I hear a lot of panic-infused grumblings from economic-savvy types about the imminent demise of the US treasury bond as China's the world's stable-investment of choice and how the heck are we going to afford our meager overly generous welfare state -- nevermind economic stimulus -- if the federal government can't even take out a loan.  Well, the 2-second panic in the foreign currency exchange markets the other day after *some* "journalist" paraphrased Mr. Geithner as supporting China's call for a new global currency spurred me to do a little unpaid research.  turns out, China's saber-ratting isn't all that fearsome.  Important part of china central bank's policy statement highlighted below:

III. The reform should be guided by a grand vision and begin with specific deliverables. It should be a gradual process that yields win-win results for all

 

The reestablishment of a new and widely accepted reserve currency with a stable valuation benchmark may take a long time. The creation of an international currency unit, based on the Keynesian proposal [to base a global currency on the value of 30 or so commodities], is a bold initiative that requires extraordinary political vision and courage. In the short run, the international community, particularly the IMF, should at least recognize and face up to the risks resulting from the existing system, conduct regular monitoring and assessment and issue timely early warnings.

 

Special consideration should be given to giving the SDR [this is special drawing rights for lesser developed countries from the IMF, and therefore currently doesn't have any substantial impact on the rest of the world] a greater role. The SDR has the features and potential to act as a super-sovereign reserve currency. Moreover, an increase in SDR allocation would help the Fund address its resources problem and the difficulties in the voice and representation reform. Therefore, efforts should be made to push forward a SDR allocation. This will require political cooperation among member countries. Specifically, the Fourth Amendment to the Articles of Agreement and relevant resolution on SDR allocation proposed in 1997 should be approved as soon as possible so that members joined the Fund after 1981 could also share the benefits of the SDR. On the basis of this, considerations could be given to further increase SDR allocation.

you can find the rest at: http://www.pbc.gov.cn/english//detail.asp?col=6500&ID=178

it's not that long, and honestly, not that crazy.