Tuesday, 7 April 2009

G20 cause and effect.

The primary decision of the G20 meeting in London was to provide the IMF with an additional 1.1 trillion dollars. And where will they get it from - right - they will just print it. So the net effect of this surprisingly stupid decision will be to significantly devalue the currency of each of the G20 countries. That is except China, who will not need to issue new currency, because of its magnificent reserves. So other currencies will be devalued, but the Chinese currency will remain stable. This would seem to make the Chinese Yuan a serious contender for the position of reserve currency, now that the dollar has proved to be so unreliable. With an obvious expected relative increase in yuan value, right now would be a good time to declare the yuan as an intermediate currency, while all the necessary work is done to organise a new master basket currency. I for one would feel much happier with my investment being backed by yuan than I would be for an investment backed by dollars. All we need to do is to ask China which name they prefer - yuan, remimbi, RMB. or kwai?
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