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Since 2008, the United States has been at the center of the
financial storm, and even once faced the risk of debt default.
While China has reached currency swap agreement with 21
countries and regions, will the RMB replace the dollar and
become the dominant reserve currency?
Please see our analysis.
Economist Eswar Prasad pointed out that despite the upheaval
in the U.S. economy, the U.S. dollar remains the dominant
Eswar Prasad is a Senior Fellow at the Brookings Institution,
the American think tank.
He explained the world relies on the security of the dollar,
which "the rest of the world has a great deal of trust in."
In fact, the dollar holds its power even during the financial crisis.
Eswar Prasad said that international investors will always turn
to the dollar because of the
"deep financial markets, a powerful central bank and legal
framework the rest of the world has a great deal of trust in."
Eswar Prasad also indicated that the U.S. will not resort to
inflation to reduce debt, this could damage both international
investors as well as American investors.
Eswar Prasad, former head of the Financial Studies
Division and the China Division at the IMF, International
In his new book, "The Dollar Trap", he believes that the
dollar will remain as the dominant reserve currency.
The RMB will not displace the dollar any time soon because
of China's political system.
He indicated that given the current political system and the
legal framework in China, it's unlikely China will be viewed
as a safe haven for investors, but rather a diversified reserve.
Xie Tian, Professor of Marketing at the University of South
Carolina Aiken indicates that:
as a world model in politics, economy, military, social and
culture, and the moral appeal, the United States has the
strength that no other democratic country could compare.
Xie Tian, professor of Marketing at University of South
Carolina Aiken: "The United States is now completely out of
recession with annual economic growth of 2% to 3%.
European countries are still struggling, so is Japan.
While China is just entering the economic crisis.
In this case, the dollar has undoubtedly become the safe haven
as the reserve currency."
According to the Treasury International Capital report,
China, the largest foreign holder of the bills, boosted its
holdings by $12.2 billion USD to $1.32 trillion USD,
- a record high.
China's foreign exchange reserves rose to $ 3.82 trillion USD
at the end of 2013, which is $ 509.7 billion more than
a year earlier, the People's Bank of China said on Wednesday.
Both foreign exchange reserves and the annual growth rate
have reached a record high.
Xie Tian points out that China's large foreign exchange reserve
reflects the Communist regime's lack of confidence.
The exchange rate between dollars and RMB is close to 6,
a new high since 2005.
The balance of M2, China's broadest measure of money supply,
recorded 107.93 trillion yuan ($17.78 trillion), in December 2013,
from 30 trillion yuan ($4.942 trillion) at the end of 2005.
That is a 218% growth in eight years,
while the United States only experienced a growth of 55%.
The New York Times indicated in its January 16 report that
because of the amount of money sloshing around China's
economy,housing prices have soared, feeding fears of a bubble,
while leaving many ordinary Chinese people feeling poor
and left out.
An economic column in China also reported that:
Chinese people have become the ultimate scapegoat of the
appreciation of the RMB overseas, but depreciation domestically.
Ren Zhongdao, financial analyst: "The Communist regime has
become the world's largest cash printing machine.
According to the Chinese broad measure,
the RMB supply has exceeded 1.5 times that of the dollar."
Xie Tian: "There has been a double-digit inflation in China
because of the abusive printing of the RMB by the Communist
In fact, the regime is facing an even greater financial crisis,
whether it is the real estate bubble, the declining stock market,
or the immeasurable local debts."
Xie Tian points out that the final economic collapse is inevitable
in China, on account of the habitual cash printing of the regime.
He believes that the economic collapse would naturally lead to
the collapse of the communist regime.