Mulling that whine about the untrustworthy dollar

Guambat has stewed over the weekend about that "untrustworthy" US dollar story coming out of China. How are we to take it?

On its face, it would seem to be a harbinger of dollar dumping, particularly by China. Should we be fearful of a run on the US dollar?

Guambat doesn't have a clue, but wonders, if you sell dollars, what do you buy to replace it? As that prior post noted, even China recognizes the structural limitations of dealing with a fractious European Community and its Euro currency. Is the world really at the place where it is willing to put its stores of value on the Euro? Without the knowledge to reject or embrace the idea, Guambat is dubious.

So, what, the Yen? It's strong, at least against the Greenback and at least at the moment. But how do you have the confidence of a currency whose economy has been running a zero percent interest policy for nearly a decade, whose currency has chiefly been appreciated (to use the word correctly in one sense and wrongly in another) more for its carry trade than its intrinsic value, and whose stock market is only a quarter of its value of a generation ago, and whose politics, while engaging at the macro world level can hardly be characterized as possessing leadership, and whose defense strategy is based on a constitutional policy of what is in essence isolationism?

Again, Guambat is dubious.

So, the Chinese Yuan, maybe? Given its recent emergence, its state-run history and its undemocratic "tendency", even granted it will become a world economic power, perhaps, and perhaps before this century is out, is the time ripe for the Yuan? Again, dubious.

Maybe the Euro-Asian connection will try to take the US Dollar out behind the Bretton Woodshed for a bit of a gilt-edged make-over? Again, Guambat is doubtful that, first, without the active support of the US that dog has legs, and, second, even a basket approach will accept a basket-case dollar. At least one qualified observer (certainly more so than Guambat) has objected to saluting that flag if it is run up the flagpole.

For now, it seems, there is no viable replacement, so why would the Chinese leadership allow such a canard to run in such an obviously provocative piece?

So far, the only idea Guambat can come up with, given his God-given limited resources, is that this is just another convenient and opportunistic weight to place on China's side of the scales as it continues to negotiate its own way with the rest of the world. If so, maybe it is only an idea whose time has not yet come.

We'll see. Meanwhile, your thoughts and contribution might possibly be welcomed, depending on how similar to a manufactured luncheon meat it presents itself. (Not to disparage the real, fair dinkum Spam itself, as Guam folk are proudly known to have some affinity along those line.)