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The Only Right Strategy to Avoid the Trap of the U.S. Debt Is to Internationalize the RMB

Qiushi Journal, a flagship publication of the Chinese Communist Party’s Central Committee, republished an article from People’s Forum, which was originally published on the Caogen website. The article claimed that the only way to keep away from the pitfall of “the U.S. dollar hegemony” and the U.S. debt is to “create an alternative to replace the U.S. dollar and the U.S. debt.” “If China wants to get away from its over-reliance on the U.S. dollar and debt, the only right strategy is to internationalize the RMB (the Chinese yuan).”

The article explained in detail “the pitfall of the U.S. dollar hegemony and the U.S. debt”:

“The pitfall of the U.S. dollar hegemony and the U.S. debt is the core of the U.S. global strategy (‘the U.S. dollar + the U.S. army’ strategy). Due to the special status of the U.S. dollar, the world’s leading reserve currency, other countries have to accumulate large amounts of the U.S. dollar reserves. Since the U.S. bond market is the most liquid and most secure bond market in the world, other countries have no other choice but to buy large amounts of the U.S. debt. The deficit and debt help the U.S. to raise huge amounts of military expenditures, which lets the U.S. maintain its global military expansion and control the global strategic resources (mainly oil). The control of global strategic resources, in turn, strengthens the U.S. dollar’s reserve currency status. ‘The U.S. dollar hegemony – the U.S. debt pitfall – the military expansion – a control of strategic resources – strengthening the U.S. dollar hegemony’ is the basic logic of the United States as the global superpower.”

Source: Caogen, People’s Forum and Qiushi Journal, August 20 – 22, 2011