Super Soverign Currency

Pissed off Readers (POS) are taking a look at this:

http://www.reuters.com/article/usDollarRpt/idUSPEK26164620090626

"China's central bank renewed its call on Friday for the creation of a super-sovereign reserve currency to reduce the dollar's global domination, which it said had worsened the financial crisis.

An international monetary system dominated by a single sovereign sovereign currency has intensified the concentration of risk and the spread of the crisis," the People's Bank of China said."

In an essay in late March, Zhou caused a stir by suggesting that the Special Drawing Right, the IMF's unit of account,could eventually displace the dollar as the principal reserve currency."

China and the other BRICS (not to mention all export driven economies) realize (as DeGaulle did back in the 60's-70's) that to rely on the US to not print their FIAT currency like mad is insane. Printing money is the easiest solution to governments that want both guns and butter.

A little history....

Beginning with LBJ the US tried to have it all (and it worked for the most part) by fighting wars against Vietnam and "social injustices" at the same time. Nixon and the Fed continued the some monetary and fiscal policies, but the French (De Gaulle) called him on it by demanding French held US credits be redeemed in gold. On Aug 15th 1971 Nixon slammed the gold window shut. That was the defining moment of the Nixon presidency, not Watergate. But like everything else, the MSM screwed that up too.

So what is happening today? The BRICS are realizing that the US's position as the reserve currency threatens their regimes more than the US's Nukes (at least for the time being). They realize that they have made a Faustian bargain with the US and they are trying to exit their positions in the most financially prudent manner.

That is why you will continuously see stories out of China, Russia, India and Brazil that seem to contradict themselves. They don't. Understand that that BRICS are in a dilemma. And dilemmas don't have good and bad answers. They have bad and less bad. The trick is to manage the situation with as little fall out as possible. Thus the call for SDR's while at the same time buying more dollars.

The thing to watch is what do the BRICS do with those dollars in terms of acquiring hard assets.