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Yes, It's Possible For A Gold-Backed Renminbi To Dethrone The US Dollar
Submitted by Tim Price via Sovereign Man blog,
“[W]e want to use our reserves more constructively by investing in development projects around the world rather than just reflexively buying US Treasuries. In any case, we usually lose money on Treasuries, so we need to find ways to improve our return on investment.”
– Unnamed senior Chinese official, cited in an FT article, ‘Turning away from the dollar’, 10th December 2014.
“Mutually assured destruction” was a doctrine that rose to prominence during the Cold War, when the US and the USSR faced each other with nuclear arsenals so populous that they ensured that any nuclear exchange between the two great military powers would quickly lead to mutual overkill in the most literal sense.
Notwithstanding the newly dismal relations between the US and Russia, “mutually assured destruction” now best describes the uneasy stand-off between an increasingly indebted US government and an increasingly monetarily frustrated China, with several trillion dollars’ worth of foreign exchange reserves looking, it would now appear, for a more productive home than US Treasury bonds of questionable inherent value.
Until now, the Chinese have had little choice where to park their trillions, because only markets like the US Treasury market (and to a certain extent, gold) have been deep and liquid enough to accommodate their reserves.
The above FT article points to three related policy developments on the part of the Chinese authorities:
- China’s appetite for US Treasury bonds is on the wane;
- China is ramping up its overseas development programme for both financial and geopolitical reasons;
- The promotion of the renminbi as a global currency “is gradually liberating Beijing from the dollar zone”.
The US has long enjoyed what Giscard d’Estaing called the “exorbitant privilege” of issuing a currency that happens to be the global reserve currency.
The FT article would seem to suggest that the days of exorbitant privilege may be coming to an end – to be replaced, in time, with a bi-polar reserve currency world incorporating both the US dollar and the renminbi.
(The euro might be involved, if that demonstrably dysfunctional currency bloc lasts long enough.)
Here’s a quiz we often wheel out for prospective clients:
- Which country is the world’s largest sovereign miner of gold?
- Which country doesn’t allow an ounce of that gold to be exported?
- Which country has advised its citizenry to purchase gold?
Three questions. One answer. In each case: China.
Is it plausible that, at some point yet to be determined, a (largely gold-backed) renminbi will either dethrone the US dollar or co-exist alongside it in a new global currency regime?
We think the answer is yes, on both counts.
Meanwhile the US appears to be doing everything in its power to hasten the relative decline of its own currency.
There is a new ‘big figure’ to account for the size of the US national debt, which now stands at $18 trillion.
That only accounts for the on-balance sheet stuff. Factor in the off-balance sheet liabilities of the US administration and pretty soon you get to a figure (un)comfortably north of $100 trillion.
It will never be paid back, of course. It never can be. The only question is which poison extinguishes it: formal repudiation, or informal inflation.
Perhaps both.
So the direction of travel of two colossal ‘macro’ themes is clear (the insolvency of the US administration, and its replacement on the geopolitical / currency stage by that of the Chinese).
The one question neither we, nor anybody else, can answer precisely is: when?
There are other statements that beg the response: “when?”
Government bond yields have already entered a ‘twilight zone’ of practical irrelevance to rational and unconstrained investors.
But when do they go into reverse? When will the world’s most frustrating trade (‘the widow-maker’, i.e. shorting the Japanese government bond market) start finally to work?
When will investors be able to enter or re-enter stock markets without having to worry about the malign impact of central bank price support mechanisms?
Here’s another statement that begs the response: “when?”
The US stock market is already heavily overvalued by any objective historical measure.
When is Jack Bogle, the founder of the world’s largest index-tracking business, Vanguard, going to acknowledge that advocating 100% market exposure to one of the world’s most expensive markets, at its all-time high, might amount to something akin to “overly concentrated investment risk”?
Lots of questions, and not many definitive answers. Some suggestions, though:
- At the asset class level, diversification—by geography, and underlying asset type—makes more sense than ever. Unless you strongly believe you can anticipate the actions and intentions of central banking bureaucrats throughout the world.
Warren Buffett once said that wide diversification was only required when investors do not understand what they are doing.
We would revise that statement to take into account the unusual risks at play in the global macro-economic arena today: wide diversification is precisely required when central bankers do not understand what they are doing.
- Expanding on the diversification theme, explicit value (“cheapness”) today only exists meaningfully in the analytically less charted territories of the world. Stock markets in Russia and China, for example, are trading at book value or less, while North American markets 3x more.
- Some form of renminbi exposure makes total sense as part of a diversified currency portfolio.
- US equities should be selected, if at all, with extreme care; ditto the shares of global mega-cap consumer brands, where valuations point strongly to the triumph of the herd.
- And whatever their direction of travel in the short to medium term, US Treasuries at current levels make no sense whatsoever to the discerning investor. The same holds for Gilts, Bunds, JGBs, OATs.
- Arguments about Treasury yields reverting to a much lower longer term mean completely ignore a) the overwhelming current and future oversupply, and b) the utter lack of endorsement from one of their largest foreign holders.
Foreign holders of US Treasuries, you have been warned. The irony is that many of you are completely price-insensitive so you will not care.
There are other reasons to be fearful of stock market valuations, notably in pricey Western markets, over and above concerns over the debt burden.
As Russell Napier points out in his latest ‘The Solid Ground’ piece,
“In 1919-1921, 1929-1932, 2000-2003, 2007-2009 it was not a resurgence in wages, Fed-controlled interest rates or corporate taxes which produced a collapse in corporate profits and a bear market in equities.
“On those four occasions equity investors suffered losses of 32%, 85%, 41% and 51% respectively despite the continued dormancy of labour, creditors and the state. It was deflation, or the fear of deflation, which cost equity investors so much. There is a simple reason why deflation has always been so damaging to corporate profits and equity valuations: it brings a credit crisis.
“Investors forget at their peril what can happen to the credit system in a highly leveraged world when cash-flows, whether of the corporate, the household or the state variety, decline. In a deflationary world credit is much more difficult to access, economic activity slows and often one very large institution or country fails and creates a systemic risk to the whole system.
“The collapse in commodity prices and Emerging Market currencies in conjunction with the general rise of the US$ suggests another credit crisis cannot be far away. With nominal interest rates already so low, monetary remedies to a credit seizure today would be much less effective. Such a shock, after five and a half years of QE, might suggest that the patient does not respond to this type of medicine.”
And since Christmas fast approaches, we can’t speak to the merits of frankincense and myrrh, but gold, that famous “6,000 year old bubble”, has always been popular, but rarely more relevant to the investor seeking a true safe haven from forced currency depreciation and an ever vaster mountain of unrepayable debt.
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https://translate.google.al/?ie=UTF-8&hl=en&client=tw-ob#auto/zh-CN/Gold will outlast the USD. Chinese invented paper money%2C know it always ends up worthless
Question, just how much gold would be required to back the trillions upon trillions of bad debts china created over the past 5 years to prop up it's economy? It's probably more gold than humans have ever mined.
The last thing China wants or will establish is a sound money system based on gold. They have too many debts that require central bank "flexibility". China buying gold is just to have a seat at the table for when the dollar finally falls.
A single ounce of gold is enough to back the debt, if the price is high enough. Gold comes first and values are measured by it, and not the other way around. Once you apply this you realize all the anti-gold-standard arguments instantly implode, because the assumption is the current gold price is a fair valuation.
It is not, and some day that will be revealed.
Now here's someone talking some sense. Dollars are debt; IOUs for repayment of gold or silver. Section 19 of the Coinage Act of 1792 was harsh because the founding fathers knew the true cost of devaluing the currency. Unfortunately they did not understand how to prevent revaluing the currency from becoming necessary, because they chose to fix the gold/silver ratio instead of letting free market forces decide. In doing so their metal standard was doomed from the start by Gresham's Law. Any amount of gold, silver, or any metal, can back any amount of dollars. The amount of metal per dollar determines the value of the dollar, or inversely, the price of the metal denominated in those dollars. But a metal standard can only succeed if the original ratio of metal grams or grains per dollar is held constant as dollars are created or destroyed. Otherwise the buying power of the currency will change, and that is precisely what must remain constant. They fixed the wrong ratio.
Zaphod, you haven't been paying attention (SDR). Dollar doesn't fail (peso).
@seek,
Trillion dollar platinum coin anyone?
I'll give you $50 for every one of those you can procur.
Nuke-backed
Gold-backed
Make your bets.
Uhm.... Yes. Gold has intrinsic value. But only as much as it's industrial use. Plating electrical connectors, Making very thin metallic layers. Creating art pieces - including jewelry. That sort of thing. But that intrinsic value is not constant. Nor is it that much higher than silver or copper. Technology has made gold intrinsically near the same value as lead, silver, copper, brass, etc... depending on the application.
Now the psychological value. Oh my can that be high. But it is psychological. So it is controlled by the rich. Those with the biggest interest in the gold have the will to create value within it. It's just another mind fuck. The same oligarchs that trick us into over valuing equities trick us into over valuing gold. They understand that humans work through psychological cycles. And when the cycle swings towards an over valuing of something, be it wine, gold, or guns, they sell that something. And they buy the under valued somethings.
Oh keep pretending you have it all figured out with your gold. You'll be right. Then you'll be wrong. Then you'll be right again.
I assume you know that's the central bank argument for running on paper assets....
I thought gold was chosen because it doesn't oxidize. I mean, argue all you want over the usefulness, but that isn't the point. Over long periods something was needed that didn't rust and break down. Durable. What else is durable like that? Silver?
I think industrial use in some ways takes away from gold. Silver has more industrial use than gold and is valued far less. Is that because of industrial use? Why is that exactly?
Money that blows away as dust in the wind wouldn't work out so well... I mean if you are planning for your kids or something. Your posterior.
Gold was chosen because chicks like to wear it.
The intrinsic value of poontang is as old as humanity.
Yes, it was either gold or shoes. Over the objection of women, men chose gold.
As opposed to the intrinsic value of green pieces of paper? You can't print gold moron.
Tell that to the nano technology nerds...
Bravo! Makes my heart sing when truth gets published.
OK, price point is valid. But you did not cover the other point.
Why would China suddenly want to be fiscally prudent?
Nothing they have shown in recent history has shown they have any goals in that area.
thats exactly what my problem with all this 'gold back RMB' and 'china will rule the world' stuff. Theyre a house of cards built on fraud just like western nations. Even if china was able to deliberatly collapse the value of the USD by deliberatley dumping all their T bills(which they very well may be capable of doing) what do they gain by doing so? they benefit from the status quo. They keep their masses employed making cheap consumer goods to sell to the US. In return, they get USDs to buy things they need on the open market. It may not be ideal, but its probably better than deliberatly destroying the means by which they are able to perpetuate their illusion of growth
The way I see it, they have two options they could go with:
1) Try to get everyone else to accept renminbi as quick as possible, so that they can print money and use it to buy gold and other real assets, until they decide to pull the plug, at which time they just got tons of gold for only the price of ink and paper
2) Print as much as the market will bear, use a lot of it to buy gold, turn around and announce a gold peg if/when the time comes that the renminbi starts crashing too hard for their liking.
The retiring baby boomers, the ability to provide govt funded retirement plan or industry-funded for that matter is a demographic nightmare for all of our nations.
http://solarcycles.net/2014/03/11/demographics-and-secular-bull-markets/
Some people just like the power
Thanks for replying.
I don't think china will have a fully gold backed currency. I think that all CB of size are positioning their currencies to be part of the weighted average that will make up the SDR. The gold is not to replace the US dollar. The dollar will be part of the mix as well. They are just trying to get enough gold to make a god argument to get into the mix.
That is why the US is part of the effort to drive down the price of gold to assist China in getting the gold and to also get some agreement from them to not dump their US Dollar based paper....
Everyone wants to be king of the global hill. Today it is the US/Petrodollar combo. China would want to make the change to dethrone the king for it's own accention. That seems like a pretty obvious rationale to me.
Of course it could be something else just as basic. Such as, maybe they are sick of the world being bullied by the dollar and this is a way to fight back.
Seek: You are most welcome to share our gold claim when the SHTF. We will designate you as Treasurer.
money vs currency
Fully agree.
~"Question, just how much gold would be required to back the trillions upon trillions of bad debts china created over the past 5 years to prop up it's economy?"~
You're asking the wrong question, Grasshopper..., er..., Zaphod. :)
The Chinese have been screwing everyone's pooch since the US and others let them dictate the FX exchange rates on renminbi. The Chinese have suppressed its value to keep the price of its export low. They have to keep up this control so as to not devastate the value of their own currency. Having trillion upon gazillions of "bad debt" helps them lower the yuan's value. Imagine parity between the USD and yuan. What's their shit worth then?
Now the shoe is on the other foot. The death of the dollar has infinitely more danger for them than to us. Well, maybe not that much, but if, (or more than likely when), the dollar suffers colossal devaluation the yuan bites the dust too, and it murders anyone else pegged to it, (the USD). Hence this insane "race-to-the-bottom" devaluation game every country is playing, (including the Swiss, the numb-nuts).
I think the Chinese would love to have a gold-backed yuan. It's good to be king. The only problem with this egg-foo-yung wet dream is that no one would be able to afford their products, (irregardless of its production qualities, or better said, lack thereof).
Lastly, the Chinese, despite some 80 years of Maoist rhetoric, have some 5000 years of clans capitalism behind them, at which's heart is the profound intent to screw the customer, or better said, anyone who isn't in the clan whom you don't owe guanxi. Remember it's all about guanxi. And "round eyes" ain't got none.
"no one would be able to afford their products"
Yes they would, the only reason prices don't constantly fall in most countries is their central banks have an active policy of creating inflation. If they stop printing money, not only does the currency trade higher, but the prices of goods fall so as to always stay rather similar in USD terms. In the US, prices fell for almost the entirety of the 19th century, while a booming middle class was created.
Probably the creation of wealth via inventions, and the creation of dynamic industrial sectors with cheap energy didn't hurt either.
~"no one would be able to afford their products"
Yes they would,...~
Sorry, I mis-spoke. What I meant to say is that their products would no longer be cheaper to produce than back home, with "back home" being one's own country, whether it was India, the USA, Europe, Korea, Japan or other places capable of advanced manufacturing. They would lose their economic edge.
People forget that it was Dick Nixon who opened China. I am fairly sure that when he made his historic trip there, the message he brought was, "Hey China, your isolation isn't healthy and you need to be more like Japan, (whom you hate), and South Korea, (whom you distrust because you're pals with North Korea). Look what has happened to both of those countries by being friends with us since the end of WWII."
The intertwining of our economies was no accident but rather a planned event. It's hard to nuke an economic trading partner. It's bad for business. And that takes us back to clan-based capitalism.
The falling of prices throughout the 19th and 20th centuries was not from currency manipulations but due more to efficiencies of scale, vertical improvements in manufacturing practices and of course, good old-fashioned commercial competition.
I think I had guanxi once. The doctor gave me a lotion to put on it and it went away after about a week. Itched like crazy.
~"Itched like crazy."~
That's because you used the cat as your applicator. Don't do that and you should be fine.
It's never a question of not having enough gold to back a currency.
It's the reverse: a question of price. At what price is the currency/debt backed?
Or perhaps I misunderstand your thesis, and you're suggesting that if the US were to switch to gold (even with all its debt), that China's debt is so much larger, that they'd still be in the Deep Fryer?
But I do agree with those who do not trust China (friendly & polite, but inscrutable and two-faced), because they simply want to position themselves for a better seat at the New Table that the Global Banksters are preparing, for when they agree to scrap the old one.
And I suspect that there may not be a seat for the Bear, whom they want to leave outside in the cold. Just my hunch. But what do I know... after all, look what I do with wine, rather than put it in a glass.
China has to buy a HELL of a lot of gold first to make this happen
No, it is more than that. All the gold going to China is being assayed, refined and recast into Kilogram bars. A change in format of weights and measures is much more significant than "we want a seat at your table..."
Why would that debt need to be backed Yaun for Yaun in gold? Just a significant portion of debt backed by gold would show stability of reserves and currency would it not?
')
Did you mean "??"?
edit: well, that clever little joke didn't work. Chinese fonts don't copy/paste into ZH responses, if anyone was wondering.
Reserve currency status does not last forever, I know we've all heard that before, but some people truly don't understand what it means. The paradigm shift is almost complete, there will be no warning. Beware, all yee who enter this uncharted territory and prepare as fast as possible for the end is nigh!
https://www.youtube.com/watch?v=IGYaFMFU63U
4. China just signalled the entire world that Treasuries are a losing bet. Game f'ing on!
Maybe BIS will take on new Mission:
To settle long term US Treasuries that countries want to sell... Like Russia, China, France, Whatever. Since NATO is in EU and based in Belgium... don't think Belgium will sell for a few more years.
BIS was created to facilitate payment of Germany's War Debt
Today US Long Term Treasuries are USA War Debt.
I've been saying this for years, and when it eventually happens 99.9% of the Sheeple in the US will be totally fucked as the paper they own and think is valuable becomes worthless when nobody but the FED will loan the US Government money. At that moment the US becomes a 3rd world country with all the hyper-inflation that will ensue on its citizens. Got physical gold & silver?
www.traderzoo.mobi
...becomes a third world country, eh? You mean like, future tense...?
Yes, more Detroiter-er than it is now.
www.traderzoo.mobi
At least we won't be France, which is nice.
Whatever happens, unless you're a billionaire, you can be sure it's going to be bad for YOU, regardless of whether or not it's good for gold. Do you think if we head down to FEMA now they might let us select our camps and get dibs on the better cots?
I heard they were going to start giving out government cheese.
Did you mean cheese or cheddar? I'm up for the latter.
~"Whatever happens, unless you're a billionaire, you can be sure it's going to be bad for YOU, regardless of whether or not it's good for gold."~
Look, Al, is this a bad time of year for you? No family coming for the holidays? Did someone pee in your eggnog? What's the old adage, "Money will never make you happy"?
Are things going to be tough?
Sure looks that way.
Are we all fucked?
Some more than others. Especially if they don't have a support network close at hand.
Is the gubbmint going to march us off to death camps?
How long would you work if the scrip they were trying to pay you with wasn't good for anything? FEMA camp guards would be too busy looking after their families too.
It all has to do with what you think has "value". For me, it's family and neighbors. Will things be tough?
Yeah, but we'll eat. And so will the neighbors. Develop your support network before you need it. Oh, and Merry Christmas! Happy Hanukah! Cheery Winter Solstice, (and whatever the hell Kwanzaa means)!
FEMA guards will work for food. FEMA campers will eat each other.
gardens are the other gold
We dethroned some forks...
Damn crawdads made off with my stash...
I hate when that happens.
HELP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
If the Yuan gets backed by gold .gov will insist that her citizens repatriate their gold to Ft. Know as a matter of National Security
Look guys, I don't want to be a dick, but if China "doesn’t allow an ounce of that gold to be exported", how come I can buy Chinese Gold Pandas?
You should read more attentively:
Which country doesn’t allow an ounce of that [sovereign mined] gold to be exported?
Now, regarding the article. I never would trust gold backing. Show me the gold, not paper promises of redemption.
I don't understand what Western Central Bankers are doing. If anything, I would want to withdraw gold from circulation and hide it deeply inside the vaults, so that there isn't an alternative to fiat.
I can buy a Chinese Gold Panda (bullion coin) any day.
Aren't these exported from China? The article states that China does not export gold.
http://www.pandaamerica.com/about_new.asp
"Founded in 1982, Panda America was initially established to become the official United States distributor for the first ever China issued Panda gold bullion coins. The unprecedented success of these coins as both collectable coins and great investments accompanied the growth of our company to its current state as a world-recognized leader in modern numismatics and precious metals."
I don't like the Gold Pandas. They have a higher premium. Every year but 2001 and 2002 have different designs, making identification only possible by experts. And purity is lowerish, three nines nowadays? Come on, China.
And I also would not buy American Gold Eagles. Alloyed coins can be counterfeited now. Stick to the Buffaloes.
Krugerrands.
Im partial to the new Maples with their micro ingraved dies
Britiania - for UK residents, VAT exempt AND capital gains tax exempt. All the rest get hit with capitla gains tax in the UK.
Okay, I get the argument for gold and it makes sense. But wait! Since gold is now king and it's West against East, gold is center stage for economic war between the usual suspects. The US is going to demand any and all gold from its citizens. This is war after all. If you don't you are not only unpatriotic, you're a traitor and going to a maximum security pokey. Yes, yes, I know the Feds in black at your door strangely buy your sunken boat story and wish you a very Merry Christmas and are on their way wondering how there could possibly be so many inept boaters. Dare you use your gold? Wouldn't there be gold stings? Being illegal, wouldn't only outlaws trade in gold? Will you need a shotgun, a 9mm and a Ka-bar to buy food? Will I have to wear get a dragon tattoo, ride a harley, pack grenades and call myself "Snake." If the gold is simply hidden for another day, when exactly? 10 years? 20? 50? And if you die? The economic logic is fine until the Feds step in. And why wouldn't they?
Tell the Feds you sold your gold at a coin shop to pay for your old hookers and blow habits.
Sadly a lot of people are selling now at distressed prices because they can't keep up.
If I had all the money I spent on boats, weed and liquor back I could buy me a senator.
Can you count senators as overpriced hookers?
Perhaps but real hookers may represent a better value.
My hookers and drug dealers take gold straight up!
I would start working on the tattoo now.
consider U gone ;
hehe, here the answers for ya. dam, i go to this link a lot i tall ya.
https://www.youtube.com/watch?v=7ubJp6rmUYM
Will I have to wear get a dragon tattoo, ride a harley, pack grenades and call myself "Snake."?
No, only a Toyata.
The economic logic is fine until the Feds step in.
ya see those in the Toyata, think Oboomer youth.
Will you need a shotgun, a 9mm and a Ka-bar to buy food?
you needed 0.01 grams of gold. hehehehe
First, stop talking about 'growth.' Then you can start talking about gold.
China will have to get out of debt themselves, first.
China can default on debt any time it desires. That's the advantage of controlling your own Central Bank, instead of being run by one...
It occurs to me that there might be a DUAL monetary system when the Dollar is ended -- either in an orderly or disorderly fashion. I don't know how they'd be linked/interfaced, but it would have to be 'friendly' (on the surface).
1. The EU and G7: Fiat-backed SDR. Using BIS and SWIFT
2. The BRICS+EMs: Gold-backed CNY and Energy-backed Ruble. Using BAS* and 'RIFT'**
* Bank of Alternative Settlement (alternative to BIS, that is)
** Russian-made alternative to SWIFT
I agree. West is run by liberal eggheads and liberal eggheads like the SDR. They may also feel using gold would be playing the BRICS game. They would try to establish their own game and let the better system win.
A gold backed currency has power over other currencies only:
1. When all currencies are gold-backed, ie an ALL-IN CLOSED SYSTEM
2. When the creditor countries can settle claims against debtor countries by getting paid in gold instead of fiat, so that the gold flows OUT of the debtor TO the creditors (as happened to USA during Nixon admin), reducing the value of the creditor's fiat relative to the other gold-backed currencies
China & Russia can buy all the gold in existence and it will still not destroy the dollar or make their fiat currencies surge against the dollar. If the gold-hoarding countries are unwilling to give out their gold in payment when demanded, then it does not matter how much gold they have because it becomes irrelvant, and if they do give out their gold, then they have less.
Get the SYSTEMS-view picture ?
In the era of global fiat currencies, what matters is economic and military power, not shiny lead.
Hey, Prober,
China, Russia and other nations in the MidEast, S.America, Eastern Europe aren't buying gold to crash the US dollar system. Austria, France, Belgium, Germany aren't talking about getting their gold back from the US Fed to crash the dollar system. They are amassing gold and reclaiming their gold because 3 billion people on this Earth believe gold is money and that paper is not. Where those three billion are concerned, machts nichts what you or I think or anyone else in N. America think. Want to argue about real money? Argue with them. China and Russia are happy to see the US continue the dollar system, which is crashing on its own. They just want to get out of the way. The same treatment Reagan had for Russia in 1989. Gold is money. Has been forever. It is never going to be irrelevant. It is not irrelevant now, and it will never be irrelevant as long as you live. Nobody cares if you or anyone else keeps your 'money' in paper certificates tying you to counterparties. Three billion people on this planet have never heard of Yellen, Bernanke or the Fed, don't know a T-Bill from a duck's bill and could care less. Go talk to them.
More like six billion know that paper is for assholes.
The USA political regime will continue to decline and rot and eventually be overthrown, the dollar with it, but not for many decades. These regimes endure far longer than those who suffer under them and hate them are willing to objectively understand. All of you buying gold thinking that the dollar will collapse and gold will become official currency will die of old age with that hope unfulfilled.
I wish that the regime would die quickly too, but shit in one hand and wish in the other and see which gets full first :-)
The ONLY thing that is money is what the ruling regime, with all of its apparatus of power, eg FED, IRS, numerous police forces, etc, allow to be money. The regime, with its currency, will end only when the oppressed get the balls to overthrow it, which is generations out in the future.
I have some Fiat that I made myself, surely you will trade me your shiny stuff for it. After all my fiat is the same as all the others.
I own zero shiny lead, would never buy any. My money is invested in real stuff, including income-earning businesses.If I did have any shiny lead, I would gladly sell it - but only for widely accepted currency, which I would then invest in real stuff.
Invest locally, put savings in physical gold and silver, deal in cash as much as possible to avoid paying taxes, starve the beast. How's that for "diversification"? Fuck the establishment.
Yellen dolars to Physical gold takes it out of bankster's hands.
Look how much people are willing to pay for silver and copper bars.
http://www.govdeals.com/index.cfm?fa=Main.Item&itemID=9445&acctID=4703
All chinese and russia for that matter, have to do is verify that they have say, 10% of their yuan backed by gold and we are toast. Japan is sushi. They have 6 to 1 debt to equity and we have 3-1...am I right or am I right?
"Yes, it's possible for a vapor-backed ruble to lose 12% against the dollar in a single trading day."
Yes all those billions of barrels of Russian crude oil are hard to discount.
And trillions of cubic feet of natural gas.
And quadrillions of board feet of timber.
Against some american paper?
Who is backed by vapour? Or should I ask who is backed by hope?
Mr. Market says it's the ruble, Bob.
Mr. Market is G.Soros, Rothschild, TBTF Banks manipulating every resources and your perception, Slave!
check his history, always posting MSM crap
Going back to a gold standard is not even possible anymore, if the PTB did that gold would go to "infinity" in value. And anybody holding any ounce of gold would be instant billionaires. And if i was to goto the bank and exchange my dollars it would be in atomic weight instead of ounces.
PTB wanted total control of $so they started printing it and confiscated the OTHER $ "gold" from the people back in the day.
The problem with this sort of fantasy is that, at any time, on a whim, with the transparency of a meter thick concrete wall, for its own political purposes, the Chinese leadership could turn around and f$uck you and remove a peg to gold or anything else. Sure, US politics is a heaping pile of dung, but it smells like a spring rose compared to Chinese politics. Just ask Zhou Yongkang and pretty much his entire family out to second cousins.
In part this is why my handle is bankonzhonguo - bank on china.
While the political culture of China is one fraught in feudal wasteful avarice, the day I began to see, hear and feel elite MBAs bemoan the "failings" of the West and admire Chinese fascism without ever setting their foot there to even ink (never mind build) something I said put a fork in liberal democracy. The price of such nearsighted stat-ism for a few bucks is abolishing the human spirit.
One need only understand that China had peasant uprisings and revolutions (recent "communist" c1912 - c1997) longer than America has been a republic.
The ebb and flow of history is nothing more than the morning tide for a culture over 4700 years old spawned by the breath of a dragon.
Sure there is wild corruption, comical disorganization, feudal games and political factionalism.
Do you see anything different of calming out of the Fed, the banks or Washington?
But these guys have an axe to grind. There is payback for a spiritual humiliation initiated by the Opium Wars and more.
The West made a huge strategic mistake by playing "engagement" for a few dollars more. From the man in the street, the floating population, the junior officers in every war college and CPS wonk-a-nauts that entire country cannot simply believe the manifest stupidity of Amerika outsourcing its entire industrial and basic sciences base to any foreign power let alone China.
There won't be any official plan announced. It is already begun with all the bilateral trade deals years ago. China will advance its own IMF, its own SWIFT, its own dictates for trade.
They will allow the US to continue its steady military build up because it knows for a few dollars and some strategic sucky-suck it can buy decades and billions of basic sciences and advanced industry for nothing and have it deployed within years. Thankfully the Pacific separates the US from China, but from China's POV, they don't have to fight, just buy select parts of Amerika for pennies after the yuan is backed by gold and the dollar goes the way of Weimar Marks.
When your rubber dog shit at Wal-mart has to bought in ounces rather than greenbacks, confidence will be gone, jobs will be gone, the banks will want their 6+% and China UST holdings will be a symbolic $1 trillion on a $30 trillion debt bomb.
The only fire break is massive destabilizing inflation in China. Good luck with that GS.
And here's the "Quiz" that is Dispositive of ALL:
How Much Gold Will China Need to Back Up its OWN $ 25 Trillion + FIAT ?
You See, End of Discussion......
I'll just add which People is least likely to pour into the streets no matter how stripped of their wealth they become?
Very easy much less then we world-wide do have gold. It's just a question of the price in Fiat-Currencies for Gold and as you can see in Russia it's easy to have an increase in price of over 50 % in no time. If China would be intelligent enouhg, they would have bought as much gold as they could and they would be clever to trade with gold backed prices. But I bet it's way too tempting to install a another world-wide fiat-currency.
The euro debt market is arond 13 trillions. By any means that is the second largest debt market world-wide. So if China just had a problem with parking their trillions. They could have choosen EUR based debt without problems. Maybe they are more intelligent as that an do change Fiat-(USD/EUR) against something real in the diverse countries. It's better for them in the end to have bases in the US and EU, then the funny paper money of the states. Or the catastrophes bound to happen...
China is bust, make no money buy no bonds
"""The US has long enjoyed what Giscard d’Estaing called the “exorbitant privilege” of issuing a currency that happens to be the global reserve currency."""
Looks like most countries realize the Mistake in calling the USD the "Global Reserve Currency", since Global Reserve stood for being the holder of the Reserves of Gold Globally, and agreeing to use the USD, "As Good As Gold" or Gold in Payment in Annual Balance Of Trade SETTLEMENT.
That ended in 1971 when the US unilaterally reneged on its promise of the BRETTON WOODS AGREEMENT. It was this Agreement that made the USD "As Good As Gold"
This was obvious in 1965 [ Noted by France's DeGaulle] when the US ceased its Silver Coinage, though making them appear/look exactly the same as the silver coins that ceased with the 1964's.<<< sneaky clever
So, with "Global Reserve" referring to the Global Reserve of Gold (Gold from other Nations given to the US to be the Custodial Holder of), the USD ceased deserving the title of Global Reserve Currency, since it's Not and was not since 1971 ...Got It?
Oh, and that part about """The euro might be involved""", is it a coincidence that Germany, the undisputed Head of the EU, can't get its own Gold back from the US?
So long as the price of gold is controlled by C/B paper there can no gold backed currency.
oh yes, the world needs the largest communist nation to possess the reserve currency - great idea!!!
and yes, the US will just roll over and say, "here you go china, have fun. could you give us something for it in the future please?"
Can you please explain me how come it's possible to buy Chinese coins if the above is true? (I'm not being sarcastic)