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The World is Already Dumping the US Dollar Pt 1
The
following quotes signal the beginning of the End Game for the US Dollar:
"We hope the U.S. government will take
responsible policies and measures to safeguard investors' interests,"
[China’s ministry] said in a statement.
“Foreign-exchange reserves have exceeded the
reasonable levels that we actually need,” [China’s central bank governor]
said. “The rapid increase in reserves may
have led to excessive liquidity and has exerted significant sterilization
pressure. If the government doesn’t strike the right balance with its policies,
the build-up could cause big risks,” he said, without elaborating.
These two
statements, in plain terms, are China saying it’s sick of the US Dollar.
Remember, the US Dollar and Dollar-denominated assets (Treasuries etc) are
China’s single largest holding. So
the reference to “foreign-exchange reserves,” is synonymous with “US Dollar denominated
assets.”
On the
surface, it will be easy to chalk all of this up to politician speak. After
all, China has been issuing warnings to the US regarding the latter’s financial
condition since 2009.
However, a
few key developments have occurred that make it clear this latest round of
statements are the real deal.
First and
foremost, China and Russia agreed late last year to begin trading with one
another in their own currencies, NOT the US Dollar. In that step alone, two of
the largest emerging markets (and economies) in the world moved away from the
US Dollar. Add to this the fact that China just agreed to expedite trade
relations with Brazil and you’ve got the beginnings of a flight from the US
Dollar and the end of the Dollar’s reserve currency status.
Indeed, not
three months after China signed this deal with Russia, China’s president
visited Washington and delivered a speech in which he stated that, “the current international currency system is the product of the past”
(edits mine).
Consider the
“past” comment in relation to China’s decision shutting the US Dollar out of
its trade with Russia (and other items I’m about to detail). In this sense, the
“past” is the US Dollar as the world’s reserve currency.
Thus we are
beginning the process of the world dumping the US Dollar. Whether it takes
months or years, the end result will be the same: an inflationary collapse in
the US.
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- advertisements -
There is more to this story than is being put forth in explanatory terms.
http://deltafunctiontoronto.wordpress.com/2011/05/05/hyperinflation-and-a-balance-of-culture/
hey china... DUMP OUR BONDS I DOUBLE DOG DARE YOU
.
seriously they are communists its not up to them... they believe in a higher man law
And what's so new about what PCR is saying??? Honestly, this is a retarded piece. Rehashing shit that everyone has known for a while. Their sales pitch at the end is almost as long as their article. Seriously stupid.
I may be smokin tin here, but I believe that the U.S. would not allow desolution of Bretton Woods and the loss of reserve currency status for bucky. This benefits everyone who holds dollars, particularly the elite. I believe the elite control the U.S. and would be loathe to see their dollars lose too much value. Hence, I suspect that quietly, behind the scenes, the U.S. has made it clear - the reserve currency status of the U.S. Dollar is a vital national interest of the U.S. and the U.S. Government is willing to take all necessary steps to protect that status - including military action. Indeed, I believe that high among the array of reasons the U.S. invaded Iraq was to prevent erosion of bucky's reserve currency status. Saddam was intent on selling oil in non-dollar currencies.
Given this completely unsubstantiated view, why would China and Russia risk incurring the wrath of the U.S. by undermining bucky? I believe it is propaganda for us proles - propaganda designed to get us begging for austerity. Judging from the tenor of the blogosphere, it is working.
Newsflash, China, or Russia can go toe to toe w/us right now.
Remember, they both have massive arsenals, and are not pussies like our leaders.
I am sure the D.C. crew would blink first.
IF it came to that.Besides, their are several countries now using currencies other than the USD, how is the US going to stop them?.
They cannot.
I'm going to give Hamy, Gunslinger, Mathman, and Dangertime a break for a while. I can't think of anything funny or trollish right now. If you look at the amount of trade conducted in Russia/China currency swaps and compare that to the dollar currency market it is less than one percent. The big daddy is the dollar. It will be the big daddy for a long time. The USA knows that its days are numbered as a reserve currency and they are happy with that, because there is no way to force current account adjustments in a pure fiat system that is controlled by one nation. The USA in the long term wants the SDR. The dollar will still maintain about 50 percent of the SDR which is close to its 65 percent reserve currency status worldwide right now. We can adjust to a drop in reserve currency status like that over a twenty year period. That will be no problem. The SDR will be the world reserve currency in 2025 to 2030 transition period if the USA has its way. Only freely floating, non manipulated currencies will be allowed in the SDR. That gives China 15 years to float. That should be plenty of time for China to join the SDR if it wants to do so.
As I stated before, Americans aren't ready or don't believe that things like this happen to them. They will go crazy when all that they where promised and saved for is gone and essentially gone for good. Most Americans believe it or not get baby talked to about everything. Don't worry god will fix it or they are told to be closed minded because it's their right etc. etc.. Reality, you have to deal with other people and societies with respect. We are a people and a govt. that is an empire in the last throes of empire. All the empires in the world never thought they would end. They thought they would continue on to enternity, and they where wrong. All are gone or are just shadows of what they used to be.
Nothing lasts forever, nothing.
I have heard that they even have cash-sniffing dogs at US airports now and you are only allowed to carry a maximum of $10,000. Can anyone confirm that?
I thought I saw something flash in the sky, oh nevermind... it was just the Hindenburg
If they find a lot of cash on you at an airport, train terminal, bus terminal or seaport, they will grab it ... the authority doing the grabbing gets to keep it. The pretext will be that it has something to do with illegal activity.
I don't think there are any particular detectors or animals in use. Profiling, surveillance and tips are the likely giveaways.
This can now happen in your home as well ... one name I remember is Luther Ricks, Sr.
fine,
Yeah, as for that being the limit, I am not sure.( For certain I would find put the laws, prior to trying,even if you declared it, your likely to go thru a long conversation,in a locked room).
But you show up w/$10+K in "C" notes, you had best be prepared to lose them.
At the VERY least have PROOF of where it came from,and receipts to prove it.
I know of more than a few legit bidness men, who made the mistake of showing up w/a wad of cash at the airport.
Only to be in court spending MORE to try and get it back.
Lose/lose.
In the west, the argument has been interestingly made, and is debatable to some degreee that without fiat the level of wealth enjoyed could never have been created. The travesty is that now many must realize, and quickly, that fiat was never really a great STORE of wealth, just a cost effective creator of availability to produce things of value. The argument of a gold backed currency should be thought through, with some reflection, and introspection. Are you ready to give up your gold for a gold standard? Who owns the bulk of the physical? I like Ron Paul but this is one area we disagree, exactly who's gonna provide this gold for backing?
The U.S. knows that other countries want to dump the dollar and is doing everything in it's power to stop this including manipulating stock market higher, keeping gold and silver from exploding, insisting oil be exchanged in dollars along with continuous buying of our treasuries. Following the rules of the U.S. kingdom ensures military protection from the never ending wars which keep the cycle going.
That's a pretty good summation right there, Mr. Antenna.
Oh, and now that my posts can be seen...Silver bitchez! Ag's like pizza, even when its' not (lookin') so good (like today), silver's still pretty good!
“Gold is the money of kings, silver is the money of gentlemen, barter is money of peasants, debt is the money of slaves, & fiat is the money of fools.”
well the US green back folly lasted a century!
Only 46 years by my reckoning. Until 1965 you could swap a dollar bill for 4 freshly minted quarters, 90% silver. Seems like quite a bargain today.
@sudden debt...the profound, simplistic brilliance of your statement on reserve currency death gave me pause and a chuckle!
possession is nine tenths of the law...so goes the ME oil patch!
Lindsey Williams says the Saudis will be the last to go in MENA. Make a deal with the devil, you eventually get burned.
This is nothing news to me. Move on.
The American dollar is propped up by the might and fear of the American military.
the Government is tearing America down, by the FED's will... and By the Grace of God! the U.S. Military will make America Great Again after we suffer this Fall!
I hope you are being sarcastic about that last part.
For a more academic discussion of this phenomena--one that does not involve offers that are 100% free-- see Barry Eichengreen's Exhorbant Privilege ( 2011)
exorbitant...
indeed
Another factor is that others must KILL THE PETRO-DOLLAR link like Iraq and Iran have already done. If the Saudis were smart they would demand physical gold for oil.
If you believe ANOTHER/FRIEND OF ANOTHER/FOFOAs' central thesis, then the Saudis do indeed demand gold for oil, but via the US dollar. Central bank gold price suppression schemes are all about enabling OPEC countries to buy discounted gold, so they'll continue to keep the oil price in fiat low.
Once the banks stop suppressing the price of gold, oil will rise in price in line with gold so OPEC can continue to swap oil for gold.
If OPEC cut the link, and just demand gold for oil, the USD will collapse entirely. And there goes their 'security' (read: ability to remain in power)
Why do you think 15 of the 19 9/11 hijackers were Saudi?
The House of Saud is in the employ of the US. They are owned, and that is crucial because they are the lynchpin.
del
del
How do you know that they arent doin it already?
"If the Saudis were smart they would demand physical gold for oil." Than the USA would suddenly discover all the human rights violations in SA, and promptly institude a no fly zone 'to protect the civilians' and regime change would follow
The only problem is the USA is fast running out of time, and in 5-10 years time it's millitary might resemble that of the Sovitet Union just after the collapse - like a dog that barks loud but does not bite
That the Chinese are ditching the dollar (or dollar holdings) could be exctly what Ben Lyin Bernank wants, perhaps.
Ditching their dollars, putting them back into circulation is going to be inflationary, no? Isn't that Ben's objective right now?
He'll leave the politics of the situation up to Prez Oh-Bomb-Uh.
So the dollar weakens, this means we consume less of other's people stuff and labor, employ more people here, and develop our own resources. As a bonus, it is harder for China to maintain the CNY-USD peg. As a double bonus, all the debts we owe people (denominated in our own currency) are now lower value.
I'm not feeling so bad about this.
You would if you saved money and lived below your means.
If you bought a half-million dollar cracker-box in 2006 and a nice SUV on a 72 month loan and think your income will track with inflation then kudos to you.
The rest of us that resisted every urge to buy shit and saved money are pretty pissed about the whole thing.
You would if you realized the next steps were hyperinflation, flight of capital, poverty, and potential civil war.
The main reason Americans will be consuming less of other people's stuff and labor is because they'll be consuming less, PERIOD. Commodities (priced in USD) such as oil, wheat, corn, rice, etc, etc, will continue to rise in price and the average American's consumption will be squeezed. America will still not be competitive unless US wages/productivity match (or better) developing nations'... and given the level of the US governments' (ie, municipal, state, and federal) deadweight costs, that means wages will have to be low indeed.
It's true our external debts will be worth less (worthless?), but then our debtors will probably notice this too, and decide not to buy any more US debt unless the US offers higher interest rates to compensate for monetary inflation. Higher rates = more mortgage defaults + higher business lending costs = higher unemployment = etc etc.
Still feeling 'not so bad' about this?
It took 12 years for the English crown to lose it's reserve status in the 19th century.
And that currency was made out of silver. It lost it status just because they where starting to run out of silver.
Now a paper currency like the dollar which is backed by the metal strip inside of it and the green ink might go a bit faster than that.
Well its been about 12 yeards, SD.
http://research.stlouisfed.org/fredgraph.png?g=nT
Until ~2000 DXY roughly tracked with % change in total debt. Since then, the opposite. I suppose its hard to say when the ponzi actually started but its clear the ROW gave up on USA inc 11 or 12 years ago.
SD. Interesting comment about BOE losing its currency by running out of silver. i did a quick search of Mises site and found this quote. I'd be interested in any other info you might have that is readily available
The Banking position was summed up in a Banking principle, which states, "The amount of paper notes in circulation [is] adequately controlled by the ordinary processes of competitive banking, and if the requirement of convertibility was maintained, could not exceed the needs of business for any appreciable length of time" (Viner 1937, p. 223). Banks are therefore purely passive instruments, expanding and contracting the supply of credit to meet the "needs of business."
In other words, banks could not excessively issue credit no matter how hard they tried, because any excess funds loaned out would simply be returned to the bank. As Mises and others pointed out, however, the demand for credit on the part of business is not independent of bank policy, but relies heavily upon it, especially through the interest rate. The money rate of interest can be reduced below the natural rate, thus artificially increasing the demand for credit. There is therefore no restriction on the extension of credit of the sort imagined by the Banking School.
Following the passage of Peel's Act, the Bank of England, although abiding by the new restrictions on note issue, began a large-scale expansion of its deposit-banking activities. This credit expansion fueled a speculative bubble that caused a drain on the specie reserves of the bank, and resulted in severe panics in 1847. Eventually, the 100-percent reserve provision of Peel's Act was suspended so as to prop up the central bank and its subsidiaries, thus negating the whole point of having the restriction to begin with.
http://mises.org/daily/4674
TIA
Well, we always talk about the hunt brother but after digging that out, there where dozens of other who did it before and succeeded. In the case of the english crown that fell was because when the European economy was at it's top, they wanted to trade cross borders with a unified currency. A currency backed by gold and silver. In that time they set gold at 15.5/1 against silver and changed their currency accordingly.
The 5.8 pure gold 20 francs
=
4 X 22,5 grams pure silver 5 francs
The United Kingdom entered discussions of Britain joining the Latin Monetary Union. The proposal involved reducing the amount of gold in one pound sterling by less than 1% to make one pound equivalent to 25 Francs and also decimalising the currency. During the period of the Latin Monetary Union, the United Kingdom was already in a monetary union with territories now commonly known as the “Commonwealth” The gold standard of the British gold sovereign existed in these territories until the outbreak World War I
However, there were problems that eventually lead to failure. The exchange rate of gold to silver was fixed at 1:15.5, which soon turned out to over value silver significantly. The Union countries tried to unload their silver coins into other countries, so they could profit by turning them into gold. Speculators could buy 16 francs of silver, go to the Mint and strike four 5 franc coins which enabled them to go and buy a beautiful Napoleon. France’s gold was disappearing, Englands silver was disappearing.
Germany shamelessly profited and benefited greatly from the situation. German agents came to Paris and Brussels with silver ingots from the recent demonetisation of thalers and exchanged Crowns and transformed them into 5 franc coins which were then converted into notes and then gold. To put an end to these practices Belgium, France, Italy and Switzerland limited (1874) and then soon after suspended (1876) the striking of écus. A larger problem was that there was also a second set of subsidiary silver coins for smaller amounts, issued by each country on its own and not fully convertible elsewhere. Even though these coins had a lower silver content than the primary coins, Union members were by law required to accept up to 100 units of them at face value per transaction, very much a loss-making proposition for the receiving side. Also, while the ending of silver convertibility stopped the minting of new silver coins, outstanding ones remained legal tender. With the advent of World War I and the massive financing strains involved, not to mention war between members of the Union, the system collapsed totally, although it remained in legal fiction until the end of the 1920s.
Now guess why the Alies requested Germany to pay damages in gold after WOI ;) which led to WOII...
BUT!! The money didn't just go to the countries. It went into the pockets of the speculators. And like that not only did England fall, all of Europe did and a happy few had vaults of gold and silver beyond belief.
Unlike the hunt brothers, they didn't appear on television or the newspapers. Even now their names are hard to find but let's say they now control the world finances.
Europe was rich, but speculators made a average 25%! on every trade for over a decade! Also remember that Europe had colonies all over the world which they plunderd, and by the beginning of the 20th century all that money was gone into the speculators pockets.
That's why the US gov. was so scared about the Hunt brothers. They faired speculators would bring down the dollar when they would have made their silver trade and exchanged them to gold thus bankrupting the US.
If they had another 5 years, they would have been able to buy the US.
A classic case of Gresham's Law
I believe the process is faster due to the digital nature of money, most transfers are handled between accounts instead of physical notes. This may accelerate the trends that we are anticipating by several orders of magnitude.
Also, good to see you still posting - I enjoy your humor.
the USD is now in mature phase of attaining a state of precocious ejaculation, with Ben trying desperately to regulate the piston pump by rushing to cool it down...all the while hoping to make it into a true thorougbred stallion, in rightful elation through artificial QE...Oh, the great US greenback...you who were the idol of the world... now fatal passenger on Titanic...
You just closed all your crisis trades so why are you blogging again?
What was it you lost? 30%+ ?
Pain is inevitable. Suffering is optional.