Professor Elam

How many of us can name the Chineses President?  Okay how about the Chinese Premier?

Okay what's the difference?  When it comes to the US dollar, none, they are both worried.

This is precisely the scenario the gold bugs lay out. The US is overspending its limits which will eventually weaken the US Dollar. If that happens the Chinese will balk at buying more US debt. If they balk, the world balks and then the game is over, we are a giant GM ever rolling the debt dice and never paying off in full. At that point say the gold bugs, gold goes thru the roof as no currency is safe. 

Hmm is this another vote against the stimulus package, I would say so.  

More developing as I write…

Chinese yuan set to replace dollar from Asia News
by Maurizio d'Orlando

Beijing has launched the experiment of using the yuan as a reserve currency in relations with 8 countries. Chinese exporters are asking to charge in yuan instead of dollars, because the U.S. currency is losing value. But China needs to revise its model of development, too much inspired by eighteenth century mercantilism.

Milan (AsiaNews) – While the comments of economic observers have focused on what is happening to U.S. public debt and to financial markets overseas, the news media rarely mention what is happening in Asia, almost as if there were not a strong correlation between the two phenomena. But it is logical that a substantial accumulation of foreign exchange reserves in China, Japan and throughout Asia corresponds to an unprecedented supply of dollars, the global reserve currency.

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SHANGHAI: China's central bank is considering hiking increasing gold reserves nearly seven-fold to spread risks in its huge foreign exhange (from the Economic Times).