DONT KILL THE DOLLAR

AN emerging trend has surfaced over the façade of the Chinese export scene.It has been visibly clearer now.We thought it odd at first,but over the last two years,more exporters are sending us cost estimates,project tenders and online receipts in RMB instead of the stalemate $.
The BRIC nations account for over 42% of the worlds population and together do more international trade than anyone else. China is the largest exporter of goods to the western world,has called for a new global reserve system, crowning “la dolares” obsolete, and its convincing its fellow BRIC members to abandon the dollar as the worlds foremost reserve currency and adopt a new more stable trade tender. The repercussions of this act would be eventful, as it would lead to a larger trade deficit for the US, which is when USA will try and monetize its growing debt,but that will only lead to an exponential increase in inflation, and ultimately weaken the position of the it .We all saw the fallout of the “bond fiasco” in 2009,and how it shook the world economies, imagine that on a larger scale,if the dollar did truly collapse,the improbabilities would be limitless, our financial system as a whole would be tested, and no one thinks the world could recover, but China’s sinister scheme is already underway and plans to incorporate India and brazil are on the charts.

Brazil already showed the world it could do with less US currency when it signed trade relations with Argentina last year and decided to bilateral trade in reals and pesos.
Every few months more and more countries that engaged in bilateral trade have made it a point to exclude the dollar as thier trade currency and prefer to work with their native currencies. The most talked about agreement was last years Russia and China deal,which is when trade analysts and the world alike took notice .That trade agreement was aimed to boost close to $50 billion between the two countries ,and if they chose not to use the green back, things might now start to look bleak.

One particular concern, and something that every world nation is keeping its eye on is the huge reserves of close to 2.4 trillion that china is keeping well stashed in its coffers.
What china imposes is using SDRs which is the IMFs unit of currency, as the next reserve for trade instead of the dollar .Its an easier way to liquidate holdings ,and inturn reduce the dominance of second order currencies like the euro, yen and pound. China still considered a “developing” nation will slowly dump its 2 tn reserves,,and then declare them worthless, if it did that too soon ,then that would erode the value of the it,,and cause huge loss for the Chinese treasury.
There are 2 main reasons for this suggestion of shift for a new reserve currency that bears no national emblem;
-it will give the host nations better liquidating power and easier control over exchange rates, but also we have to kkeep in mind that a new reserve currency that is stable enough to meet global trade demands and might take time to be resolved, since the average life span of any reserve currency as legal tender in the developed era is 30 odd years, as seen from the sterling and now to the dollar.
A new reserve would take some time for a few more years, and for now USA will be allowed to be the king of the world.

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