March 4, 2015
Bangkok, Thailand
Bangkok, Thailand
When I arrived to Bangkok the other day,
coming down the motorway from the airport I saw a huge billboard—and it
floored me.
The billboard was from the Bank of
China. It said: “RMB: New Choice; The World Currency”
Given that the Bank of China is more
than 70% owned by the government of the People’s Republic of China, I
find this very significant.
It means that China is literally
advertising its currency overseas, and it’s making sure
that everyone landing at one of the world’s busiest airports sees
it. They know that the future belongs to them and they’re
flaunting it.
And it’s true. The
renminbi’s importance in global trade and as a reserve currency is
increasing exponentially, with renminbi trading hubs popping up all over the
world, from Singapore to London to Luxembourg to Frankfurt to Toronto.
Multinational companies such as
McDonald’s are now issuing bonds in renminbi, and even sovereign
governments are issuing debt denominated in renminbi, including the UK.
Almost every major global player out
there, be it governments or major multinationals, is positioning itself for the
renminbi to become the dominant reserve currency.
But here’s the thing.
Nothing goes up and down in a straight line. And China
is in deep trouble right now. The economy is slowing down and the
enormous debt bubble is starting to burst.
A lot of people, including the richest
man in Asia, are starting to move their money out of the country.
So while the long-term trend is pretty
clear – China becoming the dominant economic and financial superpower
– the short-term is going to look incredibly rocky.
We talk about this in today’s
short podcast with Sovereign Man’s Chief Investment Strategist, Tim
Staermose, which includes a few ways to actually make money from
China’s short-term unwinding.
Have a listen here: http://www.sovereignman.
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