AGE OF MULTIPOLAR CURRENCY WARS. Part I

The USA and the EU demand China to revalue Yuan, but the Chinese authorities deny this request, stating that this will lead to bankruptcy of Chinese enterprises and, accordingly, to the growth of unemployment and social instability, which Beijing afraid even more than the discontent of its trade partners. As a counter-thesis in the debate with the USA, China presses the charges of uncontrolled emission of the U.S. dollars, which, according to the PRC, provoked the imbalance of the world economy.

The first currency war with an unpredictable outcome. Dollar versus yuan.

In September Congressmen from House of Representatives adopted the bill on measures of counteraction to the low yuan exhange rate. In particular, this bill allows American companies to file the claims for imposition of import duties for the Chinese goods in order to compenste the effect of low exchange yuan-dollare rate.

In fact the wealthiest country in the world owes great amounts of money to China, which owns 20% of all American state securities.

Chinese are holding the detonator, capable of exploding an entire American financial system in their hands. U.S. Department of Finance bonds are just the loan securities, which American government is obliged to pay up with an interest — that’s actually what governments of other countries and various financial institutions are buying them for. Why then — despite the U.S.-born financial crisis — investors from all over the world are still buying up these securities?