China, which is the second largest economy in the world, and owns a large portion of the debt of the number one economy, is preparing to seek a new reserve currency, and basing it on the gold standard.
Should this take place, the US dollar will be a fleeting memory, as our gold reserves and financial solvency will not facilitate our money as being the world standard.
In an article today by the New American, China has been using their US debt over the past three years to pave the way for a gold-based reserve currency, and the hint is for it to be the Yuan at the detriment of the dollar.
In one of the most ironic and revealing moves in the unfolding of relations between the United States and China, China has announced that it is seeking a shift to the gold standard. According to the World Gold Council, the market development organization for the gold industry, China’s appetite for gold has been rapidly expanding: It consumed 175.2 tons of gold in the fourth quarter of 2010, bringing its grand total for the year to 579.5 tons, or 18.5 million ounces. By comparison, the United States consumed a mere 233.3 tons of gold in 2010. While it is unknown how much of China’s gold acquisitions were made by private citizens, industry, or central banks, speculations remain as to what the country's true intentions are regarding its continued massive purchase and use of the gold.
Western economies, such as those in the US and the EU, are not based on a gold-based currency, but instead a fractionally based fiat money that they have devalued to the point where inflation no longer can be controlled. China, Russia, and the oil states of the Middle East however, have been preparing for the day when the dollar will be set aside, and those who relied upon non-backed currencies will move to the back of the line in the world economic system.
China has been biding their time, and it appears that they are ready to present the world a new, more stable currency. For centuries in America when we were on the gold system, inflation was virtually zero, and it wasn't until the Federal Reserve was given the power to create a fiat currency that our purchasing power died. It is ironic that a communist country like China seems to understand capitalist principals much more than the western nations who prospered on it, and then cast it aside for worthless money.
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