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Would you convert savings to yuan-rubles?

It must be boring to have no memory when reading financial news. I just burst out laughing this week when I read the paper and online news sites.

Russia and China are supposedly working together to create a new world currency. Hooray for them. The Russian ruble dropped almost 50 percent in value since last summer. Its previous ruble went “poof” in 1998. Perhaps they are planning ahead for when the current ruble goes “poof.”

Heaven knows, the dollar has its ups and downs, but if the ruble is falling that drastically against it, what does that tell you about the ruble?

China’s actions are more plausible, but only slightly. China’s currency is not traded freely. The yuan has a value that the People’s Bank of China says it has. Don’t believe them? They have reserve assets of about $2 trillion, much of that in dollars themselves. What would the value of the yuan be without the dollars or euros behind it? Back in 1993 it was devalued by one-third. By all means, China, trade those dollars in for rubles.

While China and Russia are at it, they should include the Icelandic krona in their new currency and perhaps the Venezuelan bolivar. To be really daring, they could include Zimbabwe in their new currency bloc. Too late, the Zimbabwean dollar has already inflated away to almost nothing.

How did China accumulate those assets? Why, by selling goods to the United States and Europe, which in turn pay for those goods in currencies that the Chinese now object to holding. These countries are in recession now so we are sending them fewer dollars and euros as their exports dropped by 25 percent in February. Bad United States. Bad Europe. You shouldn’t have recessions.

Perhaps China won’t sell to us anymore. Whom will they sell to? Hmm. Looks like the choice is another 200 million unemployed, or sell goods for dollars and euros. Just weeks ago the financial world was buzzing with yuan devaluation rumors. How fast these change.

Prior to the April 2 G20 economic summit the President of France pitched a fit. He threatened to walk out. What a novel thing for a French leader to do.

President Charles de Gaulle did more than pitch a fit in 1968. He said U.S. inflation was undermining the dollar. He started a run on the dollar, cashing them in for gold, which was how the international system worked at the time. The result? He also hit the French franc and it was devalued rather than the dollar.

It is true that gold eventually shook itself free of the $35-an-ounce price, and rose six years later to $197.50 at the end of 1974. It dropped to $103 by the summer of 1976, rose to $850 by January of 1980 and didn’t hit that price again until 2007. As this is written, it is $916.

This works out to a little more than 8 percent a year compounded. Now 8 percent isn’t bad over 41 years. I’ll take it. But it is a far cry from the apocalypse.

The financial news cycle is looking for something more exciting to happen in 41 days or 41 weeks. The idea of it taking 41 years is a total drag. There’ll be a new crisis and a new French president to stage a walkout by 2050, but someone else will have to write about it.

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