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China Central Bank Says It Is "Fully Prepared For Looming Currency War"

Tyler Durden's picture




 

Just in case Lagarde (and everyone else except for the Germans, who have a very unpleasant habit of telling the truth), was lying about that whole "no currency war" thing, China is already one step ahead and is fully prepared to roll out its own FX army. According to China Times, "China is fully prepared for a looming currency war should it, though "avoidable," really happen, said China's central bank deputy governor Yi Gang late Friday." We look forward to the female head of the IMF explaining how China is obviously confused and that it is not currency war when one crushes their currency to promote "economic goals." Of course, that same organization may want to read "Zero Sum for Absolute Idiots" because in this globalized economy any attempt to promote demand (by an end consumer who has no incremental income and stagnant cash flow) through currency debasement has no impact when everyone does it. But then again, this is the IMF - the same organization that declared Europe fixed in 2009, 2010, 2011, 2012, 2013 and so on.

More on China's FX troop deployments:

Yi, vice governor of the People's Bank of China, made the comment amid widespread concerns that the world's major economies would drive down their units to gain a trade advantage through monetary easing policies. 

 

A currency war could be avoided, Yi said, if policymakers in major countries observed the consensus, reached at the recent G20 meeting, that monetary policy should primarily serve as a tool for domestic economy.

 

G20 members promised that they would not wage a currency war, but none have shown signs of scaling back monetary easing that has injected a flood of cash into global markets. They worry that removing the stimulus will plunge their economies into another recession.

 

"China is fully prepared," Yi said. "In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries."

What probably requires clarification is whether the PBOC will tie up its currency, already pegged to the USD, to the Yen, or the Pound, or whatever is the worst performing currency du jour, and adjust the CNY trading band on a daily basis.

What certainly demands clarity is just how will crushing the Chinese currency prevent the kind of soaring energy and food inflation that led to an explosion in civil unrest and disobedience in 2011, and when it took an abrupt end to the devaluation of all central banks to prevent an inflationary conflagration first in China, and then across the world.

We hope to get the answer to both soon, because once you pop (the first FX war shot), you don't stop, until someone's currency hits rock bottom.

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Sat, 03/02/2013 - 09:13 | 3293154 MrX
MrX's picture

wars make me smoke doobies: http://vimeo.com/43832369

Sat, 03/02/2013 - 09:32 | 3293168 King_of_simpletons
King_of_simpletons's picture

There is no currency war. The G20 said so. There is only competitive quantitative easing masturbation jerkapalooza going on.

Sat, 03/02/2013 - 09:40 | 3293182 AssFire
AssFire's picture

Squirrel who run up woman's leg not find nuts.


Sat, 03/02/2013 - 09:54 | 3293204 GetZeeGold
GetZeeGold's picture

 

 

When we reach peak Yuan.....we plan on detonating.

Sat, 03/02/2013 - 10:06 | 3293227 SafelyGraze
Sat, 03/02/2013 - 10:16 | 3293241 NoDebt
NoDebt's picture

Currency drones!  They target you and drop worthless fiat ordnance on you until you succum.  Typically used on one's own citizenry in an effort to "help" them.

Sat, 03/02/2013 - 11:44 | 3293365 NotApplicable
NotApplicable's picture

So... do algobots speak Mandarin?

Sat, 03/02/2013 - 12:55 | 3293504 new game
new game's picture

expecting these 'pathics to not game to their advantage is like trusting a six time felon to watch your castle and expect the jewels not to be missing...

Sat, 03/02/2013 - 16:01 | 3293877 mjcOH1
mjcOH1's picture

They're about as prepared for a currency war as a 10yr old Liberian kid with a prom dress, magic hat, and AK-47 is to take on the WWI German army.  

If they haven't figured out by now that when the US goes we'll be taking everyone with us, they really do deserve what's coming.   But deserve it or not....they'll be getting it.

Sat, 03/02/2013 - 09:57 | 3293192 Element
Element's picture

If every cuntry added 15 zeros to their currency at midnight GMT would the debt end up inconsequential?

Maybe, but the problem is, everyone would also get a massive but meaningless pay rise.

So in order to debase away debts, you'd need to shrink wages proportionally (make sure they don't move, let alone catch up ... which is the same as hyperinflation).

But somehow that just seems less attractive than an informal default or jubilee.

Bottom line is devaluations won't work, currency war won't work, and trade war won't work.

But bankruptcy will work.

Again, the problem is, the chicken-shit govts and banksters won't let that happen, which is to say, the rich will not stand for going broke.

So they'd much rather get 'recapitalised', at taxpayers expense, and start WWIII instead - thanks.

Sat, 03/02/2013 - 10:56 | 3293301 centerline
centerline's picture

Any and every action with the current system would be nothing more than an attempt at stopping the ponzi from collapsing... which is impossible.  Doomed to failure.  Those at the top know this.  It is just math.  The public at large, politicians, etc. all bred to believe "the system is the system as it always has been" and "fixing it" is possible.

No matter what action is taken, the promises that have been made cannot be kept unless we can exponentially expand population further.  This of course requires similar expansion in energy, food, water, etc.

Reality is that we have hit the resource limits.  Technology allowed for expansion far beyond the nightmares of Malthus.  Now we are extending time by undertaking a more extreme Malthus counterpoint of redistribution... which also has limits.  After which, there is nothing else that can be done to buy any more time.  We are in this final stage today.

What is going on right now in this final stage is positioning.  Various factions of "landlords" jockeying for the right angle on whatever comes next.

I won't claim to have any clue what is coming next since I am a peasant in the grand scheme.  But I wager bankruptcy is the plan - at a sovereign level of course.  Debts that cannot be repaid, will not be repaid.  Instead, they will be destroyed - one way or another.  War is a possible outcome of course.

No matter what though, none of this will address billions of people around the world who depend on government, government aid, etc. to survive.  The best the "landlords" can do is attempt to stretch this out over a very long period of time to allow for a more gradual adjustment.  That assumes they have any sort of humanitarian characteristics... which I doubt.  It also assumes the trend can be changed in the context of competition for global resources, that there is enough time on the clock to allow, etc.  All of which violate the lessons from history about human nature.  Hence, my bet is that something more dramatic is coming.

 

Sat, 03/02/2013 - 12:26 | 3293445 RockyRacoon
RockyRacoon's picture

Current policy:

"The Fed is buying $45 billion in Treasuries and $40 billion in mortgage bonds per month, its third round of "quantitative easing," and has said it will continue the purchases until it sees substantial improvement in the labor market outlook."

That translates thus:  The beatings will continue until moral improves.

Typical bureaucratic tactics.

Sat, 03/02/2013 - 12:36 | 3293469 C deK
C deK's picture

Agreed.  With those hurt by the sequester as prime example of the effect on sheeple.

 

Keep your powder dry.

Sat, 03/02/2013 - 13:05 | 3293511 Element
Element's picture

Yeah, govts and financials will maintain their deathgrip on the minds of the collective mass that turns to them ... to survive the mess that the earlier govts and financials created ... when they thus controlled the masses ...

hmm ... just like now.

I'm actually quite confident humanity is going to survive this rather easily. But I strongly suspect all forms of civilization everywhere are going to be downsizing rather abruptly. Just look at the population growth curve, as you say, it's all straight-forward math. It couldn't be any more clear we're approaching "Peak-Human".

And evolution has never been 'suspended', not on this planet, we're following the typical pattern of a bloom and die-back cycle that happens every organism that encounters more resources than it requires. Plankton or human makes no difference. The chances of population crashing soon after are of course enormously higher, than of stabilizing near the spike's apex level. It is completely unrealistic to expect stability anywhere near that point. Obviously a mean-reversion trend is entirely possible soon after the peak. But even then it's very likely millions of human beings on every continent will survive.

I'd really love to be around to see how that turns out. I find this insane rush toward peak-human kind of repulsive and disgusting most of the time.

On a long enough timeline we are all pre-fossils.

Sat, 03/02/2013 - 13:14 | 3293531 new game
new game's picture

centerline says;

This of course requires similar expansion in energy, food, water, etc.

Reality is that we have hit the resource limits.

 

 

the money game can be replayed, but the resource limits are just that - limits.

without projecting, i will say get out of the crossfire.

but logic might suggest that given the 'Fibonacci Retracement' and we hit the wall at 7-8 billion, well i'll let you do the math.

.618

 

Sat, 03/02/2013 - 17:51 | 3294107 centerline
centerline's picture

Interesting take on putting Fib math to this.  Damn.  Now I am going to have to break out a calculator and charts.  lol.

Sat, 03/02/2013 - 20:06 | 3294045 fockewulf190
fockewulf190's picture

I suspect China´s trump card will eventually be it´s hoard of phyzz.  They are buying physical gold and silver like crazy, and the only information coming through as to how much phyzz is actually being bought, is coming from export reports from Hong Kong...and those numbers are enormus.  China has not updated it´s official gold holdings since 2009. 

There are probably multiple reasons for this.  As an outsider looking in, I suspect one reason is going to be related to internal security.  China is known to have regular riots, and most are related to the increasing divide between the haves and have-nots.  Reporting updated numbers of gold while hundreds of millions of Chinese are still living in poverty is politically explosive.  They would just be shooting themselves in the foot doing that. 

Another reason is to keep the west in the dark.  China loves cheap phyzz, and they are going to be nice and quiet and let the Fed, and all of the other behind the scenes players, keep the manipulation going for as long as the spice keeps flowing east. 

But the main reason for all the buying, and all the stealth, is that they are preparing for the Great Reset. More specifically, post-Great Reset.   They intend on keeping their renminbi not only as a national currency, but they intend to declare it as the new international reserve currency, only this time, it will be backed by gold.  Only then, when most of the world´s currencies have been vaporized because of the Great Reset, will they reveal how much gold they have in their possesion. 

Much of this gold will be stacked up neatly at the newly constructed vault located at Beijing Airport.  It is conviently located, and it will allow the beaten down dignitaries and financial ministers of devestated foreign nations to observe, in person, the hoard of true money backing up their currency.

And guess what, they will also be able to fix the gold price to the renminbi as they see fit. Yi Gang´s slip of the tounge regarding currency wars, fits the profile of one who knows what kind of preparations are being made in the backround, and he has spoken with confidence.

Sun, 03/03/2013 - 08:51 | 3295085 Marco
Marco's picture

It's just currency in the end ... if they are forced to run a current account deficit it will all phyzzle out.

It's invasion of Africa is a bigger trumpcard than phyzz IMO.

Sun, 03/03/2013 - 11:38 | 3295309 e-recep
e-recep's picture

the usa has too many nuclear weapons and too many rich jews to let this shift of financial hegemony to slip through quietly.

Mon, 03/04/2013 - 05:14 | 3297162 fockewulf190
fockewulf190's picture

The Great Reset will cause humanity to howl like never before.

Sat, 03/02/2013 - 10:31 | 3293269 fomcy
fomcy's picture

Is Bernank gonna do anything about "rising" Dollar

while Eur and GBP and YEN going lower?

How's he going to achive that? Print 2 trillion instead?

Sat, 03/02/2013 - 12:58 | 3293507 gmrpeabody
gmrpeabody's picture

Yes...

Sat, 03/02/2013 - 17:23 | 3294064 Ghordius
Ghordius's picture

...he can

Sun, 03/03/2013 - 06:24 | 3295005 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

I qucikly scanned about 300 hundred of the 1400 + posts to the article you linked. People are waking up. I did not notice a single comment which supported the article.

Anyone who has the time should check it out. Most of the replies were what one could see here.

Sun, 03/03/2013 - 15:24 | 3295734 e-recep
e-recep's picture

desperate assholes are rooting for subprime lending once again.

Sat, 03/02/2013 - 09:21 | 3293158 Peter Pan
Peter Pan's picture

I am not saying anything new, but if you don't want currency wars and the whole infrastructure of hedging, speculation and vampire banks, then the solution of gold and silver for setting price and settling accounts is second to none.

Sat, 03/02/2013 - 09:33 | 3293171 narnia
narnia's picture

State issuing currency = imminent failure, backed or not backed by commodity.

Sat, 03/02/2013 - 09:26 | 3293164 narnia
narnia's picture

The countries seriously debasing their currencies are & have been primarily doing it for misguided Keynesian logic domestic reasons. It's called subsidizing banks, monetizing debt & gaming the government borrowing rate.

Sat, 03/02/2013 - 10:14 | 3293239 DaveyJones
DaveyJones's picture

...and theft

Sat, 03/02/2013 - 09:33 | 3293170 Sudden Debt
Sudden Debt's picture

To make something beautifull...
You first... NEED TO TURN IT INTO A HORRIBLE MESS!!!!

It's how the game works...
Where did you think all those central bankers got their inspiration from? They just want to create something beautifull... and like artists... they don't know yet what's it going to look like... but like art... you can smear crap on a canvas.... and sell it to a moron for a million bucks if you theml him it's the next picasso...

Sat, 03/02/2013 - 22:45 | 3294661 mkhs
mkhs's picture

Drinking already?

Sat, 03/02/2013 - 09:34 | 3293172 Tristan Ludlow
Tristan Ludlow's picture

Don't start a war if you don't know you can win. In this case, we are all losers.  Keep Stackin'.

Sat, 03/02/2013 - 09:35 | 3293174 Sudden Debt
Sudden Debt's picture

when you hear they're going to start a currency war...
it turns out... it's been going on for 4 years now...

Sat, 03/02/2013 - 17:27 | 3294070 Ghordius
Ghordius's picture

not more like 40? since one million bucks weren't one metric ton of gold - guaranteed and fixed - anymore?

Sat, 03/02/2013 - 09:35 | 3293175 DblAjent
DblAjent's picture

Looming?

I thought it was already here!

(first post bitchiz...go easy on me)

Sat, 03/02/2013 - 11:01 | 3293312 GetZeeGold
GetZeeGold's picture

 

 

The progressives look a little stupid today.....cause no one actually died yesterday.

It was a great show if you like watching mass hysteria.

Sat, 03/02/2013 - 11:15 | 3293332 CH1
CH1's picture

first post bitchiz...go easy on me

Welcome to the party.

Sat, 03/02/2013 - 11:21 | 3293342 Karl von Bahnhof
Karl von Bahnhof's picture

Enjoy it!

Sat, 03/02/2013 - 19:21 | 3294256 chubbyjjfong
chubbyjjfong's picture

Matt Damon!  "The Bourne Awakening". Welcome!

Sat, 03/02/2013 - 09:37 | 3293176 Element
Element's picture

Funny, given the Chinese already flung the economic sanctions bomb at Japan.

Sat, 03/02/2013 - 09:42 | 3293185 Tao 4 the Show
Tao 4 the Show's picture

Yes, though the game still involves trying to sound like one holds the high ground. Obviously, none do. So the statements are mostly directed towards rallying the public opinion of their own citizens while at the same time pinging radar signals at the enemy ships.

Sat, 03/02/2013 - 09:50 | 3293206 Element
Element's picture

Quite T4, and good to see you again.

Sat, 03/02/2013 - 10:19 | 3293252 Tao 4 the Show
Tao 4 the Show's picture

Thanks Element - always enjoy your comments.

Sat, 03/02/2013 - 09:51 | 3293195 DblAjent
DblAjent's picture

Funny, given the Chinese already flung the economic sanctions bomb at Japan.

 

...along with the smog bomb...

Sat, 03/02/2013 - 09:39 | 3293178 Getting Old Sucks
Getting Old Sucks's picture

We do it and say we're not.

They do it and say they are.

At least they're honest.

Sat, 03/02/2013 - 10:16 | 3293243 DaveyJones
DaveyJones's picture

there's also that small detail that they're better prepared

Sat, 03/02/2013 - 13:00 | 3293510 post turtle saver
post turtle saver's picture

Better prepared for what? I don't think they're ready to handle what's coming any better than anyone else. The Art of Judo is plain on this... "if you have a hold on me, I have a hold on you". The rest of it is just hot air to placate their citizens.

Sat, 03/02/2013 - 18:29 | 3294165 DaveyJones
DaveyJones's picture

Oh I don't know. Maybe buying solid things from other countries instead of bizzare, criminal, and very inefficient "democracy / terrorist" projects just to name one. It has nothing to do with who is "better" but it may have a little bit to do with who's been around for a long time. Humility, patience, experience

Sat, 03/02/2013 - 09:39 | 3293180 LongBalls
LongBalls's picture

Do the Chinese have more gold than reported? Me thinks yes.

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