Chinese rolling out their alternative to the USD

These are the headlines from the FT this morning that shows Chinese politicians are getting serious about the roll-out of their currency, the renminbi, as an alternative reservable currency…

It means the Chinese, whether corporates or government, will be going into more debt to allow investors/central banks to hold this CNY denominated ‘asset’ on their balance sheets. China will experience a big debt boom in the coming few decades. Note, however, that this will be as a result of rising demand for CNY and falling demand for the USD and USD related debt, particularly government debt.  This means the US government will have to finance itself in an environment of falling demand for its debt.  This means much higher interest rates in the US, and a falling USD as far as the eye can see.


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