China has over 1 trillion US dollars in its central bank. Not really any paper money, just a line entry in a bank account.
If China had that money in the form of Euros, they would not have lost over 300 billion dollars just from the fall of the value of the dollar. See, the Euro is gaining and the Dollar is falling.
So why does China keep the inferior currency? Two reasons:
1. We will only pay for our imports in US Dollars so China has to take them in. However, China also falsely pegs their own Yuan currency to the dollar. 1 Yuan is about 13 cents. With as much exporting as they are doing, their currency should be growing and the Yuan should rise in value. China keeps it down by not releasing the US dollars it receives from us for exports into the world economy. They do this so that their goods are still cheap and we continue to use them, otherwise WallyWorld would be having some other nation build the crap we buy.
2. OPEC transacts oil sales in US Dollars. If you want to buy oil on the world market, you have to pay in US Dollars. This means China has to keep some US Dollars in their bank for oil purchases. This sucks for them because if they could buy oil in Euros, they wouldn't have lost 300 billion dollars in their central banks.
Worldwide demand for the US dollar is what keeps our currency from losing massive value, plummeting us into a depression worse than the thirties. The only great reason most nations even want our money is because they need it to buy oil with. Otherwise, they would likely switch to Euros if they could buy oil in Euros since the dollar continues to fall. The value of our currency essentially depends on OPEC nations transacting oil in Dollar currency. So, our financial stability depends on ensuring that OPEC nations don't switch to the Euro.
One OPEC nation did switch to the Euro. Iraq did so on 11/06/2000. We put an end to that. After taking control of Iraq, we immediately switched it back to Dollars.
Iran has started converting the Dollars in their central banks to Euros. It is expected that this is a clear sign that they plan to conduct their oil sales in Euros. Syria has similar interests. China already has a deal worked out with Iran to purchase natural gas. If Iran switches to the Euro, China won't need Dollars and there won't be a thing we can do about it. Iraq we did, Iran we proooooobably could. China, no way in hell. They have 30 million more men than women. A high-casualty war would correct that. They also have kept the economy poor enough (remember #1?) that military service might appeal to much of the men in their nation. That extra trillion they have in the bank could finance a war.
I wonder what the weather is like in Switzerland.
Re: Bush Says...Try To Stop Me
Member #: 40846
Registered: 9/19/2005
Posted:
1493
Name:
Duane Vick
Name:
Duane Vick
Company:
Self-Employed
Occupation:
Installer
Location:
Phoenix AZ
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