THE YUAN BECOMES THE NEW RESERVE CURRENCY

It is happening today…Dollars and Euros are flooding into Hong Kong to buy…

DIM SUM DEBT—BONDS DENOMINATED IN YUAN!

From Bloomberg, November 17, 2010: “HSBC Holdings Plc and Standard Chartered Plc, the biggest foreign underwriters of yuan bonds sold in Hong Kong, say they have never been busier even as China seeks to curb inflows of capital to limit appreciation.”

Investors across the world have realized that China is the world’s new economic leader and that the Yuan will be the new world reserve currency.

A change in the world’s reserve currency happens every century. As Europe became reformed into federal governments from small principalities in the 19th Century, the British Pound Sterling was the World’s Reserve Currency.

In the 20th Century, the U.S. Dollar took that position, promising gold in return for the paper U.S. Dollar. In the same century, the U.S. withdrew its promise of gold and the U.S. Dollar was used world wide, backed only by the military might of the U.S. Government.

Along came the EU and its Euro gained prominence.

Today, the U.S. Dollar and the Euro are the two prominent world currencies.

ECONOMIC TURMOIL HITS THE WEST

What we are seeing in the U.S. and Europe is Economic Turmoil.

Debt, Deficits and Unemployment have shattered the economic strength of the West. Europe is floundering like a dying fish. The U.S. is using the Federal Reserve as a Money Printer, desperately trying to avoid deflation.

China, in the meantime shows export prowess, selling all things to all people. China is also buying up U.S. Bonds, holding close to Three Trillion Dollars of U. S. Federal Debt.

WORLD INVESTORS

World investors, the financial skeleton of the world, the ultimate source of the world’s financial blood stream, moves always to where the greatest profit and security lie.

What do they see?

They see the U.S. printing trillions of dollars. They see the E.U. trying to save its weak members and the Euro dropping in value. They see China growing internally and externally.

Whose currency would they want?

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