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Dollar no longer world reserve currency for China OR Australia

Thanks, World Reserve Currency, But No Thanks: Australia And China To Enable Direct Currency Convertibility
Tyler Durden's picture
Submitted by Tyler Durden on 03/31/2013 12:46 -0400

A month ago we pointed out that as a result of Australia's unprecedented reliance on China as a target export market, accounting for nearly 30% of all Australian exports (with the flipside being just as true, as Australia now is the fifth-biggest source of Chinese imports), the two countries may as well be joined at the hip.

Over the weekend, Australia appears to have come to the same conclusion, with the Australian reporting that the land down under is set to say goodbye to the world's "reserve currency" in its trade dealings with the world's biggest marginal economic power, China, and will enable the direct convertibility of the Australian dollar into Chinese yuan, without US Dollar intermediation, in the process "slashing costs for thousands of business" and also confirming speculation that China is fully intent on, little by little, chipping away at the dollar's reserve currency status until one day it no longer is.

That said, this latest development in global currency relations should come as no surprise to those who have followed our series on China's slow but certain internationalization of its currency over the past two years. To wit: "World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade", "China, Russia Drop Dollar In Bilateral Trade", "China And Iran To Bypass Dollar, Plan Oil Barter System", "India and Japan sign new $15bn currency swap agreement", "Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says", "India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees", and "The USD Trap Is Closing: Dollar Exclusion Zone Crosses The Pacific As Brazil Signs China Currency Swap."

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Bumping to add this article

"Australia’s announcement that it is abandoning the U.S. dollar for trade with China is the latest broadside in the global currency war. Starting April 10, Australia and China will no longer use the U.S. dollar for trade between the two nations. For the first time, Australian businesses will be able to conduct trade in Chinese yuan. No more need for U.S. dollar intermediation."


I believe I read something in

I believe I read something in zero hedge about brasil making a similar deal.

Soon Bernanke's chickens will return to roost over

us all. We are going to pay for all his foolish money printing, used to buy all the bonds needed to finance the debt for Congress.

It's only a matter of time Hyperinflation hits and to poor and middle class will be totally wiped out financially. I am so glad I convinced my wife to stop paying into her 401k, because she is going to lose it all.

Gold standard: because man can not be trusted to control his greed


Any reason why Bitcoin couldn't, in due time, find itself being the reserve currency of the world?

They are only going to come

They are only going to come out with 21 million "units" of bitcoins right? Thats no where near enough for trading on a mass scale and is limited to to interactions where something like gold would be used. Had they allowed something like 500 million to 1 billion out, that would be enough for smaller denominations without oversupplying.

To climb the mountain, you must believe you can.


they are divisible by like 8 decimal points.

0.500000 bitcoins = $50.50 @$101 per bitcoin current price.

Official Daily Paul BTC address: 16oZXSGAcDrSbZeBnSu84w5UWwbLtZsBms

I'm not a Bitcoin pusher

But Bitcoins are divisible into smaller units just the same as gold. So Bitcoin certainly could become the reserve currency of the world.

Not exactly

Since bitcoins are denominated down to 8 decimal places, there are actually many more than there seem to be. For example, if we did use them exclusively and had a desire to keep our global currency level equivalent to trillions of 'units', we would see the following exchange rate:

21,000,000 whole bitcoins
Each one can be broken down to .00000001
This yields 2,100,000,000,000,000 units or 2 quadrillion.
Accounting for the smallest to equal 1 current penny, we now have 20 trillion dollars worth of them which is roughly half the global GDP.

So, if this took place tomorrow, we could buy anything with bitcoin down to 2 cents worth from a direct exchange. We would just have to label them with prefixes like milli, micro and nano. So today's "2 pennies" would equal 10 nano-bitcoin and a whole bitcoin would be worth $2 million.

(Note: The exact number of them is 2,099,999,997,690,000)

EDIT: I just realized that I assumed you proposed bitcoin as the world's RESERVE currency, not the only currency used in the world. Being a reserve only serves to set the standard of what the other currencies are 'officially' worth. If used this way, we would only need maybe 1/10th to 1/1000th of the amount I noted above. So the ultimate value might stop ascending around 1000 times short of the example above.

I think the issue would eventually become moot. Who would use a rigged currency when it's pegged to one that is un-rigged, anonymously private and globally ubiquitous? However, should precious metals become the standard for a store of wealth, this will also reduce the number of bitcoins needed, which will then decrease their relative value.

In my opinion that would be

In my opinion that would be very difficult. Countries exert power over their own and over other countries via currency. That is why there is so much backlash against the Euro. Germany is dominant in regards to making the decisions concerning the Euro and countries such as Spain and Greece have little to say. A populist president in Greece or Spain could artificially make things look better by printing more money - same as Obama is doing right now. Under present circumstances they cannot do this.

Bitcoin is descentralized and independent of governments. It would not be in the best interest of a government to adopt bitcoin.

They may try to demonize and shut down every exchange

But they won't succeed.


Those who expect to reap the blessings of freedom, must, like men, undergo the fatigue of supporting it. ~Thomas Paine

Perhaps there is more here than meets the eye.

The destruction of capitalism is part of the NWO plan. "Communist America" is in the plan, but first the "land of the free" has to be destroyed, one way or another.

Quotes by Lenin
"The surest way to destroy a nation is to debauch its currency.
The Capitalists will sell us the rope with which we will hang them.

The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.

Socialized medicine is the keystone to the arch of the socialist state.

While the State exists, there can be no freedom. When there is freedom there will be no State.

mountaincat's picture


Thanks Bob.

You are welcome, Mountaincat

I have a feeling China plans to crash the US economy, which will also stop our war machine.