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2009/6/21 11：26
Crisis of US$; a decline of world key currency
The U.S. has been enjoying excellent privileges as the result of US$ is the world key currency. Namely, the U.S. can utilize "seigniorage"-- printing paper money -- to finance its vast amount of twin deficits and import products and commodities from around the world.
So it is only natural that hypothesis enemies of the U.S., such as Russia and China -- want to destroy this U.S. privilege.
Indeed, following the China, Russia expressed intention to challenge US$ key currency structure.
>"ロシア大統領「ドル依存の通貨体制見直しを」"
> ロシアのメドベージェフ大統領はこのほど米 CNBCと会見し「世界の準備通貨を増やすべきだ」と述べ、米ドルに依存する現行の通貨体制の見直しが必要と指摘した。原油など資源輸出に頼るロシア経済については多様化に努めると強調。「ルーブルもユーロのように（地域の準備通貨に）なりえる」などと述べた。
> 大統領は米国発の金融危機について「全世界がドルの健全性に依存している」ことが原因の一つになったと指摘した。
> ロシア経済について今年の成長率はマイナス６%超になるだろうと予想した。一方、インフレ率は13%にのぼるだろうとし「警戒すべきことが起きている」と指摘。原油、天然ガスなど資源以外の産業基盤が弱いのが問題だとして「経済の多様化が最優先課題だ」と述べた。石油化学やバイオテクノロジー、環境技術などの分野で技術革新に取り組む考えを示した。会見内容は13日夕に日経 CNBCでも放映する。
Compared to Tokyo's action in the so called "Lost Decade," Washington's one is indeed quick.
Washington decided to inject public money into ailed U.S. major financial institutions much quicker than Tokyo, ref.(>"Will the U.S. economy recover under the President Obama?")
Washington also decided much quicker than Tokyo to nationalize ailed giant financial institutions, ref.(>'"Fannie Mae" & "Freddie Mac"' & "When will U.S. President Barack Obama be able to recover economy?")
In addition, Washington conducted "stress test" on U.S. giant financial institutions, ref.(>"How deep President Obama can be believed?")
Even though it is still doubtful that standard of inspection and calculation is strict enough or not, there is no doubt that Washington's action is again much quicker than Tokyo's in '90s.
Generally speaking, there is no doubt that U.S. government and financial authority are much abler than Japan's.
It is well said that "do-nothingness" and "inaction" of the 31th U.S. president Herbert Clark Hoover accelerated free-fall of economy during the Great Depression.
It is also said that "slowness" and "inaction" of Tokyo made deterioration of Japan's economy accelerate in '90s.
In this meaning, it can be said that Washington studied well about the Great Depression and Japan's Lost Decade, and acts as quick as possible to halt free-fall of economy.
Indeed, FRB Chairman Mr. Bernanke is well known as a "Great Depression buff." In particular, just like his nickname of "helicopter Ben," Mr. Bernanke is injecting as much liquidity as possible into financial system.
Cooperating well with Secretary of Treasury Mr. Tim Geitner, Mr. Bernanke won't hesitate to utilize public money to make financial system continue to work.
But just moment please. There is one problem -- how about financial resources?
For the sake of bail-out and nationalization of ailed giant financial institutions and public investment, the Obama Administration decided to issue enormous amount of Treasury Bond.
Needless to say, Treasury Bond is nothing more than "national debts" so that the U.S. needs purchasers who wants to lend money to the U.S.
At present, China takes a role of the largest purchaser of Treasury Bond, ref.(>"Balancing U.S.-China economic ties")
In addition, the U.S. must repay vast amount of debts sooner or later, ref.(>"Public debt, The biggest bill in history" & "Politics of debt, Seeing red")
But is it possible? I doubt that. U.S. national debts is too enormous to be repaid. When it comes to normal countries, such amount of debts means "default" just like Argentine in 2001.
But the U.S. has a national privilege. As the U.S. is a hegemony, its currency is the world key currency.
For a few decades, every economists have argued that "as its twin deficits is so enormous that bold depreciation of US$ is unavoidable." But they failed to forecast foreign exchange market exactly.
US$ is still valuable in spite of ballooning twin deficits as there are still enough purchase of Treasury Bond around the world.
But even so, such kind of magic -- I mean printing money scheme -- mustn't be eternal. Sooner or later, the amount of U.S. debts is to reach limit.
Indeed, the U.S. might almost reach the limit. Late Saddam Hussein decided in 2000 to receive payment for crude oil with not US$ but Euro.
But in 2003, the U.S. launched a making inroad into Iraq based on false cause of "WMD," then return Iraqi crude oil deals to US$.
Please understand that I don't want to say "this is the true cause of the Iraq War." I only described the "facts," and it depends on you how to interprete this facts.
Anyway, the world was forced to fully realize that the U.S. are too great to be challenged, and US$ avoided a crisis of falling from a status of the world key currency.
But later, the Iraqi conditions deteriorated and the U.S. was forced to waste awful amount of national power.
In addition, subprime fiasco made further attacks on the U.S. The U.S. is forced to issue enormous amount of Treasury Bond to finance two wars in Iraq and Afghanistan and economic recession.
The more Washington issues Treasury Bond, the more beneficial conditions it must offer for purchasers.
So it is only natural that yeild rate of Treasury Bond is rising gradually, ref.(>"米長期金利、3.83%に上昇"
> 18日のニューヨーク債券相場は大幅に続落。長期金利の指標である10年物国債利回りは前日比 0.14%高い（価格は安い）3.83%で終えた。一時3.85%と、11日以来の水準に上昇した。
> 同日発表された６月のフィラデルフィア連銀景気指数がマイナス 2.2と前月から大幅に改善したことなどを受け、景気悪化に対する懸念が和らぎ債券売りが優勢となった。)
Indeed, gradual and moderate depreciation of US$ is bless for U.S. economy rather than evil. Depreciation of US$ means partial default of U.S. national debts.
But if the world rejects to receive greenbacks saying "this is nothing more than printed paper," it must be an another story.
Theoretically speaking, as the U.S. printed and is printing excessive amount of paper money, value of that are already diluted boldly.
It means that current exchange rates of US$ is too high, and sudden and bold depreciation of that could occur anytime soon.
Taking such conditions into consideration, both China and Russia may think that "it is a perfect opportunity to challenge the U.S."
Even though it may be on the decline, the U.S. is still the overwhelming strongest country in the world. Neither China nor Russia alone can't compete against the U.S. hegemony.
But if they combine powers, they could shake the US$ world key currency structure, then realize multi-power structure.
Indeed, there is a sign of such moves, ref(>"上海協力機構、「多極化」推進を宣言へ 首脳会議"
> ロシア、中国と中央アジア４ヶ国（カザフスタン、キルギス、タジキスタン、ウズベキスタン）が加盟する上海協力機構（SCO）の首脳会議が15日、エカテリンブルクで開幕した。
> 16日には「多極化」の推進などをうたった共同宣言などの文書に署名する。核実験を強行した北朝鮮情勢についても協議する見通し。ロシアのメドベージェフ大統領は会議の冒頭「地域の安全保障問題と世界の金融危機について協議しよう」と述べた。
> ロシア大統領府によると、共同宣言では多極化推進を支持するほか、国際問題解決における国連の役割強化などが盛り込まれる。核拡散防止条約（NPT）体制への支持、国際金融面での協力などでも一致する。)
If the US$ world key currency structure collapse, it could deliver critical jolt to the world economy and both China and Russia could be hit hard.
But if a structural metamorphosis would be unavoidable sooner or later, it is not surprise that both China and Russia aims to maximize their national interests.
Indeed, it seems to me that it is impossible for the U.S. to repay its national debts. Or in the first place, Washington may not have an intention to do so.
Will China and Russia launch a full-scale action to challenge the US$ world key currency structure soon?
If the world economy hits bottom and starts recovery within short, they won't do so. If current lull state of the world economy is temporary and the world economy restarts to deteriorate soon, they will do so.
Here, I am sorry but I have to say that the later scenario seems to be more plausible, ref.(>"A lull state of the stock markets"
>"世界の製造拠点、輸出不振 中・東欧、西欧・旧ソ連向け低迷続く"
> 世界経済の低迷を受け、製造業の拠点である中・東欧諸国や東南アジア諸国連合（ASEAN）などで輸出不振が続いている。チェコなどの 2009年１〜３月期はユーロ圏向けの落ち込みで前年同期比で軒並み２ケタ減。
> ASEANも今年に入って単月ベースで大幅なマイナスが続く。日米欧など先進国の早急な需要回復は望み薄で、外需依存度の高い途上国には厳しい環境が続きそうだ。
> 中・東欧諸国はドイツ、フランス、イタリアを中心とした西欧の製造業の投資を誘致し、経済成長の原動力にしてきた。現在、輸出の７〜８割を欧州連合（EU）向けが占めており、欧州経済の低迷が中・東欧の輸出の足を大きく引っ張っている。１〜３月期はチェコが前年同期に比べて 23.6%減、ラトビアが同25.9%減となった。)
For your ref.>How deep President Obama can be believed?
>New world order? Not yet
>Dollar beauty may be fading but it still tops currency pageant list
0
So it is only natural that hypothesis enemies of the U.S., such as Russia and China -- want to destroy this U.S. privilege.
Indeed, following the China, Russia expressed intention to challenge US$ key currency structure.
>"ロシア大統領「ドル依存の通貨体制見直しを」"
> ロシアのメドベージェフ大統領はこのほど米 CNBCと会見し「世界の準備通貨を増やすべきだ」と述べ、米ドルに依存する現行の通貨体制の見直しが必要と指摘した。原油など資源輸出に頼るロシア経済については多様化に努めると強調。「ルーブルもユーロのように（地域の準備通貨に）なりえる」などと述べた。
> 大統領は米国発の金融危機について「全世界がドルの健全性に依存している」ことが原因の一つになったと指摘した。
> ロシア経済について今年の成長率はマイナス６%超になるだろうと予想した。一方、インフレ率は13%にのぼるだろうとし「警戒すべきことが起きている」と指摘。原油、天然ガスなど資源以外の産業基盤が弱いのが問題だとして「経済の多様化が最優先課題だ」と述べた。石油化学やバイオテクノロジー、環境技術などの分野で技術革新に取り組む考えを示した。会見内容は13日夕に日経 CNBCでも放映する。
Compared to Tokyo's action in the so called "Lost Decade," Washington's one is indeed quick.
Washington decided to inject public money into ailed U.S. major financial institutions much quicker than Tokyo, ref.(>"Will the U.S. economy recover under the President Obama?")
Washington also decided much quicker than Tokyo to nationalize ailed giant financial institutions, ref.(>'"Fannie Mae" & "Freddie Mac"' & "When will U.S. President Barack Obama be able to recover economy?")
In addition, Washington conducted "stress test" on U.S. giant financial institutions, ref.(>"How deep President Obama can be believed?")
Even though it is still doubtful that standard of inspection and calculation is strict enough or not, there is no doubt that Washington's action is again much quicker than Tokyo's in '90s.
Generally speaking, there is no doubt that U.S. government and financial authority are much abler than Japan's.
It is well said that "do-nothingness" and "inaction" of the 31th U.S. president Herbert Clark Hoover accelerated free-fall of economy during the Great Depression.
It is also said that "slowness" and "inaction" of Tokyo made deterioration of Japan's economy accelerate in '90s.
In this meaning, it can be said that Washington studied well about the Great Depression and Japan's Lost Decade, and acts as quick as possible to halt free-fall of economy.
Indeed, FRB Chairman Mr. Bernanke is well known as a "Great Depression buff." In particular, just like his nickname of "helicopter Ben," Mr. Bernanke is injecting as much liquidity as possible into financial system.
Cooperating well with Secretary of Treasury Mr. Tim Geitner, Mr. Bernanke won't hesitate to utilize public money to make financial system continue to work.
But just moment please. There is one problem -- how about financial resources?
For the sake of bail-out and nationalization of ailed giant financial institutions and public investment, the Obama Administration decided to issue enormous amount of Treasury Bond.
Needless to say, Treasury Bond is nothing more than "national debts" so that the U.S. needs purchasers who wants to lend money to the U.S.
At present, China takes a role of the largest purchaser of Treasury Bond, ref.(>"Balancing U.S.-China economic ties")
In addition, the U.S. must repay vast amount of debts sooner or later, ref.(>"Public debt, The biggest bill in history" & "Politics of debt, Seeing red")
But is it possible? I doubt that. U.S. national debts is too enormous to be repaid. When it comes to normal countries, such amount of debts means "default" just like Argentine in 2001.
But the U.S. has a national privilege. As the U.S. is a hegemony, its currency is the world key currency.
For a few decades, every economists have argued that "as its twin deficits is so enormous that bold depreciation of US$ is unavoidable." But they failed to forecast foreign exchange market exactly.
US$ is still valuable in spite of ballooning twin deficits as there are still enough purchase of Treasury Bond around the world.
But even so, such kind of magic -- I mean printing money scheme -- mustn't be eternal. Sooner or later, the amount of U.S. debts is to reach limit.
Indeed, the U.S. might almost reach the limit. Late Saddam Hussein decided in 2000 to receive payment for crude oil with not US$ but Euro.
But in 2003, the U.S. launched a making inroad into Iraq based on false cause of "WMD," then return Iraqi crude oil deals to US$.
Please understand that I don't want to say "this is the true cause of the Iraq War." I only described the "facts," and it depends on you how to interprete this facts.
Anyway, the world was forced to fully realize that the U.S. are too great to be challenged, and US$ avoided a crisis of falling from a status of the world key currency.
But later, the Iraqi conditions deteriorated and the U.S. was forced to waste awful amount of national power.
In addition, subprime fiasco made further attacks on the U.S. The U.S. is forced to issue enormous amount of Treasury Bond to finance two wars in Iraq and Afghanistan and economic recession.
The more Washington issues Treasury Bond, the more beneficial conditions it must offer for purchasers.
So it is only natural that yeild rate of Treasury Bond is rising gradually, ref.(>"米長期金利、3.83%に上昇"
> 18日のニューヨーク債券相場は大幅に続落。長期金利の指標である10年物国債利回りは前日比 0.14%高い（価格は安い）3.83%で終えた。一時3.85%と、11日以来の水準に上昇した。
> 同日発表された６月のフィラデルフィア連銀景気指数がマイナス 2.2と前月から大幅に改善したことなどを受け、景気悪化に対する懸念が和らぎ債券売りが優勢となった。)
Indeed, gradual and moderate depreciation of US$ is bless for U.S. economy rather than evil. Depreciation of US$ means partial default of U.S. national debts.
But if the world rejects to receive greenbacks saying "this is nothing more than printed paper," it must be an another story.
Theoretically speaking, as the U.S. printed and is printing excessive amount of paper money, value of that are already diluted boldly.
It means that current exchange rates of US$ is too high, and sudden and bold depreciation of that could occur anytime soon.
Taking such conditions into consideration, both China and Russia may think that "it is a perfect opportunity to challenge the U.S."
Even though it may be on the decline, the U.S. is still the overwhelming strongest country in the world. Neither China nor Russia alone can't compete against the U.S. hegemony.
But if they combine powers, they could shake the US$ world key currency structure, then realize multi-power structure.
Indeed, there is a sign of such moves, ref(>"上海協力機構、「多極化」推進を宣言へ 首脳会議"
> ロシア、中国と中央アジア４ヶ国（カザフスタン、キルギス、タジキスタン、ウズベキスタン）が加盟する上海協力機構（SCO）の首脳会議が15日、エカテリンブルクで開幕した。
> 16日には「多極化」の推進などをうたった共同宣言などの文書に署名する。核実験を強行した北朝鮮情勢についても協議する見通し。ロシアのメドベージェフ大統領は会議の冒頭「地域の安全保障問題と世界の金融危機について協議しよう」と述べた。
> ロシア大統領府によると、共同宣言では多極化推進を支持するほか、国際問題解決における国連の役割強化などが盛り込まれる。核拡散防止条約（NPT）体制への支持、国際金融面での協力などでも一致する。)
If the US$ world key currency structure collapse, it could deliver critical jolt to the world economy and both China and Russia could be hit hard.
But if a structural metamorphosis would be unavoidable sooner or later, it is not surprise that both China and Russia aims to maximize their national interests.
Indeed, it seems to me that it is impossible for the U.S. to repay its national debts. Or in the first place, Washington may not have an intention to do so.
Will China and Russia launch a full-scale action to challenge the US$ world key currency structure soon?
If the world economy hits bottom and starts recovery within short, they won't do so. If current lull state of the world economy is temporary and the world economy restarts to deteriorate soon, they will do so.
Here, I am sorry but I have to say that the later scenario seems to be more plausible, ref.(>"A lull state of the stock markets"
>"世界の製造拠点、輸出不振 中・東欧、西欧・旧ソ連向け低迷続く"
> 世界経済の低迷を受け、製造業の拠点である中・東欧諸国や東南アジア諸国連合（ASEAN）などで輸出不振が続いている。チェコなどの 2009年１〜３月期はユーロ圏向けの落ち込みで前年同期比で軒並み２ケタ減。
> ASEANも今年に入って単月ベースで大幅なマイナスが続く。日米欧など先進国の早急な需要回復は望み薄で、外需依存度の高い途上国には厳しい環境が続きそうだ。
> 中・東欧諸国はドイツ、フランス、イタリアを中心とした西欧の製造業の投資を誘致し、経済成長の原動力にしてきた。現在、輸出の７〜８割を欧州連合（EU）向けが占めており、欧州経済の低迷が中・東欧の輸出の足を大きく引っ張っている。１〜３月期はチェコが前年同期に比べて 23.6%減、ラトビアが同25.9%減となった。)
For your ref.>How deep President Obama can be believed?
>New world order? Not yet
>Dollar beauty may be fading but it still tops currency pageant list
0
