In an announcement on Tuesday, Premier Wen Jiabao and his Russian counterpart Vladimir Putin said that would no longer use the US Dollar in their bilateral trade agreement.\u00c2\u00a0 They will be using their own currency when dealing with each other.\u00c2\u00a0 This stemmed from the financial crisis of 2008 when both countries began seeking alternatives to protect their economies.<\/p>\n
In an article on chinadaily.com:
\nSun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.\u00c2\u00a0 Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.<\/p>\n
The action taken by Russia and China further emphasizes the world\u00e2\u20ac\u2122s view that the US Dollar is risky and weak.\u00c2\u00a0 These two countries have taken a small step to eliminate the US Dollar as the world\u00e2\u20ac\u2122s reserve currency<\/a>.\u00c2\u00a0 In fact they have been calling for a new world\u00e2\u20ac\u2122s reserve currency since early 2009.\u00c2\u00a0 When the IMF didn\u00e2\u20ac\u2122t include the rouble and renminbi in the new SDR weighting this month the two responded with penning their own agreement.<\/p>\n With the recent announcement of QE2 pumping new dollars into the world economic system, it is no wonder our foreign trading partners are longing for a way to protect their countries economies from our reckless spending.\u00c2\u00a0 I believe this new development between these two countries will inspire others to do the same, thus circumventing our dollar.\u00c2\u00a0 This will force more dollars to come home to the United States and will cause inflation here at home.<\/p>\n Inflation will ultimately cause gold to rise priced in dollars.\u00c2\u00a0 Gold is commonly used as an inflation hedge and is a great portfolio diversifier.\u00c2\u00a0 If Russia and China are afraid of the dollar shouldn\u00e2\u20ac\u2122t we all be to a certain degree?\u00c2\u00a0 If the Fed is going to continue to print money shouldn\u00e2\u20ac\u2122t that only emphasize our need as citizens of the dollar to diversify that risk away?\u00c2\u00a0 Gold coins<\/a> are a great way to diversify your portfolio and give you a hedge against the dollar and inflation.<\/p>\n","protected":false},"excerpt":{"rendered":" In an announcement on Tuesday, Premier Wen Jiabao and his Russian counterpart Vladimir Putin said that would no longer use the […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1207],"tags":[],"class_list":["post-521","post","type-post","status-publish","format-standard","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/521","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/comments?post=521"}],"version-history":[{"count":0,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/521\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/media?parent=521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/categories?post=521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/tags?post=521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}