China is right to fear US dollar debauchery

By Ian Campbell

Optimism is one reason: investors feel cheerful enough to leave the supposedly safe haven of the greenback. But fear is another reason. In the middle of the week, China's central bank warned of a "policy mistake" by some of its western peers.

The Chinese are worried that the decisions by the US and the UK to try to print their way out of economic trouble will end badly. The money creation could end up debauching the dollar and pound and inviting a global inflationary crisis.

Beijing's latest criticism follows an earlier suggestion that the world could do with an alternative reserve currency to the US dollar. The criticisms matter because they come from the US's biggest foreign creditor. China holds $744bn of US Treasuries - an increase of $257bn in the past year.

It seems the People's Republic wants to send a message to the US: respect your currency's integrity. Failing to do so could trigger a dollar collapse, surging US inflation, soaring interest rates and a still deeper global recession.

China is right to fear US dollar debauchery - Telegraph

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