The declining yaun....

Over the last few years there has been a lot of talk about a new reserve currency coming from China. I have even heard people say that China will come out with a gold backed currency.

I dont think that will happen, a gold backed currency from China much less the Chinese Yaun replacing or competing with the USD. or even the Yen. As far as the Euro I think we may be seeing the end of the currency union there or maybe we will see a "hard Euro" and a "soft euro".

The United States is one of the biggest trade region in the world as is the Euro region. The Chinese are communists and or Keynesians as most of the elite studied at universities in either the US or Euro land and other countries in the west so will have a bias towards mercantilism as most western countries do today.

So when you have a mercantilist outlook where you tend to want to compete with the world with a cheap currency against your trade partners it makes sense the Chinese currency will never rise against the USD to much and is decline now and why we may be surprised with some kind currency colllapse when the next wordwide economy crash comes.

So as the Chinese economy slows down or goes into recession expect the government to put pressure on the Chinese Central bank to allow the Chinese Yaun to decline against its major trading partners.