“The Jackson Hole central banking conference in the U.S. is likely to be another venue to witness the economically unsustainable international currency system centered on the U.S. dollar,” as countries around the world “increasingly look for substitutes for the failing system,” China’s Global Times daily wrote Aug. 27.
Of the Chinese experts cited by Global Times, Mei Xinyu, a research fellow with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, was the most on target. He pointed to the collapse of U.S. economic productivity under the Federal Reserve’s money-printing policy as what had dug a “grave for the dollar system.”
In Mei’s view, “the dollar’s status as the world’s currency was based on the U.S.’ once-paramount economic productivity.” That productivity was gutted as the Fed’s “quantitative easing policy … fundamentally decimated the U.S. manufacturing sector’s competitiveness.” Now, whatever policy the Federal Reserve chooses to deal with inflation, is “unlikely to bolster the U.S.’s real economy.… The sudden tightening after years of easing, along with the large role of the virtual economy in the U.S. economy, is very likely to cause a financial crisis, Mei said,” Global Times reported.
“The U.S.’s wanton sanctions against other countries have accelerated the fall of the U.S. dollar-based system,” he added.
Other experts emphasized that because of China’s actual (not virtual!) economic strength, China’s yuan will remain a stable major currency, even if it depreciates in relation to the dollar as Fed interest rate hikes increase capital flows into the dollar. This, in the context of countries around the world looking to alternatives to the dollar. (https://www.globaltimes.cn/page/202208/1273971.shtml )
