Is the Chinese Yuan being reserve currency a good or a bad thing?
Talks of the Chinese Yuan being “a” reserved currency would actually be a good thing for America and the United States dollar but a bad thing for the “Euro”. The reason for this is simple if the China gets it wish to be the worlds reserve currency it will no longer be able to devalue it’s currency. How this would impact Euro is they won’t be able manage their debt load and they’ll be forced to raise their interest rates and bring back manufacturing. The problem with doing this in western Europe is they’ll need to take a group approach to tackle this problem which I’m sure countries like Germany shouldn’t won’t have a problem with because they’re economy is built on efficiency.
However countries like Italy, France and Spain who are reliant on strong “euro” to maintain “status quo” will suffer with Chinese Yuan being a serious competitor in the currency markets. The United States on the other hand is not a group of countries like China it’s 1 country and although the immediate impact might decrease the dollar the bottom line is the American people are one people in a country that was founded on capitalistic principals. Furthermore if Chinese Yuan becomes a worlds currency jobs will more than likely start to come back to America as China will be forced to make their dollar rise to where it should be.
If you’re reading this and don’t understand what I’m saying or where I’m going with this. If the Chinese Yuan appreciates in value there will be less incentive for businesses to manufacture goods in China! Because the price to do business over there will be too expensive. Add this to the fact that China has never operated or had to compete with a high Yuan you’d understand why if China was smart they wouldn’t want to be a reserve currency right now. Right now if I were China this would be the last thing they’d want to do. Their country is too fragile economically to handle this kind of responsibility, furthermore there are daily protests going on in China, China has an artificial housing market, or housing bubble that nobody is talking about. China would be a paradise for the media to rip to shreds especially right now.
Is Chinese Yuan being a reserve currency a good thing in 2014? I would say NO!
When would Chinese Yuan being a reserve currency be a good thing? If things continue the way they are now I would say around 2025 – 2030 it would make sense. Anytime sooner than that will have a devastating effect to all first nations of the world minus the U.K who have their own dollar and the United States who currently have a monopoly on world currencies. Because China doesn’t have freedoms like America has it will always have a hard time maintaining a strong consumer base. Fiat money was created despite what many believe to assist capitalism. Fiat money is German creation that when put in practice properly can build and sustain wealth. However the challenge has always been to get the world on board.
Lots of people still believe in the Gold standard, there are others that believe that government should control the lives of people which I call communism. Than there are those that believe that corporations and banks should rule which I refer to as fascism. Then there are rebels or conspiracy theorists that believe that only see negativity those people swing from side to side whenever it’s convenient for them.
However I warn people who take advice from conspiracy theorists. When information is presented to people; people are then allowed to interpret that information in anyway they please. If the person you’re listening too believes that destruction r war are inevitable they will present their message to you in this fashion. When reading, listening or watching information make sure you give yourself the “RIGHT” to have your own opinion so you can think for yourself. Because remember conspiracy theorist have no plans to lead! Ask most of them if they’ll ever get into politics and they’ll give you a million and one reasons why they won’t!4
If you live in the Euro zone the Chinese Yuan being reserve currency is probably a bad thing!!!
If the Chinese Yuan becomes a reserve currency I would suspect that if Europe doesn’t make some major changes Germany will have no choice but to start making some tough decisions about who joins and who doesn’t.
The U.K in my observation would be fine and may even benefit from the Yuan as reserve currency.
Regarding Oil sure America would like to keep other countries purchasing oil using the USD. But people shouldn’t be too confused about this. America has gone to war helping out a lot of countries and it hasn’t asked for much. When countries stop purchasing oil with US dollars the draw back is clear that they shouldn’t expect U.S troops to come bail them out when a rebel dictator takes over their country. I’ve heard a lot of people make huge deals over this but they’re not telling people the whole story. The reality is people of other nations to think the same way Americans do. That’s the reality of the situation, most of the other nations of the world put religion first and no matter what any American says to them they will not budge on this issue. But if a country is being terrorized should America sit back and do nothing? At times I find myself on the fence with these issues but I refuse to succumb to negativity or stagnation
Yes America would like to keep countries on the United States dollar but it’s not like the United States can’t survive without them. A high Yuan makes America look like a much better place to invest in actually. That is if America lowers it’s taxes! I’ve been saying this for years America’s problems stem from their politics surrounding small businesses. This is where reforms need to take place first. The American economy was built on entrepreneurship and if they don’t find a way to stimulate this section of the American economy the Bretton woods system would have been a complete waste!
My personally opinion is a stronger America means a stronger world, I think American influence in America has the ability to reshape the way people think and view the world on this planet. China having the worlds reserve currency shouldn’t matter to you if you have tangible skills and good network of friends.
“For those of you wondering if America’s position as one of the worlds reserve currencies wouldn’t be threatened by the Chinese Yuan? That shouldn’t be you concern as the Yuan would just become another ‘reliable’ alternative. The only thing that would concern Americans is if the United States dollar was stripped of it’s title of being the worlds reserve currency”