Wednesday, November 24, 2010

Stop The Presses ! ! ! !

China and Russia are now using the yuan and the ruble in their trade relationships. 
They used to use the dollar. 
Why the change?  Why is everyone suddenly abandoning the dollar as the currency of international trade?

We're printing too many dollars. 
Why does it matter which currency the rest of the world uses for these exchanges?  Go here. 

The dollar reserve currency status allows the U.S. to run up high deficits and have its debt be denominated in the U.S. dollar, which in turn enables it to print unlimited dollars and inflate its way out of debt. America, understandably, wants to protect these privileges.

The rest of the world is not populated with economic idiots who believe that we can spend our way out of debt.  They also won't use dollars if we're going to try to print our way out of debt. 
It really is that simple. 

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