Chinese Netizens: Do Not Treat the U.S. Dollar Like Treasure

In 2007, Song Hongbin launched a book entitled “Currency Wars.” Even though it was well-received by the public, the authorities and experts thought otherwise. Eventually, even when Song appeared on screen, he was only present as a supporting character, and in particular, as an example of a bad educator.

In 2008, I looked down on the U.S. dollar and said that it will simply be deemed to be colorful slips of waste paper sooner or later. The gold that China ships to the United States has only been exchanged for a worthless piece of promissory note. The experts thought I was spouting nonsense, and have repeatedly claimed, in various sources of media, that the debt in U.S. dollars is the safest. In the end, China’s foreign currency reserves did not manage to be exchanged for gold and did not have enough time to purchase resources, and instead China had to export silver and rare earths in large quantities. It even had to continue sustaining the debt accumulated from the U.S. property market, when in fact that market was already in the red.

The best analysts declared in a paper in 2008 that the U.S. dollar would be devalued by 50 percent in 10 years, based on a thorough analysis. Then, the price of each gold bar was US$800, while the price of gold rose to close to US$1,400 by Nov. 11, 2010. As such, it seems like the predictions made by these analysts have come true prematurely.

Currently, the Federal Reserve has decided to print more U.S. dollars. I forewarned that the public should never underestimate the power of printing money in the United States, and I was unfortunately right. According to officials, after China heard of this news, its various government departments held an all-night meeting to discuss strategies to manage this inflation. However, once these strategies were executed, this led to the strongest appreciation of the Renminbi in a day, which is hardly believable!

This G20 meeting was particularly lively as most countries commented on the U.S. dollar, while some even disregarded their manners when making their comments. As the United States has historically adopted an independent working style, along with the fact that this issue concerns its national interests, it did not make any related comments. A consensus was also reached that countries at the G20 meeting would not be involved in currency warfare. In any case, the United States would be the one initiating such warfare if necessary.

In order to deal with the U.S. dollar, other countries have adopted protectionist measures to stabilize their exchange rates, causing distress in the global financial order. Countries from Europe to Asia all face the threat of hyperinflation. Countries in the American continent will also suffer the same wrath — in the past 12 months, Argentina circulated 155 million 100-peso notes, but found it insufficient. Some experts even suggested making an exception to circulate 200-peso notes, 500-peso notes or notes of bigger values.

The quantitative easing policy adopted by Wall Street has caused great confusion in the world, let alone among American citizens. It came as a shock when the American media screened an elderly looking person shocked at the increased prices labeled on items!

The situation in China is not optimistic, either. As the United States has been continually releasing gold, global "hot" money has been flowing to China, causing inflation in product prices and a fall in property prices. From wet market food items like garlic and ginger, to speculation on the Japanese Yen, gold, silver, coffee, cotton and even the Shandong Chinese cabbage, all items have experienced price inflation. Now, some mainland Chinese are even resorting to buying products pegged to the U.S. dollar (like Hong Kong products) in order to get goods cheaply.

Other experts have provided another reason: The loose currency flow that China allowed in the past has resulted in the current circulation of US$10 trillion worth of money, which surpasses the United States. The amount of money in circulation is more than double the GDP. The main reason behind inflation is the excess circulation of money. Theoretically, if it is double the GDP, then prices should be doubled. Moreover, the central bank is unable to absorb so much currency within a short period of time, causing the inflation to continue.

No wonder netizens are saying: The most worthless thing we have now is money, so do not treat the U.S. dollar as treasure!