted the word "gold" at least five times.

But our problem now is not the physical measure of wealth, rather the integrity of the "standards" body. No measure, not the length of a silver bar in Paris (once the "standard" meter) nor the frequency of a cesium beam (the basis for the atomic clock) can stand given a sufficiently powerful and corrupt standards body.

When the United States held the bulk of the worlds central bank gold and the bulk of the worlds economic, manufacturing, technological, monetary and military power at the end of World War II, it was that sufficiently powerful body. We've been working on the sufficiently corrupt part since then, and are making great progress.

Whatever standards body they come up with will always be corrupt. It is not something specific to US. In other words, this issue is too important to let politicians handle it. Their financial power should be limited just as much (or more) than their political power. It cannot be done if the financial system is run by a mysterious standards body.

What could be simpler than actually enforcing the gold standard by gov’t regulation? Yet, it has never been done or even attempted. The failure of the banks to comply with the gold standard was the excuse for creating super leveraged fiat currency system run by the Gosbank (Fed). Now the failure of one fiat currency will be the excuse to create another one, and it will fail again.

Gold this last century has not been a particularly stable store of wealth. One can pick a few points on the curve and draw a straight line and claim stability, but only by ignoring the ups and downs between. This last decade it is not been stable; it has been gaining. In the two decades previous, gold lost value.

Nothing could be stable store of wealth in the last century, when the whole world ran on debt-based fiat currency without any anchor.

So long as the current oligarchy holds sway (a week? a millenia? likely in between?) they will seek to shift back and forth between various monetary systems, as they do between various political powers, in order to maintain and extend their control. All our meter sticks, even those crafted from the finest gold and silver, will be but chewing gum and bailing wire. The more respected monetary experts will work to craft a "finer floating ship", a monetary system that more smoothly and robustly integrates the economic power of human civilization for its basis. The most powerful sociopathic oligarchs will use and abuse these monetary efforts as one instrument for their der Wille zur Macht. The debt-based monetary systems, by which families such as the Rothschild's have funded the wars and social programs of nations, have been the main form of these monetary systems.

The Euro, SDR and Wocu are evolving from the debt-based systems to economic power based systems. Debt based currency comes into existence using double entry bookkeeping. Each dollar is someone else's debt. The powers that be will, I predict, seek to overlay national debt-based currency with a distinct world reserve currency. As noted a half century ago by Triffin, one currency cannot long stand as both a national currency and as the world's reserve currency. The Dollar is coming to the end of its reign as such a dual purpose currency. The national currencies, including the Dollar, will remain debt-based, as debt is one of the means, along with taxes, regulations, propaganda, surveillance and laws, by which the powerful control the masses. The inter-national reserve currency, used to settle accounts between the central banks of nations, will become, I forecast, a power based currency, such as the Wocu, which is balanced long term (every six months) on the basis of the IMF's reports of national product (GDP), and balanced short term (real time) on the basis of foreign currency markets (Forex.)

This is my bet: the new currency system created by experts will be just as corrupt, inefficient and prone to financial crises. The gold may be banned as a currency, but as long as these designer currency systems exist it will be the store of value.

[ThePythonicCow]

Re: Do They Really Yuant a Higher Yuan?

I may believe 20% of what international bankers and governments say at these meetings (IMF, G20, etc...) I'm not saying they are lying, or they don't genuinely believe in the implementation and success of a future reserve currency.

What I am saying is that national security, and jockeying for power and access to resources and markets trumps everything. And in that regard, cooperation is thrown out the window.

You touch on a key point here. Who or what is top dog?

If, as you state, national power trumps all, then it unfolds perhaps as you expect.

If, as I suspect, there are some very influential, but not to be trusted, men and families behind the scenes, who have over the centuries and continue to have considerable influence over the rise and fall, conflict and cooperation, of nations, then I suggest one can best judge the future by examining which nations are being setup for decline or conflict.

A huge debt burden is being stacked on Uncle Sam's shoulders. The oil spill, the lack of manufacturing dominance that we had for a century, the likely increase in conflict in the Middle East, the second round of mortgage defaults, the collapse of several state budgets within the United States, the collapse of some major pension funds, ... it's getting worse. We have not yet reached "Peak Cheap Debt."

It's time for the American Empire to go the way of the British Empire a century earlier. A couple more ugly chapters are about to be written in our history books.

[ThePythonicCow]

Re: Do They Really Yuant a Higher Yuan?

This is my bet: the new currency system created by experts will be just as corrupt, inefficient and prone to financial crises.

That's likely.

But will the new designer currency collapse in five years or fifty?

Meanwhile, expect the nominal price of gold to fluctuate, as you note:

Nothing could be stable store of wealth in the last century, when the whole world ran on debt-based fiat currency without any anchor.

[ThePythonicCow]

Re: Do They Really Yuant a Higher Yuan?

And all the brilliant blackboard ideas espoused by the hard working academics at the IMF will have to accomodate the new reality.

Global monetary systems are rarely agreed upon peacefully, if they ever were... they are earned by those that can earn them and dictated to the rest.

No doubt, no doubt.

The key question is who is doing the dictating.