RE:From GATA: we are one step closer to losing reserve curence Timely story from the FT, but bear in mind that virtually EVERYTHING the Chinese government (or the USG and the Fed) say is pure propaganda, designed to send a signal, float a trial balloon, or achieve some other calculated purpose. You can bet that the Chinese aren't all of a sudden getting concerned about their massive U.S. debt holdings because of the passing fiscal circus in Washington. The Chinese plan years, if not decades ahead, and do not change their plans or get all angry and perturbed because of some story of the moment hyped up in the Western financial media.
The movement to replace the USD as the world's reserve currency is a process, not an event, and has been proceeding inexorably for some time. IMO, the die was cast a long time ago, when everyone else in the world - especially the BRICS - started to realize what "exorbitant priviledge" was going to eventually mean to THEM. It's possible, of course, that the government could have used its priviledge wisely and sparingly, instead of going on an historically unprecedented spending binge, but at this point it obviously no longer has that option. It does have an enormously powerful military, however, paid for by much of that debt. Unfortunately, the game may get rather dirty before the other players eventually leave the table.