China's Dollar-Busting Gold-Backed Renminbi
Wednesday, 9/10/2014 10:14
One day, perhaps. Meantime, Beijing is the darnedest place anyway...
A HUGE plastic bull with a mushroom cloud coming out of his fundament...and a guy with horns on his head, crushed against the wall,
writes Bill Bonner in his Diary of a Rogue Economist.
It is art. Titled:
Things Are Not What They Seem. It is also a puzzle. Because we can't tell what it seems to be. In fact, it doesn't seem to be anything at all...just an odd piece of surreal art.
It is exactly what it seems to be, in other words. Maybe that is the joke.
Another statue...in a kind of rough bronze...has a woman (at least, it appears to be a woman) with her legs splayed, and her arms over her head, lying on the floor.
The Parkview Green mall in downtown Beijing is easily the biggest, most modern and most stylish mall your editor has ever seen. It looks like something imagined from the future – made of steel, glass and concrete...with soaring interior spaces crisscrossed by elevated walkways and escalators...and a collection of oversize pieces of art that rivals the Tate Modern in London.
It also has chic shops...restaurants...and even a Tesla car dealership.
"But you have to get in line to buy one of these," said the young man who showed us the car.
In Beijing, you can't buy a car even if you have the cash. Traffic jams and air pollution are such serious problems that the government rations new car purchases.
"In China, you enter a lottery to get a new car," says a friend. "You don't win the car. You win the right to buy it."
"China is the nation to watch," begins a Beijing colleague.
"It is already the biggest trading nation in the world. And it will soon pass the US as the world's biggest economy. But what is really important is that it will also overtake the US in two other important categories: military power and money.
"No nation ever became the world's biggest economy without also dominating the world's money and the world's armed forces.
"If you think back to the succession of great nations – from Spain in the 16th century...to the Netherlands...to France...to Britain...and finally, in the 20th century, to the US – each one dominated the financial system at the time. And each dominated, militarily at least, the territories around it.
"Now, the US is making a show of supporting the nations around China...as though it could stop China by teaming up with the Philippines and Japan.
"This is like the early 19th century, when France tried to get all of Europe to unite against Britain, the rising power of that era. It didn't work...especially when Napoleon attacked Russia to stop it from trading with the British. Now it's the US that has made a new enemy of Russia. This has made Russia China's friend.
"You can't stop a nation whose time has come. And China's time is coming. Everybody here believes it. And we know it has two components – money and firepower. We don't talk much about the army. But we talk openly about money.
"Right now, world trade is done in US Dollars. China's currency, the Renminbi, is used in less than 3% of settlements. That's because the Renminbi is not fully convertible. But the government knows it has to change this.
"It will make the Renminbi a world currency, not just a Chinese one...and give other nations an alternative to the Dollar. That is already happening, by the way.
"Contracts worked out between China and other nations call for settlement in Renminbi, not in Dollars. And we're talking some very big contracts. And when the Renminbi is fully convertible, you'll see more and more of the world's trade shift to Renminbi.
"There is even talk of backing the Renminbi with gold. Gold always flows to the rising power. China is the world's biggest buyer of gold. What do you think will happen to the Dollar when much of the world shifts to a gold-backed Renminbi?"
Email us