China bidding dollar goodbye?

Harvard economist says currency dying ‘slow death’

With the dollar falling rapidly to test – once again – the $1.50/euro benchmark, Harvard University professor Niall Ferguson, the author of “The Ascent of Money,” is warning China has begun “dumping the dollar” by buying gold and commodities, including oil rights around the world.

With China holding approximately $2 trillion in foreign exchange reserves, the largest amount ever held by an country in the history of international trade, the conventional wisdom in Washington is that China would be committing economic suicide to dump the dollar since approximately 80 percent of China’s foreign exchange reserves are held in dollar denominated assets.

But Ferguson called this view “slightly naïve,” arguing the Obama administration is refusing to acknowledge the dollar is “dying a slow death.”

“The idea they [the Chinese] don’t have anywhere else to go or would shoot themselves in the foot if there were a steep decline in the dollar or appreciation of their currency reassures many people in Washington ‘we can relax,’” Ferguson said.

Read Entire Story in World Net Daily

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Tags: ", "The Ascent of Money, China, dollar, Foreign exchange reserves, International trade, obama, The Ascent of Money: A Financial History of the World, Washington.