Venezuela Reduces Dollar Holdings To Remain Independent
People (such as Hillary Clinton) who worry about China holding dollars in their reserves to make “us dependent on them” should look down to Venezuela for a lesson. It appears that Chavez understands that holding dollars makes him dependent on us, not the other way around.
Venezuela will speed up plans to pare holdings of dollars in its international reserves to reduce the nation’s dependence on the world’s most widely held currency, Central Bank President Gaston Parra said.
The bank won’t give details on its strategy or the amount of dollars in its reserves, which total about $36 billion, Armando Leon, a bank director, said alongside Parra in an interview with the state television channel. The central bank started its diversification plan in 2005, Parra said.
“We are accelerating the process of diversification of our reserves,” Parra said from Caracas. “It’s a program to protect and diversify our national wealth; it’s been implemented meticulously and will continue to be.”
The decision underscores President Hugo Chavez’s push to direct a growing share of the country’s oil windfall into other currencies as the dollar and crude prices fall.
Always remember. Hugo Chavez is sending us oil, and in response we’re sending him pretty green pieces of paper. China is sending us durable goods, and in response we’re sending them pretty green pieces of paper. What makes those pieces of paper worth anything? Government promises. Each new dollar we print erodes not only the wealth of Americans, but the wealth of every country using dollars as a reserve currency.
Blame your own politicians for this one… If America were keeping our currency stable, we wouldn’t have guys like Chavez trying to divest his reserves of dollars. If we can’t keep those dollars stable, we might actually have to offer something of value in return for those tankers full of oil we get from Venezuela, and the container ships full of goods we get from China.