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China Starts To Make A Power Move Against The U.S. Dollar
 

China Starts To Make A Power Move Against The U.S. Dollar

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In order for our current level of debt-fueled prosperity to continue, the rest of the world must continue ...

In order for our current level of debt-fueled prosperity to continue, the rest of the world must continue
to use our dollars to trade with one another and must continue to buy our debt at ridiculously low
interest rates. Of course the number one foreign nation that we depend on to participate in our system is
China. China accounts for more global trade than anyone else on the planet (including the United
States), and most of that trade is conducted in U.S. dollars.

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    China Starts To Make A Power Move Against The U.S. Dollar China Starts To Make A Power Move Against The U.S. Dollar Document Transcript

    • China Starts To Make A Power Move Against The U.S. Dollar By Michael Snyder February 21, 2014 In order for our current level of debt-fueled prosperity to continue, the rest of the world must continue to use our dollars to trade with one another and must continue to buy our debt at ridiculously low interest rates. Of course the number one foreign nation that we depend on to participate in our system is China. China accounts for more global trade than anyone else on the planet (including the United States), and most of that trade is conducted in U.S. dollars. This keeps demand for our dollars very high, and it ensures that we can import massive quantities of goods from overseas at very low cost. As a major exporting nation, China ends up with gigantic piles of our dollars. They lend many of those dollars back to us at ridiculously low interest rates. At this point, China owns more of our national debt than any other country does. But if China was to decide to quit playing our game and started moving away from U.S. dollars and U.S. debt, our economic prosperity could disappear very rapidly. Demand for the U.S. dollar would fall and prices would go up. And interest rates on our debt and everything else in our financial system would go up to crippling levels. So it is absolutely critical to our financial future that China continues to play our game. Unfortunately, there are signs that China has now decided to start looking for a smooth exit from the game. In November, I wrote about how the central bank of China has announced that it is “no longer in China’s favor to accumulate foreign-exchange reserves”. That means that the pile of U.S. dollars that China is sitting on is not going to get any higher. In addition, China has signed a whole host of international currency agreements with other nations during the past couple of years which are going to result in less U.S. dollars being used in international trade. You can read about many of these agreements in this article. This week, we learned that China started to dump U.S. debt during the month of December. Many
    • have imagined that China would try to dump a flood of our debt on to the market all of a sudden once they decided to exit, but that simply does not make sense. Instead, it makes sense for China to dump a bit of debt at a time so that the market will not panic and so that they can get close to full value for the paper that they are holding. As Bloomberg reported the other day, China dumped nearly 50 billion dollars of U.S. debt during the month of December… China, the largest foreign U.S. creditor, reduced holdings of U.S. Treasury debt in December by the most in two years as the Federal Reserve announced plans to slow asset purchases. The nation pared its position in U.S. government bonds by $47.8 billion, or 3.6 percent, to $1.27 trillion, the largest decline since December 2011, according to U.S. Treasury Department data released yesterday. This is how I would do it if I was China. I would try to dump 30, 40 or 50 billion dollars a month. I would try to make a smooth exit and try to get as much for my U.S. debt paper as I could. So if China is not going to stockpile U.S. dollars or U.S. debt any longer, what is it going to stockpile? It is going to stockpile gold of course. In fact, China has been voraciously stockpiling gold for quite some time, and their hunger for gold appears to be growing. According to Bloomberg, more than 80 percent of the gold that was exported from Switzerland last month went to Asia… Switzerland sent more than 80 percent of its gold and silver bullion and coin exports to Asia last month, the Swiss Federal Customs Administration said today in an e-mailed report. It imported most from the U.K. Hong Kong was the top destination at 44 percent on a value basis, with India at 14 percent, the Bern-based customs agency said in its first breakdown of the gold trade data since 1980. Singapore accounted for 8.6 percent of exports, the United Arab Emirates 7.9 percent and China 6.3 percent. When China imports gold, most of it goes through Hong Kong. We know that imports of gold from Hong Kong into China are at an all-time record high, but we don’t know exactly how much gold China has accumulated at this point because they quit reporting that to the rest of the world a number of years ago. When it comes to global finance, China is playing chess and the United States is playing checkers. China knows that gold is a universal currency that will hold value over the long-term. As the paper currencies of the world race toward collapse, China could end up holding most of the real money and that would be a huge game changer when they finally reveal that fact… The announcement of China’s new gold hoard will send shockwaves through the financial markets, and make China and the Chinese yuan (their national currency) even bigger
    • players at the international table. International banking expert James Rickards compared it to a game of Texas Hold ‘Em poker: “You want a big pile of chips. The U.S. has a big pile of chips, Europe has a big pile of chips. The U.S. has 8,000 tonnes [metric tons] of gold, 17 members of the euro system have 10,000 tonnes. China at 1,000 tonnes is not a player, but at 5,000 tonnes, they are a player.” There are some really good points made in the quote above, but I do take exception with a couple of things. First of all, I believe that China now has far more than 5,000 tons of gold. Secondly, I seriously doubt that the U.S. still actually has 8,000 tons of gold or that Europe still actually has 10,000 tons of gold. As China (and eventually the rest of the world) moves away from a U.S.-based financial system, the consequences are going to be dramatic. For instance, right now the average rate of interest that the U.S. government pays on debt is just 2.477 percent. That is ridiculously low and it is way below the real rate of inflation. It is simply not rational for anyone to lend the U.S. government money so cheaply, and at some point we are going to see a dramatic shift. When that day arrives, interest rates are going to rise dramatically. And if the average rate of interest on U.S. government debt rises to just 6 percent (and it has been much higher than that in the past), we will be paying out more than a trillion dollars a year just in interest on the national debt. Even more frightening is what a rapidly changing interest rate environment would mean for our
    • banking system. There are four large U.S. banks that each have exposure to derivatives in excess of 40trillion dollars. You can find the identity of those banks right here. Interest rate derivatives make up the biggest chunk of those derivatives contracts. As John Embry told King World News just the other day, when that bubble bursts the carnage is going to be unprecedented… “Stockman brought up a brilliant point, the fact that we have hundreds of trillions of dollars of interest rate swaps, which are polluting the world’s banking system. If we see growing volatility in interest rates, and I think that’s inevitable with what’s going on, that would cause spasms in the financial system. And if something goes wrong in the derivatives market, Heaven help us because the leverage that is imparted to the banking system through these derivatives is unholy.” Unfortunately, very few of the “experts” will ever see this crash coming. Very few of them saw it coming in 2000. Very few of them saw it coming in 2008. And very few of them will see it coming this time. I really like what Paul B. Farrell had to say about this… Early warnings of a crash are dismissed over and over (“just a temporary correction”). They gradually numb us about the inevitable. Time after time we forget history’s lessons. Until finally a big surprise catches us totally off-guard. Financial historian Niall Ferguson put it this way: Before the crash, our world seems almost stationary, deceptively so, balanced, at a set point. So that when the crash finally hits — as inevitably it will — everyone seems surprised. And our brains keep telling us it’s not time for a crash. Till then, life just goes along quietly, hypnotizing us, making us vulnerable, till a shocker like Lehman Brothers upsets the balance. Then, says Ferguson, the crash is “accelerating suddenly, like a sports car … like a thief in the night.” It hits. Shocks us wide awake. Don’t let the upcoming crash take you by surprise. The warning signs are very clear. Get ready while you still can.
    • Expert Warns of Hyperinflation: “The American Way Of Life Will Be Destroyed” Mac Slavo SHTFPlan.com February 18, 2014 If there’s one thing that’s certain about what’s happening in the world right now it’s that uncertainty is pervading every aspect of the global economy. From fabricated employment statistics and consumer spending reports to obscene levels of debt and a failing domestic monetary policy, the writing is on the wall. According to top Casey Research analyst Marin Katusa, who has met with energy ministers and business leaders in over 100 countries, it’s only a matter of time before the world’s reserve currency goes the way of the German Reichsmark and Zimbabwe Dollar. What we’re talking about here is nothing short of an outright collapse of our banking system, hyperinflation of the US dollar, and a complete destruction of the world as we have come to know it. This is a must-watch for those trying to understand what’s happening with the economic landscape, how to position yourself for an unprecedented paradigm shift in how Americans live their lives, what to expect as this crisis unfolds, and how to find opportunities when everyone else is in panic mode. If the petro-dollar ends, the American way of life will be something that will be destroyed. The inflation will be over 100% because Americans are getting their lifestyle subsidized by the rest of the world. This is a very complicated issue… but to be summed up quickly, the world has already started trading commodities and oil, not in the petro-dollar. And if the petro-dollar finally does die, the American way of life is gone. The American Way of Life Will Be Destroyed -- Inflation to Exceed 100%...Marin Katusa
    • Interview VIDEO BELOW http://www.youtube.com/watch?v=NML5-dgp1u4 (Full interview and transcript via Future Money Trends) When that happens – when the rest of the world finally turns its back on the United States – you’d better be positioned in the right assets… tangible assets. Failure to do so will leave you exposed to a financial collapse unlike anything we’ve ever seen in America. You want to invest in gold… and that’s why you really want to invest in tangible assets… because the bank system will crash. And I’m not trying to be a doom and gloom guy, this is just factual. You want to invest in silver, and gold, and companies that produce what the rest of the world wants, which is gold and silver. It should be clear that China, Russia, oil-producing nations and emerging markets are positioning themselves for exactly what Marin Katusa describes. They have already established unilateral agreements to replace their petro-dollar transactions with either their own currencies or gold. When the timing is right, they’ll pull the plug, at which point all hell will break loose. The only assets that will survive the destruction will be physical goods such as those commodities essential to survival – food, energy, water, etc. On the monetary front, when the dollar becomes worthless, confidence in the system itself will be lost on a global scale. We saw similar effects in 2008, when banks refused to lend to businesses, individuals and even themselves for fear of counter party risk. This will leave only one viable mechanism of exchange that will be trusted by trading partners. If you happen to own some, then while everyone else is trying to figure out how to acquire food or pay for other needs, you’ll be thriving. Insiders and the well informed like Doug Casey, Rick Rule, and Eric Sprott who want to protect and preserve their wealth are already diversifying out dollar-denominated assets. Foreign governments are doing the same, to the tune of billions of dollars being used to buy up assets in the gold production and mining sector (something sovereign wealth funds also did back in late 2008 at the height of the crisis): The money now is showing up. For example, Rick [Rule] went and got Korean money, and then also Chinese Money. That’s a billion and a half dollars that is coming in to this sector. K.K.R, a major fund, has now put up a billion and a half dollars to set up shop in Calgary for the junior resource sector. You see a lot of funds now, starting to say, “hey, we are getting back in to the
    • junior resource sector because it is so cheap.” If you go to the BRI website, they talk about all of the big shareholders. You have Tocqueville, Sprott, Sun Valley, KCR… There’s a reason that well known investment firms run by contrarians like Sprott and Casey are buying gold. Because they know what is coming down the pike. Yellen is going to continue where Bernanke left off, with the troubles. And the reality is, this is going to make a stronger bull market for gold and silver, and it’s going to be even a better market for the junior resource sector. If gold and silver are heading to new highs it’s because something has gone terribly wrong in our economy and financial markets. That being said, if gold is rising and the dollar is collapsing then in all likelihood we’ll see stratospheric price increases in everything from food to fuel, so preparing a contingency plan for this scenario is absolutely critical. The scenario described here, as noted by Marin Katusa, is not just doom and gloom. It’s fact. The system as we know it is under pressure from all sides. When it implodes you’d better be ready. Chase Imposes New Capital Controls On Cash Deposits Paul Joseph Watson Infowars.com February 17, 2014 Customers have to show ID, can no longer deposit cash into another person’s account
    • JPMorgan Chase has irked its customers by imposing new capital controls that mandate identification for cash deposits and ban cash being deposited into another person’s account. Air Force veteran Kristen Meghan received a letter from Chase informing her of “changes in how we accept cash deposits.” “When making a cash deposit please; be ready to show a valid ID – deposit only into accounts that list your name,” states the letter. The move is another example of how banks are becoming increasingly invasive and restrictive with how they treat their customers, while crypto-currency alternatives like Bitcoin offer total anonymity. According to Meghan, when she asked a Chase bank teller why cash deposits couldn’t be made into another person’s account, she was told that the new regulation was imposed by government request. According to Fox Business, Chase is “the first big bank to enact such a change.” Customers are already being asked for ID as of February 1, while cash deposits into accounts bearing someone else’s name will be banned from March 3 onwards. Chase claims it is imposing the changes to prevent money laundering, although the policy is likely to cause massive inconvenience for families, such as parents who wish to deposit cash in accounts belonging to children who are away at college. Representatives from Bank of America, Citigroup and Wells Fargo did not respond to questions on whether they would also be looking to impose the same rules. Some analysts have speculated that such measures are a sign that banks are preparing for economic turmoil and potential bank runs. Last year it was reported that two of the biggest banks in America were stuffing their ATMs with 20-30 per cent more cash than usual in order to head off a potential bank run if the U.S. defaults on its debt. This is by no means the first example of Chase imposing capital controls on their customers’ accounts. In October last year, we reported on how Chase instituted policy changes which banned international wire transfers while restricting cash activity for business customers (both deposits and withdrawals) to
    • a $50,000 limit per statement cycle. The bank’s reputation was already under scrutiny after an incident last year when Chase Bank customers across the country attempted to withdraw cash from ATMs only to see that their account balance had been reduced to zero. The problem, which Chase attributed to a technical glitch, lasted for hours before it was fixed, prompting panic from some customers. Other banks have also imposed capital controls in recent months, including HSBC, which is preventing customers from withdrawing larger amounts of money without written documentation proving how it is to be used. Russian lender ‘My Bank’ also temporarily banned all cash withdrawals last month. 29 Percent Of All U.S. Adults Under The Age Of 35 Are Living With Their Parents By Michael Snyder February 20, 2014 Why are so many young adults in America living with their parents? According to a stunning Gallup survey that was recently released, nearly three out of every ten adults in the United States under the age of 35 are still living at home with Mom and Dad. This closely lines up with a Pew Research Center analysis of Census data that looked at a younger sample of Americans which found that 36 percent of Americans 18 to 31 years old were still living with their parents. That was the highest level that had ever been recorded. Overall, approximately 25 million U.S. adults are currently living at home with their parents according to Time Magazine. So what is causing all of this? Well, there are certainly a lot of factors. Overwhelming student loan debt, a depressing lack of jobs and the high cost of living are all definitely playing a role. But many would argue that what we are witnessing goes far beyond temporary economic conditions. There are many that believe that we have fundamentally failed our young people
    • and have neglected to equip them with the skills and values that they need to be successful in the real world. More Americans than ever before seem to be living in a state of “perpetual adolescence”. As Gallup noted, one of the keys to adulthood is to be able to establish independence from your parents… An important milestone in adulthood is establishing independence from one’s parents, including finding a job, a place to live and, for most, a spouse or partner, and starting one’s own family. However, there are potential roadblocks on the path to independence that may force young adults to live with their parents longer, including a weak job market, the high cost of living, significant college debt, and helping care for an elderly or disabled parent. Unfortunately, it is becoming increasingly difficult for young people to become financially independent. While they are in high school, we endlessly pound into their heads the need to go to college. Then we urge them to take out whatever loans that they will need to pay for it, ensuring them that they will be able to get “good jobs” which will enable them to pay off those loans when they graduate. Of course a very large percentage of them find that there aren’t any “good jobs” waiting for them when they graduate. But because of the crippling loans that they have accumulated, they quickly realize that they have decades of debt slavery ahead of them. Just consider the following numbers about the growth of student loan debt in the United States… -The total amount of student loan debt in the United States has risen to a brand new all-time record of 1.08 trillion dollars. -Student loan debt accounted for 3.1 percent of all consumer debt in 2003. Today, it accounts for 9.4 percent of all consumer debt. -In the third quarter of 2007, the student loan delinquency rate was 7.6 percent. Today, it is up to 11.5 percent. This is a student loan debt bubble unlike anything that we have ever seen before, and it seems to get worse with each passing year. So when is the bubble going to finally burst? Meanwhile, our young adults are still really struggling to find jobs. For those in the 18 to 29-year-old age bracket, it is getting even harder to find full-time employment. In June 2012, 47 percent of those in that entire age group had a full-time job. One year later, in June 2013, only43.6 percent of that entire age group had a full-time job. And in many ways, things are far tougher for those that didn’t finish college than for those that did. In fact, the unemployment rate for 27-year-old college dropouts is nearly three times as high as the unemployment rate for those that finished college. In addition, since Barack Obama has been president close to 40 percent of all 27-year-olds have spent at least some time unemployed. So it should be no surprise that 27-year-olds are really struggling financially. Only about one out of every five 27-year-olds owns a home at this point, and an astounding 80 percent of all 27-year-olds are in debt. Even if a young adult is able to find a job, that does not mean that it will be enough to survive on. The quality of jobs in America continues to go downhill and so do wages.
    • The ratio of what men in the 18 to 29-year-old age bracket are earning compared to what the general population is earning is at an all-time low, and American families that have a head of household that is under the age of 30 have a poverty rate of 37 percent. No wonder so many young people are living at home. Trying to survive in the real world is not easy. Many of those that are trying to make it on their own are really struggling to do so. Just consider the case of Kevin Burgos. He earns $10.50 an hour working as an assistant manager at a Dunkin Donuts location in Hartford, Connecticut. According to CNN, he can’t seem to make enough to support his family no matter how hard he works… He works 35 hours each week to support his family of three young children. All told, Burgos makes about $1,800 each month. But his bills for basic necessities, including rent for his two-bedroom apartment, gas for his car, diapers and visits to the doctor, add up to $2,400. To cover these expenses without falling short, Burgos would need to make at least $17 per hour. “I am always worried about what I’m going to do for tomorrow,” Burgos said. There are millions of young people out there that are pounding their heads against the wall month after month trying to work hard and do the right thing. Sometimes they get so frustrated that they snap. Just consider the following example… Health officials have temporarily shut down a southern West Virginia pizza restaurant after a district manager was caught on surveillance video urinating into a sink. Local media reported that the Mingo County health department ordered the Pizza Hut in Kermit, about 85 miles southwest of Charleston, to shut down. But as I mentioned earlier, instead of blaming young people for their failures, perhaps we need to take a good, long look at how we have raised them. The truth is that our public schools are a joke, SAT scores are at an all-time low, and we have pushed nearly all discussion of morality, values and faith out of the public square. No wonder most of our young people are dumb as a rock and seem to have no moral compass. Or could it be possible that I am being too hard on them? INFOWARS.COM BECAUSE THERE'S A WAR ON FOR YOUR MIND