China is currently artificially downvalueing it's currency to a certain exchange level with the $. This means China guarantees about 7 Yuan for one $. Thereby China is using the $ as it's "Gold Standart".
On the one hand China could destroy the value of the $ with the blink of an eye. They would just have to switch from $ to € as their standart. China would lose some money on that, the € would become more expensive and the $ would lose worth.
Because of the power switch between $ and € the OPEC would probably switch to €, too.
That would again mean that the $ would lose value.
All that would of course make American products more competetive in international trade, but America is not exporting enough to capitalize on that enough to make up for the rising costs of things they have to import.
In this scenario the price of oil to name one example would raise to ten times what Americans currently have to pay for it within weeks.
You can imagine the consequences of that.
America would become a Third World Country within months.
Of course that would put an enormous strain on the global economy, but America would probably suffer much more than China.
It is basicly like an economical nuclear bomb that China can drop, but America can't.

"The first thing Fascists usually try to do is silencing the opposition."

by opposition on 11/28/2009 12:15:49 PM EST