Donald Trump’s China Nightmare Is Coming True For The U.S. Dollar

[beijingwalker]

Donald Trump’s China Nightmare Is Coming True For The U.S. Dollar
Apr 26, 2020,08:12pm EDT


U.S. president Donald Trump's power struggle with China was perhaps the defining feature of his presidency, until the coronavirus COVID-19 pandemic struck.

The pandemic—and subsequent lockdowns—crashed global markets and pushed investors around the world toward the safety of the almighty dollar.

But the U.S. dollar's days as the world's reserve currency could be numbered, with some of the biggest ever changes to government-backed central bank currencies looming—and China leading the field.

Casual discussions around central bank digital currencies, sometimes called CBDCs, have been going on for the last few of years.

Digital currencies would work just like regular coins and notes issued by central banks but exist entirely online. Instead of printing or minting currency, the central banks would issue digital dollars via online accounts—similar to the commercial banking apps that have exploded in popularity in recent years.

Employers could, theoretically, pay directly into these government-run accounts and both online and physical stores could accept payment from them. Foreign exchange could also be handled through them, easing the flow of international trade.

The long-running debate among central bankers over the need for digital currencies was blown wide open last year by news of Facebook's libra project—something that almost saw the social media giant elevate itself to (or even above) central bank status as an issuer of the first global currency.

World leaders and regulators slapped Facebook back down.

"We have only one real currency in the U.S.A., and it is stronger than ever, both dependable and reliable," Trump said last year in a Twitter tirade against Facebook's libra, as well as bitcoin and cryptocurrencies—scarce digital assets that were the inspiration for libra.

"[The dollar] is by far the most dominant currency anywhere in the world, and it will always stay that way."

Libra is expected to launch later this year, though somewhat reduced from Facebook chief executive Mark Zuckerberg's original vision.

Some U.S. lawmakers have proposed the creation of digital dollars and so-called FedAccounts as part of stimulus bills designed to offset the economic damage wrought by coronavirus-induced lockdowns.

These have so far been excluded from final bills and may never get through a divided Congress—perhaps leaving Facebook's libra as a defacto digital dollar.

"The big battle for global financial supremacy could be between the digital yuan and Facebook's libra dollar, a digital version of the U.S. dollar," said financial author and trading veteran Glen Goodman, who made a name for himself by successfully navigating stock markets during the 2008 global financial crisis and has been closely following the development of central bank digital currencies.

"Both of these currencies may be launched as soon as this year and will make it quicker, cheaper and more efficient to buy, sell or transfer money from place to place. China will pull out all the stops to convince international trading partners to switch from the dollar to their new currency. If they manage to lure enough users, the U.S. dollar could be in deep trouble."

Battle lines are now being drawn but the war could be measured in decades and not years.

"Given the risks inherent to such a transformation, China will phase in the CBDC very gradually," journalists at the widely-respected Economist newspaper wrote this week, pointing to analysis from Citic Securities that estimates it will take "several years for the digital yuan to replace just about 10% of all physical cash in China."

Donald Trump's first term as U.S. president may have been marked by his trade war with China; but if he wins a second he could go down in history as the president that that saw the U.S. dollar fall from grace.

https://www.forbes.com/sites/billyb...s-coming-true-for-the-us-dollar/#787f32303835

 

[tower9]

The US will be following up soon with its own digital dollar using blockchain technology. I don't see how China's digital currency spells the end of the dollar as reserve currency. It may dent it somewhat but there are really no competitors in the wings.

 

[Hamartia Antidote]

 

[Han Patriot]

The US will be following up soon with its own digital dollar using blockchain technology. I don't see how China's digital currency spells the end of the dollar as reserve currency. It may dent it somewhat but there are really no competitors in the wings.

I don't think China aims to dislodge US, it aims to provide an alternative. Absolute power corrupts, China will still use dollars but now other countries requiring sanctions free financing and trade can use DIGITAL RMB. Some companies only trade with China hence they don't need to convert to dollars first. Loans can be given to african countries in Digital rmb. Then they can trade with China with resources. In the end economy is about transactions of goods and services, its not about accumulating dollars.

 

[tower9]

I don't think China aims to dislodge US, it aims to provide an alternative. Absolute power corrupts, China will still use dollars but now other countries requiring sanctions free financing and trade can use DIGITAL RMB. Some companies only trade with China hence they don't need to convert to dollars first. Loans can be given to african countries in Digital rmb. Then they can trade with China with resources. In the end economy is about transactions of goods and services, its not about accumulating dollars.

So basically OP's article is just hogwash.

 

[Han Patriot]

So basically OP's article is just hogwash.

It's a good article none the less but he is not asking the right question, does China want to destroy US? Does China seek to dominate US? The question is No. China seeks equality for non Caucasians. We are the only Non-caucasian power on earth which is able to rival US. Think about that?

 

[tower9]

It's a good article none the less from a respected ex minister but he is not asking the right question, does China want to destroy US? Does China seek to dominate US? The question is No. China seeks equality for non Caucasians. We are the only Non-caucasian power on earth which is able to rival US. Think about that?

China is the only power on earth to rival the US period.

I think race is a factor but not the most important factor. Even if China was Caucasian, the US would be deeply against it as long as it challenged American might and had a Communist system.

 

[Han Patriot]

China is the only power on earth to rival the US period.

I think race is a factor but not the most important factor. Even if China was Caucasian, the US would be deeply against it as long as it challenged American might and had a Communist system.

China does not view itself as either communist or democratic, its Han Chinese first. We are a civilization state, that's why US does not know how to react to us, we don't promote any ideologies, we actually thrive under western system, but yet on one hand we also offer an alternative to other nations. We are a hybrid pragmatic system, not bounded by dogmatic doctrines and ideologies. That's the essence of Chinese civilization, adaptability and fluidity. You can't destroy something which is always changing. It might even come to a point China just declare they are no longer communist but still retaining the authoratarian gov.

 

[49savage]

It's a good article none the less but he is not asking the right question, does China want to destroy US? Does China seek to dominate US? The question is No. China seeks equality for non Caucasians. We are the only Non-caucasian power on earth which is able to rival US. Think about that?

Exactly! The only!!!

 

[patero]

China does not view itself as either communist or democratic, its Han Chinese first. We are a civilization state, that's why US does not know how to react to us, we don't promote any ideologies, we actually thrive under western system, but yet on one hand we also offer an alternative to other nations. We are a hybrid pragmatic system, not bounded by dogmatic doctrines and ideologies. That's the essence of Chinese civilization, adaptability and fluidity. You can't destroy something which is always changing. It might even come to a point China just declare they are no longer communist but still retaining the authoratarian gov.

I sort of agree with you. But in some aspects the modern Chinese state is repeating the behavior and policies of the Soviet Union. One aspect of the Soviet Communists which was the key driver of the cold war was the desire for Marx's goal of world revolution.

The Soviet state could not rest while an example of a different way of life existed in the world. The gigantic war machine the Soviets built, which eventually helped bankrupt them, was not built to defend the motherland: it was built for the purpose of achieving world revolution. Always at a high state of readiness, the Soviet armed forces were poised and ready to strike anywhere within reach to further the primary goal of communist doctrine.

Case in point, why did the Soviet army invade Czechoslovakia in 1968 but never invaded Romania? Despite Ceausescu being a fierce and outspoken enemy of the Soviet state, Romania remained free from Soviet liberation which would have been a formality given the military superiority of the Soviets. The answer is simple, Romania was governed as a Communist state and therefore did not represent a threat ideologically to the Soviet state.

Is the modern Chinese Communist State as dedicated to Marx's ideal of world revolution as the Soviets were? Is the world heading inexorably towards armed conflict between opposing ideologies? It's highly likely in our lifetime in my opinion.

There is a big clue to what the future holds in some of the official Chinese state rhetoric, specifically the promotion of the China option for state governance. Viewed through the lens of history, the actions of the CCP throughout the developing world (and much of the developed world) are really the same central communist doctrine being applied again, just with different and more discreet methods.

A communist state that can't abide a different system of government existing elsewhere, overly focused on proving the superiority of its system above others? Sure the iron curtain might have been replaced with bamboo, but the walls are metaphorically there. The more things change, the more they stay the same.

 

[Han Patriot]

I sort of agree with you. But in some aspects the modern Chinese state is repeating the behavior and policies of the Soviet Union. One aspect of the Soviet Communists which was the key driver of the cold war was the desire for Marx's goal of world revolution.

The Soviet state could not rest while an example of a different way of life existed in the world. The gigantic war machine the Soviets built, which eventually helped bankrupt them, was not built to defend the motherland: it was built for the purpose of achieving world revolution. Always at a high state of readiness, the Soviet armed forces were poised and ready to strike anywhere within reach to further the primary goal of communist doctrine.

Case in point, why did the Soviet army invade Czechoslovakia in 1968 but never invaded Romania? Despite Ceausescu being a fierce and outspoken enemy of the Soviet state, Romania remained free from Soviet liberation which would have been a formality given the military superiority of the Soviets. The answer is simple, Romania was governed as a Communist state and therefore did not represent a threat ideologically to the Soviet state.

Is the modern Chinese Communist State as dedicated to Marx's ideal of world revolution as the Soviets were? Is the world heading inexorably towards armed conflict between opposing ideologies? It's highly likely in our lifetime in my opinion.

There is a big clue to what the future holds in some of the official Chinese state rhetoric, specifically the promotion of the China option for state governance. Viewed through the lens of history, the actions of the CCP throughout the developing world (and much of the developed world) are really the same central communist doctrine being applied again, just with different and more discreet methods.

A communist state that can't abide a different system of government existing elsewhere, overly focused on proving the superiority of its system above others? Sure the iron curtain might have been replaced with bamboo, but the walls are metaphorically there. The more things change, the more they stay the same.

China is Not communist. Communism is an economic concept, equal distribution of wealth, you can be democratic and communist or authoratarian and communist. China is capitalistic and nationalistic and authoratarian aka Facist. We are closer to Nazis Imperial Japan post 1949 to 1996 KMT and Park led Korea than Soviet Union.

 

[patero]

China is Not communist. Communism is an economic concept, equal distribution of wealth, you can be democratic and communist or authoratarian and communist. China is capitalistic and nationalistic and authoratarian aka Facist. We are closer to Nazis Imperial Japan post 1949 to 1996 KMT and Park led Korea than Soviet Union.

We'll have to disagree on that. Given the highly centralized planning and control of the Chinese economy, there only remains the illusion of capitalism. For the last 5-7 years there has been a tightening of state control over all sectors of the economy.

Communism as it is practiced is much more than an economic concept, state control of all aspects of life is necessary for communism to function. Which brings us to the great myth of communism, Marx's ideal of a classless society and equal distribution of wealth. It has never existed anywhere.

 

[vi-va]

China does not view itself as either communist or democratic, its Han Chinese first. We are a civilization state, that's why US does not know how to react to us, we don't promote any ideologies, we actually thrive under western system, but yet on one hand we also offer an alternative to other nations. We are a hybrid pragmatic system, not bounded by dogmatic doctrines and ideologies. That's the essence of Chinese civilization, adaptability and fluidity. You can't destroy something which is always changing. It might even come to a point China just declare they are no longer communist but still retaining the authoratarian gov.

well said.

 

[Han Patriot]

We'll have to disagree on that. Given the highly centralized planning and control of the Chinese economy, there only remains the illusion of capitalism. For the last 5-7 years there has been a tightening of state control over all sectors of the economy.

Communism as it is practiced is much more than an economic concept, state control of all aspects of life is necessary for communism to function. Which brings us to the great myth of communism, Marx's ideal of a classless society and equal distribution of wealth. It has never existed anywhere.

India has central planning too. State control of economy is one charateristic of communism, however don't forget Socialist France also had a high degree of state owned enterprise. Communist countries don't have billionaires. The most basic tenet of communism is equal wealth. At most you can call China facist but not communist. Just like Nazis, they had a private sector, capitalism and also some form of state owned companies.

Its just so happens most communists are either dictatorships or authoratarian regimes. The ideal communist is democracy.

 

[Naram_Sin]

Theoretically, The digital yuan does not need to replace the dollar to undermine its strategic value, by simply providing an alternative, the US can no longer leverage the dollar's reserve currency status to impose unilateral sanctions.

The question is... can the digital yuan act as a full fledged alternative to the dollar ? Or are there limitations preventing worldwide adoption ?