Russian President Dimitry Medvedev supports the idea of replacing the dollar and euro as reserve currencies with a basket of currencies.
“This is a topic which is of concern to us … because the whole world is dependent on the health of the dollar,” he told CNBC in an interview. “Despite the other currencies, such as the euro, British pound and yen, much depends of course on the health of the dollar.”
We have our own point of view on this, which I outlined already a year ago, Medvedev says. My idea is that at the moment the world needs a larger number of reserve currencies, and it isn’t because the dollar is bad or the euro is not sufficient. The situation is that the current environment requires that we need to have more reserve currencies where people could be investing, where banks could be investing and to which the states could be investing,” Medvedev says.
Even a 14 year old could read through all the lines………the Russians don’t want dollars.
Treasury Secretary Tim Geithner says China actually supports the dollar’s role as the world’s primary currency. Geithner told reporters after meeting with Chinese officials this week.
“I believe the Chinese expect the dollar to be the principal reserve currency for a long period of time, as do we,”
Well that is certainly not what the Chinese have hinted in plain English (yes of the straight forward variety that even a New Zealand sheep farmer could understand).
Check this out……..this week Geithner drew laughter (as in funny ha-ha stuff) when he addressed the public at Peking University. The Telegraph in London reports:
In his first official visit to China since becoming Treasury Secretary, Mr Geithner told politicians and academics in Beijing that he still supports a strong US dollar, and insisted that the trillions of dollars of Chinese investments would not be unduly damaged by the economic crisis. Speaking at Peking University, Mr Geithner said: “Chinese assets are very safe.“
The comment provoked loud laughter from the audience of students. There are growing fears over the size and sustainability of the US budget deficit, which is set to rise to almost 13pc of GDP this year as the world‘s biggest economy fights off recession. The US is reliant on China to buy many of the government bonds it is planning to issue but Beijing‘s policymakers have expressed concern about the strength of the dollar and the value of their investments.
But the US media avoided any reporting of the laughter that greeted Mr. Geithner‘s speech. None of the US television stories reported laughter; none of the US newspapers reported the laughter; none of the US magazines covering the trip reported the laughter… but the laughter was loud; it was palpable and it was very, very real. And we thought the Chinese were bad at propaganda and deception! So much for a country that prides itself on “free-speech”.
Simply put, the US fiscal circumstance has become a laughingstock, and we do not say that lightly.
One should see last night’s USD strength as a very good excuse to increase holdings in FXA (or UDN), DBC, SLV, and EEM.
