Edward Harrison submits:

In the lead-up to next week’s G8 summit, the Chinese have been making yet more noises about setting up a new monetary system without the dollar as its anchor and leading reserve currency. The Chinese, who have maintained a export orientation which has made them the largest holder of U.S. government bonds, are concerned that they are holding depreciating assets. As the U.S. economic and fiscal position deteriorates, the likelihood for a disorderly decline in the U.S. dollar increases. So, China wants a change.

The Japanese, who also have the same export orientation, making them the second largest holder of U.S. treasury assets, have come America’s defense.

Complete Story »