Posted on 04/13/2013 5:44:53 AM PDT by lowbridge
Australia’s announcement that it is abandoning the U.S. dollar for trade with China is the latest broadside in the global currency war. Starting April 10, Australia and China will no longer use the U.S. dollar for trade between the two nations. For the first time, Australian businesses will be able to conduct trade in Chinese yuan. No more need for U.S. dollar intermediation.
This is a significant announcement and key development for China as it continues its campaign to internationalize the yuan and chip away at the dollar’s role as the world’s reserve currency.
Australian Prime Minister Julia Gillard made the announcement during an official visit to Shanghai on Monday. She noted that China is now Australia’s biggest trading partner and that the direct currency trading would be a “huge advantage for Australia.”
She called the currency accord a “strategic step forward for Australia as we add to our economic engagement with China.”
According to hsbc bank, more than 40 percent of small and medium-size Australian businesses that trade with China plan to offer quotes for goods and services in yuan. No longer will Chinese customers need U.S. dollars before purchasing Australian goods.
For China, this is a big accomplishment as it works toward its goal of having about a third of its foreign trade settled in yuan by 2015.
But for the U.S. dollar, it is more like the treatment the U.S. Eighth Army got at Chosin Reservoir in Korea.
This Australia-China currency pact isn’t the only whipping the dollar has taken lately either.
On March 26, China and Brazil agreed to cut out the U.S. dollar for approximately half of their trade. Some $30 billion worth of commerce per year will now be conducted in yuan and reals.
(Excerpt) Read more at thetrumpet.com ...
Thank Ben Bernake: He is actively monetizing the fedgov’s deficits.
Why should anyone care?
This is a smart move. When entering long term contracts, it is foolish to introduce a variable over which there is no control. The uncontrollable changes in the variable can adversely remove the goal of the contract, orderly conduct of business and profit.
Bernanke does what he's forced to do by the politicians.
With the rest of the world catching up, our ruling class will have to stop basing our future on stupid people.
While this is smart as it saves money and takes a step and a variable out of the equation for China it is about sidelining the US Dollar. Long term they are about making the US financially irrelevant.
Mel
Now countries are going to abandon the dollar one by one. Do you think that will wake us up?
Quite the opposite. Politicians, and the media, do what the central banksters pay them to do.
Sarah Palin is correct about crony capitalism. (which is really fascism lite)
http://www.breitbart.com/Big-Government/2013/03/16/Palin-on-Crony-Capitalism-You-Are-on-Menu-if-You-Don-t-Have-Lobbyist
Demand for dollars affects the purchasing power of dollars. Do you use dollars to buy things?
The U.S. dollar as the world’s reserve currency is headed for the trash can. When enough countries do what Australia/China just did, the Fed will be unable to continue printing money like a madman. The only reason it’s been getting away with propping up the federal government’s deficit spending by printing more and more dollars and injecting them into the world economy has been precisely BECAUSE the U.S. dollar has been the world’s reserve currency. When that distinction is lost, we will see a major domestic economic meltdown leading to civil breakdown, all fueled by rampant hyperinflation the likes of which has never before been experienced by Americans. It’s not business as usual anymore.
We are watching WW3 of currency wars, ironically the battles are conducted by nuking your own currency! Then the opponents need to nuke theirs to stay alive. It is a race to the basement all to keep the too big to fail banks afloat.
The way things are disentegrting we might be better off switching to Bitcoins.
Pathetic.
It must be noted that Australia has not abandoned the US$. Australia has said that the very specific case of trade with it’s largest trading pardner will not involve the unneeded third party currency restriction.
Russia dealing directly with China without the dollar, now Australia...
This is not good for the US.
No, because it has reached a majority of people who either don’t care, even know it is happening or don’t understand the consequences of it.
Trade from afar will break down, you can count on having to deal with that until a viable alternative is agreed upon and enters broad enough circulation to serve as a useful medium of exchange. Until then, you might find that increasingly isolated communities agree to agree upon just what the value of “their” currency is among themselves. It'll continue to “spend” long after it should have been regarded as worthless.
Out and out barter or exchange via precious metals whose value will be debatable, with those holding it wanting to exchange at the actual greatly inflated rate of reality and those who have food or other necessities unable to accept those terms, will be a problem. It's still unstable.
Perhaps not, but IMHO this is a warning sign that things aren’t going in the right direction.
Malarky. They are totally abandoning the USA. Let’s see how much China helps them, or even gives a crap about them. They are only about the oil.
“Why should anyone care?”
Probably no one, except the aussie’s. over 90% of their population lives within 100 miles of their east coast. Meaning that China is licking its chops at the prospect of using some of that vacant land - as is India btw. Sooo, if I were the Aussie’s I would be careful about cozying up to close with the Chinese. How does Esops parable about The Farmer and The Snake go? “Well, you knew I was a snake...” Something like that :)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.