China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
What will this mean? While China doesn’t hold all of the U.S. debt, it holds a lot of it. Even though “Russia” disintegrated, many folks contend the cold war never really ended. Having grown up with neighbors (those who could afford them) who had bomb shelters and the universal fear was Russian ICBMs raining down on us, it’s hard not to be paranoid about “them.”
It’s been a long time since Russia and China were our allies in World War II — and even then it was more for their own self-interest. That alliance in what surely must have a destabilizing effect on the dollar surely cannot be good news but it’ll take some smart people to figure out what this portends.
At the moment, there is no analytical coverage in the news and even the blogosphere is quiet on the subject. Any experts out there?