Net Drain on US Foreign Reserves

posted by Nima

March 21, 2009 · Posted in Global Economics

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Tags: china us dependency, inflation

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3 Responses to “Net Drain on US Foreign Reserves”

LauraB on March 22nd, 2009 2:11 pm

I don’t look forward to seeing Americans or anyone else around the world suffer from the inflationary policies being pursued by their governments against their wills and despite their increasingly vocal objections.

OT — Good call on the increasing talk in the media of Special Drawing Rights (SDRs) before the push for a global currency.

Here are two articles from last week that mentioned SDRs:

1. U.N. panel says world should ditch dollar
http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318?pageNumber=2&virtualBrandChannel=10452&sp=true

According to this article, the U.N. Commission of Experts on International Financial Reform will recommend to the U.N. on March 25, 2009 that “the world ditch the dollar in favor of a shared basket of currencies.” Under the heading “Good Time”, U.N. panel member Avinash Persaud talks about using something like an expanded SDR as the reserve currency.

This is the link to the accompanying video of the interview with U.N. panel member Avinash Persaud, who is also chairman of consultants Intelligence Capital and a former currency chief at JPMorgan:
http://www.reuters.com/news/video?videoId=100494&newsChannel=wtMostRead

2. China backs talks on dollar as reserve -Russian source
http://www.reuters.com/article/usDollarRpt/idUSLJ93633020090319

According to the article, ” The source said the Chinese paper envisaged the International Monetary Fund’s Special Drawing Rights (SDRs) being first assigned a role of a clearing currency on some transactions and then gradually becoming the main global reserve currency.” The article also mentions that the U.N. panel is looking at using expanded SDRs as a new reserve currency.

The article says that Russia plans on raising the issue at the G-20 meeting on April 2, 2009. According to the article, “The source said that India did not object to the discussion but was not prepared to take the lead. The source said South Korea and South Africa backed the idea, while developed nations were not “allergic” to it.” The Russian Finance Minister told reporters that he thought “it would take up to 30 years to create a new super-currency.”
Nima on March 22nd, 2009 10:26 pm

Interesting. Thanks for the links. I will post a specific blog on this.
LauraB on March 23rd, 2009 5:35 pm

It looks like China is going to continue to buy our debt, at least for now:

Official says China to Continue Buying U.S. Debt http://business.smh.com.au/business/world-business/official-says-china-to-continue-buying-us-debt-20090324-97qw.html