Yet Another Massive Nail In The Dollar's Coffin

Tyler Durden's picture

Two years ago, the CME announced USD/CNH futures trading enabling speculation (and hedging or risk transfer) of offshore Chinese Renminbi. On the other side of the world this week, a couple of gentlemen that few people have ever heard of signed an agreement that has massive consequences for the global financial system. It was a Memorandum of Understanding signed by representatives of the Singapore Exchange and Hong Kong Exchange. Their aim – to combine their forces in rolling out more financial products denominated in Chinese renminbi. This is huge...

 

Submitted by Simon Black via Sovereign Man blog,

Hong Kong and Singapore are THE two dominant financial centers in Asia. For years they’ve been locked in competition with one another, much like New York and London. So their public partnership is a very big deal… indicative of the clear objective they have in front of them.

Bottom line – finance executives in Asia see the writing on the wall. They can see that the dollar is in a period of terminal decline, and it’s clear that the Chinese renminbi is going to take tremendous market share away from the dollar. They want a big piece of the action.

The renminbi has already surpassed the euro to become the #2 most-used currency in the world when it comes to trade settlement, according to a report released yesterday by the Society of Worldwide Interbank Financial Telecommunication (SWIFT).

Right now the renminbi has about an 8.6% share of the global market for trade settlement. Granted, the dollar has the lion’s share of trade settlement at more than 80%.

But just look at how quickly the renminbi has grown; in January 2012, its share of the global market was just 1.9%. So it’s grown by nearly a factor of 5x in less than two years.

With today’s agreement between Hong Kong’s and Singapore’s financial exchanges, that growth will likely accelerate.

As we’ve discussed before, the dollar is in a unique position simply because it is the world’s dominant reserve currency.

This means that when a rice distributor in Vietnam does business with a Brazilian merchant, they’ll close the deal by trading US dollars with each other… even though neither nation actually uses the dollar.

It’s been this way since World War II, simply because there has been such a long tradition of trust in the United States, and a steady supply of dollars throughout the world.

But this confidence is fading rapidly as merchants and banks around the world have been seeking alternatives, primarily the Chinese renminbi.

As the dollar’s market share in international trade decreases, it will mean the end of US financial privilege. No longer will the US be able to print money without repercussions.

And as so many other nations have learned the hard way, when you print money with wanton abandon and indebt your nation to the hilt, there are severe consequences to pay.

Last week’s move between Hong Kong and Singapore gives us a glimpse into this future.

We’ll soon see more financial products– oil, gold, Fortune 500 corporate bonds, etc. denominated in renminbi and traded in Asia.

And as trade in these renminbi products grows, the dollar will be closer and closer to its reckoning day.

Years from now when this has played out, it’s going to seem so obvious.

Just like the post-Lehman crash in 2008, people will scratch their heads and wonder– ‘why didn’t I see that coming? Why didn’t I recognize that it was a bad idea to loan millions of dollars to unemployed / dead people?’

Duh. Same thing. People will look back in the future and wonder why they didn’t see the dollar collapse coming… why they didn’t recognize that it was a bad idea for the greatest debtor nation in the history of the world to simultaneously control the global reserve currency…

The warning signs are all in front of us. And last week’s agreement between Hong Kong and Singapore is one of the strongest signs yet.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Dr. Bonzo's picture

And dont forget to add, in the mean time Hong Kong stubbornly clings to its dollar peg which is doing none of us who don't own serfs in sweatshops an iota of any good. While the rest of the world babbles about deflation, there's not a whiff of it on the horizon here as everything from daily necessities to transportation to rents to flat sales continue to increase in cost month-on-month.

Deathrips's picture

Fook Me!!!

 

Silvers on Sale!!!

 

RIPS

2¢Wurth's picture

I wish this would stay at the top of the ZH list for a week or so, not buried in the late Saturday detritus.

Of course everyone is out buying a car-full of Chinese crap and trimming the tree with prison labor strings of lights so no worries all around.  Simon Black is just an alarmist.

 

Crash Overide's picture

Giddy up, here we go...

jonytk's picture

this will happen with stocks very soon.

jonytk's picture

can we have source on those south park episodes?

MeelionDollerBogus's picture

I scour youtube for them & lots of them are wiped as fast as youtube can find them - copyright.

Comedy Central hosts online & forbids non-US viewers and I didn't set up a proxy to get around it. This one I think survived the copyraping attacks because it's a unique remix, a work unto itself.

Atomizer's picture

Obama administration needs to play dumb as the NSA already knows. Let the hedge funds liquidate to delay the currency wars.  

seek's picture

Speaking of CME --

Anyone see the massive move in JPM's registered stocks on the 12th? 62% of their registered was moved to eligible on Thursday.

CME Gold Stock Report

 

blindman's picture

an infinite number of cash like equivalents , each
with a finite nominal feature. but ...
i remember paul krugman told ron paul that people
in the usa can always barter. or maybe just create their
own infinite cash like equivalents with a finite feature.
how the federal reserve note will fit in no one
can say.

TheLoveArtist's picture

Makes sense to use the Chinese currency, everything you need and buy is made in China, they can easily require the deals to be done in their currency.  Why should they denominate the transactions in US dollars when this helps fund a military that is parked outside their front door.  The Chinese are not dumb.

Truther's picture

Never seen Silver looking any better now.

wintermute's picture

It was $4 for years. That was the screaming buy.

Apostate2's picture

Simon your hair is on fire. This has been in the works long time and no secret.

The Heart's picture

Nails in the bankster coffins.

"Setting the bar..."

http://www.youtube.com/watch?v=Md06Y7_VnNg

 

TheLoveArtist's picture

You know there are no Jews in Japan, China, Korea, very few in Germany, and these countries are manufacturing jaugernauts.  Then you look at the USA where Jewstreet with Junk Bonds and other crap financial products has destroyed our industrial base.  Look at France and Britain also.  They have been picked apart.  I say that our currency is going to crap because we have let the Jews into our financial markets and allowed them to run the fed and treasury.  I mean why put the blame on them, how about because they have been running the show.

Herodotus's picture

They should be prohibited from dealing in listed securities.

kito's picture

Loveartist, so the Jews caused all of the manufacturers to move production to China in furtherance of decreased labor costs? and billionaires like the Walton family are just victims of these evil plot to decrease labor so they could sell items at lower prices? let me guess, the unions, and their ridiculous leverage, which forced manufacturers to look elsewhere to stay competitive, these unions were actually formed by the Jews in the fed? Wow love artist, thanks for the clarity

Treason Season's picture

Mao's China had a number of Jewish friends.

One such was Israel Epstein who became a Chinese citizen in 1957 and a member of the Communist Party in 1964.

In China, Epstein served on official government and party committees and was at one time Minister of Appropriations.

From 1983 on, he was a member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), the politburo, the top advisory body in China.

Two other Jews, Sidney Shapiro and Chen Bidi, were also members of the same top body.

http://jewishfaces.com/china.html

http://aangirfan.blogspot.com/2011/06/jews-in-china.html

WTFUD's picture

Breaking up is hard to do!
Don't cry for me fiat dollar, the truth is i never loved you. . .

chunga's picture

Lately, there seems to be a lot of new ZH members swarming the comments.

"This is a one-time login.  Use it not more than once twice, not less than once never, but once."

Just a random observation out of the blue.

 

Deacon Frost's picture

Chunga, you are correct.

satoshi401 1 week 3 days.

Another government indoctrinated troll.

He will get added to my list of resident ZH trolls.

Freddie's picture

ZH is starting to blow.  We get half wits like satoshi401 while BrusselsBanker, Francis and a few others were supposedly banned recently.

Treason Season's picture

WTF don't the Tylers organize the comments section is a curiousity.. I asked Sacriligious a long time ago to do it but got no response. The Daily Telegraph uses DISQUS and pretty much cuts outs all the trolls and other b.s. artists.

lakecity55's picture

Then it is up to us to ignore trolls, try to keep rolling, and try to get some of our old guys back.

 

chunga's picture

Curious as to why "Bankguyinbrussels" got the boot.

dick cheneys ghost's picture

@chunga, he got to close to the truth.....

he had a epic post a few months back, I mean it was epic and then he was gone........

trav777

Mako

francis

bank guy and others

all got to close to the truth

this aint 'fight club anymore', its 'give me a hug club'

chunga's picture

I would have liked to seen what he was writing. He didn't seem to fit the mold of what would be in "violation" of the "discrimination" policy.

I've seen other sites bash ZH by selectively plucking/quoting comments with the suggestion that ZH encourages or supports such things. Personally, I think that having no policy has less exposure to criticism (and litigation). The bottom of the page states "intended for mature audiences", so when certain commenters get banned, and others don't it opens the door for critics.

Something seems to have changed here; I just can't put my finger on it.

Bay of Pigs's picture

Kind of surprised I'm still here, lol.

TheGardener's picture

Me too, and I`m the resident gardener who is guilty of all and produces his own wine and meat and reloads as well
and does not believe in destructive interbreeding
for his livestock nor mankind. Monarchist too and still not yet banned.

AKrandy's picture

Referring to the new commenters, I've noticed that as well. When you check the join date it is 4 years xxx weeks and they've never commented before????

Bay of Pigs's picture

I imagine those are buried sock puppets used to troll around when needed.

arrogantchef's picture

I went to China in 1986 to study "Special Economic Zones" when they were first opening up to capitalism. Back then, they had two kinds of money 1. RMB and 2. FEC (Foriegn Exchange Certificate) We converted our USD into FEC and could spend them anywhere. They had "department stores" (not anywhere near what we are used to in the States) so that we would spend our money on goods so they could get more hard currency to buy Caterpillars, etc. Well, the common Chinese citizen could not go into those stores because the stores would not take RMB, only FEC. 

We were approached by Chinese people when walking down alleys "Hello, American? Change your money?" Of course we were interested so we would go into a dark corner and they would trade our FEC for RMB at a ratio of 1.4 to 1. Then, when we would go to the bar at the hotel down the street from the college and drink Tsingtao and pay with RMB because we were American's and we could. 

I couldn't immagine something like that happening here

boeing747's picture

Yes, to maintain King dollar, we sold gold, real estates to foreigners. We steal from our sons and their sons.

Are you happy? Satoshi?

In some hk stores, you can pay rmb or us$, there are currency exchanges everywhere in hk.

 

Kina's picture

The lsnd commonly denoted as Israel in ancient times didn't exist 4000 years ago. ..settlements first started around 1200 to 1000 bc. 


Jews as such were a much later invention. .basically an invention after the demise of Israel and judah a vassal. .then the later conquest of its Assyrian masters.. and so on..don't think they would have been in China 2000 bc...unless you are talking maybe common ancestors .even before the common people off the plains of palestine...goat herders ..rogue shashu...4000 bc... at which time language would have been entirely different. ...just sayin.

q99x2's picture

As ugly an image as this may be, the Chinese print more than Yellen on steroids. So what's the problem?

lakecity55's picture

Great catch.

The PRC has its own problems akin to Uncle Fedster printing moar paper digits. You read too much stuff about China's growing superman strength, but IMHO, they have plenty of problems we have all read about right here.

That said, why go around poking a dragon?

Why go around placing dual capability weapons near the Russian frontier?

Does it not seem at times our foreign policy car is being driven by a group of illegal aliens?

Pullmyfinger's picture

I strongly recommend you read "Full Spectrum Dominance" to understand that particular conundrum.

hootowl's picture

"....... our foreign policy car is being driven by a group of illegal aliens?"......Of course it is,  and chief among them is the illegal alien and his Mooch squatting in the White Mosque on Pennsylvania Avenue in the District of Criminals.

 

Starve the beast.

Pullmyfinger's picture

The problem is that there's more to it than such a simplistic comparison. From an overview it's clear that the entire global system of unpacked fiat paper is dying. The Chinese recognize this, and --apart from their own massive printing in response to this ongoing event-- are preparing for that day; America is not.

Al Huxley's picture

There is a small group (say about .1%) of the US population that's preparing, but they're using the other 99.9% as fodder for their preparation.  TPTB are fully aware of what's going on, they've just decided to throw the country under the bus, having the middle class trade the modest wealth they briefly accumulated over the last century for a brief idiotic consumption binge, EBT cards and discount iToys.

headhunt's picture

The power in DC believes in communism, no matter to them the outcome, they get thiers and we get F'd.

 

Road Hazard's picture

For fucks sake, can ZH PLEASE stop posting simon black articles??????????