Mark Thornton: China after deserved status for Yuan

Press TV has conducted an interview with Mark Thornton, senior fellow of the Ludwig von Mises Institute in Alabama, about stock markets worldwide taking a nosedive due to a sell-off of Chinese shares and falling oil prices.

What follows is a rough transcription of the interview.

Press TV: Tell us what you are gauging to be the reason, which pretty much starts, I think, if you agree, with the Yuan being devalued by China, something they have not done, which happened recently.

Thornton: The devaluation of Yuan was a trigger event, and when these stock markets go into a correction and how severe the correction is is hard to determine, but the fact that worldwide stock markets are heading down was inevitable, because worldwide stock markets have been pumped ever higher by central bank policy. So it is a global phenomenon in stock markets and it is a global phenomenon with central banks offering very low interest rate loans and engaging in quantitative easing policies. And so that is the cause you are seeing the effect right now and it could continue for some time.

Press TV: So is it true that you think one of China’s goals would be to have pressure on the dollar and then therefore want to do what it has been advertising that it would do and that is replacing the dollar with the Yuan as a global currency?

Thornton: The Chinese want to get their Yuan currency in line with its status, it is one of the largest economies in the world, but they have no interest in seeing stock markets melt down or the world economy melt down, because they are engaged in exporting their products as a way of life and so they do not want to see economic instability but they do eventually want to have their currency with the status that it rightly deserves, which is one of the world’s largest economies and currencies. 

Press TV: We saw the opening of the AIIB (the Asian Infrastructure Investment Bank), we saw the BRICS Development Bank really kick-start itself and Russia based on the SCO (Shanghai Cooperation Organization) summit . Do you think that there is a relationship there when it comes to what has happened with those two major banks which involve obviously countries like Russia and China?

Thornton: Yes I think that those are important long-term developments where the BRICS countries – Russia and China in particular – where they want to see their status in the world economy equal, their size and strength and importance, and so they also want to be independent with these banks but they also want to see their status in the World Bank, in the IMF, also raised, but again the cause of today’s concern in stock markets is the long period where central banks have been inflating their currencies, they have been engaged in a worldwide currency war that includes China, Japan, European Central Bank and the Federal Reserve amongst many other central banks with their low interest rate policies.

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