Information Related to "Could the Dollar Fall?"
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Several recent headlines in London's Financial Times illustrate a continuing thought among world financial leaders. The first headline said, "Brazil and China Eye Plan to Axe Dollar." "China Attacks Dollar's Dominance" read another. A third spoke of "De-Dollarization and the Ending of America's Financial-Military Hegemony." Another spotlighted the lack of confidence in American financial leadership: "Dollar Falls as Geithner [the U.S. Treasury Secretary] Hails Recovery Hopes."
Warning shots are being fired across America's bow. Many want an end to
the era of the dollar as the world's reserve currency. If that happens,
your financial world will be forever altered.
The United States is now the world's largest debtor nation ($10.6 trillion). And China owns more of that debt than any other nation-more than $800 billion. Chinese Premier Wen Jiabao has publicly expressed "worries" over China's significant holdings of U.S. government bonds, which ties China to America's good times and its bad times.
China is concerned that the U.S. Treasury bills (T-bills) and bonds it holds will lose much of their worth if the dollar is devalued or the financial crisis does not turn around.
By calling for the creation of another reserve currency, China, Russia and other nations seek insurance for their economies against the problems generated when one country's economy goes bad. They also seek to end American dominance over the world economy. America's decline and China's rise fit their geopolitical ambitions.
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