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China Chooses Her Weapons

Tyler Durden's picture




 

By Alasdair Macleod of Gold Money

China's recent mini-devaluations had less to do with her mounting economic challenges, and more to do with a statement from the IMF on 4 August, that it was proposing to defer the decision to include the yuan in the SDR until next October

The IMF's excuse was to avoid changes at the calendar year-end and to allow users of the SDR time to "adjust to a potential changed basket composition". It was a poor explanation that was hardly credible, given that SDR users have already had five years to prepare; but the decision confirming the delay was finally released by the IMF in a statement on Wednesday 19th.

One cannot blame China for taking the view that these are delaying tactics designed to keep the yuan out, and if so suspicion falls squarely on the US as instigators. America has most to lose, because if the yuan is accepted in the SDR the dollar's future hegemony will be compromised, and everyone knows it. The final decision as to whether the yuan will be included is not due to be taken until later this year, so China still has time to persuade, by any means at her disposal, all the IMF members to agree to include the yuan in the SDR as originally proposed, even if its inclusion is temporarily deferred.

China was first rejected in this quest in 2010 and since then has worked hard to address the deficiencies raised at that time by the IMF's executive board. That is the background to China's new currency policy and what also looks like becoming frequent updates on her gold reserves. It bears repeating that these moves had little to do with her domestic economic conditions, for the following reasons:

  • To have an economic effect a substantial devaluation would be required. That is not what is happening. Furthermore devaluation as an economic solution is essentially a Keynesian proposal and it is far from clear China's leadership embraces Keynesian economics.
  • Together with Russia through the Shanghai Cooperation Organisation, China is planning an infrastructure revolution encompassing the whole of Asia, which will replicate China's economic development post-1980, but on a grander scale. This is why "those in the know" jumped at the chance of participating in the financing opportunities through the Asian Infrastructure Investment Bank, which will be the principal financing channel.
  • China's strategy in the decades to come is to be the provider of high-end products and services to the whole of the Eurasian continent, evolving from her current status as a low-cost manufacturer for the rest of the world.

China's leaders have a vision, and it is a mistake to think of China solely in the context of a country whose economy is on the wrong end of a credit cycle. This is of course true and is creating enormous problems, but the government plans to reallocate capital resources from legacy industries to future projects. Rightly or wrongly and unlike any western government at this point in a credit cycle, China accepts that a deflating credit bubble is a necessary consequence of a deliberate policy that supports her future plans. She is prepared to live with and manage the fall-out from declining asset valuations and business failures, facilitated by state ownership of the banks.

Instead, to understand why she is changing the yuan-dollar rate we must look at currencies from China's perspective. China is the world's largest manufacturing power by far, and can be said to control global trade pricing as a result. It then becomes obvious that China is not so much devaluing the yuan, but causing a dollar revaluation upwards relative to international trade prices. She is aware that the US economy is in difficulties and that the Fed is worried about the prospect of price deflation, so lower import prices are the last thing the Fed needs. Now China's currency move begins to make sense.

The mini-devaluations were a signal to Washington and the rest of the world that if she so wishes China can dictate the global economic outlook through the foreign exchange markets. China believes, with good reason, that she is more politically and economically robust, and has a better grasp over the actions of her own citizens, than the welfare economies of the west in the event of an economic downturn. Therefore, she is pursuing her foreign exchange policy from a position of strength. And the increments that will now be added to gold reserves month by month are a signal that China believes she can destabilise the dollar through her control of the physical gold market, because it gently reminds us of an unanswered question always ducked by the US Treasury: what evidence is there of the state of the US's gold reserves?

China would probably live with a deferral of her SDR membership for another year, if there is a definite decision in October to include her currency in the SDR basket. That being the case, China must be tempted to increase pressure on all IMF members ahead of the October meeting. The strategy therefore changes from less passivity to more aggression over both foreign exchange rates and gold ownership over the next eight weeks. We can expect China to tighten the screw if necessary.

The stakes are high, and China's devaluation of only a few per cent has caused enough chaos in capital markets for now. But if the eventual answer is that the yuan will not be allowed to join the SDR basket, it will be in China's interest to increase the pace of development of the new BRICS bank instead with its own version of an SDR, selling dollar reserves and underlying Treasuries to fund it. The threat that China will turn her back on the post-war financial system and the IMF would also undermine the credibility of that institution more rapidly perhaps than the dollar's hegemony if the yuan was accepted. And if a US-controlled IMF loses its credibility, even America's allies will desert her, just as they did to join the Asian Infrastructure Investment Bank a few months ago.

It was always going to be the US that faced a predicament from China's growing economic power. She has chosen to bluff it out instead of gracefully accepting the winds of change, as Britain did over her empire sixty years ago. Change in the economic pecking-order is happening again whether we like it or not and China will have her way.

* * *

And, as a reminder from 2013, here again is the "US vs China Currency War For Dummies"

 

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Sat, 08/22/2015 - 19:34 | 6456698 kaiserhoff
kaiserhoff's picture

I'm glad China doesn't mind having HER ass blown up every week.

Frankly, I would find that rather distracting.

Sat, 08/22/2015 - 19:48 | 6456733 J S Bach
J S Bach's picture

"...what evidence is there of the state of the US's gold reserves?"

The fact that they won't allow an audit is simple proof that the gold is not all there.  It's probably been gone for decades - having accelerated under Clinton.

Sat, 08/22/2015 - 19:51 | 6456741 realmoney2015
realmoney2015's picture

Come on. You can trust them. Just take their word for it. When have banks and governments ever shown that they aren't trustworthy. No need for transparency.

Sat, 08/22/2015 - 19:59 | 6456748 Handful of Dust
Handful of Dust's picture

"If you can't trust your Banker, who can you trust?"

Sat, 08/22/2015 - 20:13 | 6456780 max2205
max2205's picture

We gave them all our jobs, what moar do they want?

Sat, 08/22/2015 - 22:05 | 6456965 jeff montanye
jeff montanye's picture

regarding u.s. gold, imo the reserves started leaving when the audits stopped, i.e. late fifties.  considerable acceleration from 1965 or so to 1973.  but 2011 to now is probably the fastest rate of decline.  will we ever know the fine detail?

Sat, 08/22/2015 - 22:12 | 6456978 TeamDepends
TeamDepends's picture

Sheeeit, it was gone the day after Nixon announced we were jumping on the fiat rollercoaster.

Sat, 08/22/2015 - 22:13 | 6456980 Four chan
Four chan's picture

gold confiscation from we the people started when the tribe took over the honest money system in 1915.

Sun, 08/23/2015 - 02:16 | 6457228 reTARD
reTARD's picture

A Joo? ;-)

Sat, 08/22/2015 - 20:11 | 6456771 nmewn
nmewn's picture

Which brings up (being the counterintuitive jerk I am) an interesting point, when was the last independent audit of the Communist Party's gold holdings?

I mean, they say its there, everyone assumes its there...but is it?

Sat, 08/22/2015 - 21:26 | 6456904 Apostate2
Apostate2's picture

The first rule of gold is to not talk about the gold.

(I think I read that somewhere...)

Sat, 08/22/2015 - 22:06 | 6456969 jeff montanye
jeff montanye's picture

the east has more gold than they admit; the west less than they claim.

Sat, 08/22/2015 - 23:12 | 6457054 nmewn
nmewn's picture

You will forgive me for being cynical (or cautious) enough to evaluate things on the merits, not on lack of admissions or forthright claims.

I'm kinda weird that way ;-)

Sat, 08/22/2015 - 23:31 | 6457070 BandGap
BandGap's picture

Look at it from the other side. What have we seen of US gold purchases? It appears as if China is announcing the fact that it is buying gold and this can be substantiated. However, I have not seen any evidence that the United States is purchasing gold.

Sat, 08/22/2015 - 23:44 | 6457095 nmewn
nmewn's picture

Its two sides of the same coin to me.

It "appears" that by China "announcing" it is buying (or bought) whatever amounts of gold bullion that the claim can be substantiated...but has it? All it (or she if one prefers...lol) has to do is open the vaults to an independent audit.

Right? ;-)

Sun, 08/23/2015 - 02:08 | 6457222 Sanity Bear
Sanity Bear's picture

Just out of curiousity, is there any chemical that you can mix with gold at very high temperatures that would produce white foam?

Sun, 08/23/2015 - 07:11 | 6457366 Urban Redneck
Urban Redneck's picture

Aqua Regia, but the foam would come from reactions of the acids with impurities (non-noble metals or dirty Chinese water could work).  

Sun, 08/23/2015 - 09:02 | 6457465 Grimaldus
Grimaldus's picture

Maybe so but when I mix (50/50) Nitric acid with Hydrochloric acid to make Aqua Regia the shit turns brown and gets darker for awhile while it reacts. Mine gives off a brown gas and foam when etching ceramic or refractory metals clean of contamination. But I am not etching any gold so I really could not say what happens there....

 

When making up a fresh batch of Aqua Regia never make the mistake of mixing Hydrofluoric (HF) acid instead of Hydrochloric (HCL) acid with the Nitric. Molybdenum parts immersed in it will disappear immediately in a puff of brown gas. Very aggressive etch. DOH!

 

 

 

Grimaldus

Sun, 08/23/2015 - 10:09 | 6457574 Fukushima Fricassee
Fukushima Fricassee's picture

That's like asking Obama to be filmed on the golf course when in fact he is in his room sucking dicks.

Sun, 08/23/2015 - 11:38 | 6457737 lu86cky
lu86cky's picture

And the follow up question should be - who in China actually has the gold?

 

Does any sane observer actually think that "China's gold" isn't being diverted into the personal holdings of high ranking communist party officials?

 

 

Sun, 08/23/2015 - 05:07 | 6457307 silvermail
silvermail's picture

08/22/2015 - 12:56
The Bank of Russia are increasing the share of gold in the international reserves of the country.

In July, the Central Bank has bought about 12 tons of the precious metal, and since the beginning of the year - almost 81 ton. This is 18% more than in January-July last year. From the beginning, the share of gold in the composition of foreign exchange reserves increased by 6.7% and in the last 12 months - even more significantly.
http://rusnext.ru/news/1440231667

Sun, 08/23/2015 - 08:19 | 6457419 nmewn
nmewn's picture

Well, like I say, it's one thing to "announce" the exchange of a nations paper (any nations paper) for gold. It's quite another to not announce it's transfer elsewhere and not bothering to adjust the public ledger either.

Zeee humble accountants & guards have seen this all before and accept it unquestioningly as normal operations due to their patriotism, loyalty and love of the motherland, besides, the documents were all in order and clearly stamped Top Secret so they followed normal protocol, as issued from on high by their superiors.

I mean, if you can't trust the President or the PM or their Cabinet or the Duma/Politburo/Congress officialdom party members, who can you really trust?

Its a very high honor ya know ;-)

Sun, 08/23/2015 - 09:16 | 6457481 MsCreant
MsCreant's picture

You are right to question something that refers to itself as a Govern-ment.

You are also correct to challenge a system that is "centrally planned." Like ours.

Good to advocate for the devil's position. 

Govern: synonyms- rule, preside over, reign over, control, be in charge of, command, lead, dominate; run, head, administer, manage, regulate, oversee, supervise; informal: in the driver's seat of, "he governs the province."

Sun, 08/23/2015 - 09:32 | 6457507 nmewn
nmewn's picture

You noticed the betrayal of trust in my little synopsis did you?...lol.

Everyone did their job correctly, everyone followed procedure, all checks & balances were completed with no breaks in the chain of command or custody, yes the very pinnacle of efficiency, no one can be accused of disloyalty or not being a "Team Player".

Accept the one(s) who issued the order to move the gold of course ;-)

Sat, 08/22/2015 - 23:39 | 6457086 TeamDepends
TeamDepends's picture

Comrade, COMRADE PLIS, you must understand! If party boss say in Stalingrad warehouse sits Everest-sized nugget, then Everest-sized nugget exist in Stalingrad warehouse. Is not difficult comrade, are you inflamed with vodka?

Sun, 08/23/2015 - 00:01 | 6457115 nmewn
nmewn's picture

Da, veee do dis for de Peoples, not for ouwa personal profit!

Greed is universal, from the lowliest pig farmer to the highest Party Boss in China or as the case may be, from the dickhead banker/solar-health insurance-oil-automotive CEO/ funding the Party Boss.

Tammany Hall or the Kremlin or the National Peoples Congress of China! (lol...give me a fucking break)...or..."our" very own Congress makes absolutely no difference.

They're fucking thieves disguised as "public servants".

Sun, 08/23/2015 - 00:44 | 6457168 TeamDepends
TeamDepends's picture

Most people are scared, not greedy. Most want to, at least, get along with their neighbors. The cartel wants us at each others' throats. Which is why, and we will (yawn) take a beating for this, they want world communism. Or, if you prefer, neo-fuedalism. The last thing they want is a bunch of Constitutional Republics engaged in a friendly competition to perfect life on earth.

Sun, 08/23/2015 - 11:39 | 6457740 Ass Burger
Ass Burger's picture

"Appear weak when you are strong; appear strong when you are weak." I think Abraham Lincoln said that. --Bob Dylan

Sat, 08/22/2015 - 22:14 | 6456981 Mr. Magoo
Mr. Magoo's picture

Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent's fate.

Sun Tzu

Sat, 08/22/2015 - 22:18 | 6456988 TeamDepends
TeamDepends's picture

Communist gold exist in blood and sweat of worker, comrade. Now purge dangerous thoughts from head....

Sun, 08/23/2015 - 12:23 | 6457834 YHC-FTSE
YHC-FTSE's picture

Excellent point about independent verification of China's gold holdings. Not only do they have GS minions like everywhere else, but for the last few years the local govt officials haven't exactly been paragons of virtue running off to the West with their suitcases of NPL money. You'd think the Chinese would send their secret service to get them back but they've been surprisingly lax about it all. There's no reason why that could not have happened with their gold as well.

Kudos on sharing your contrarian view nmewn, while everyone else on the planet speculates about China's 16k-30k tonnes of gold holdings.

Sun, 08/23/2015 - 16:11 | 6458664 TheReplacement
TheReplacement's picture

They already brought up the lack of transparency of US gold.  You are being redundant.

Sat, 08/22/2015 - 20:05 | 6456754 stant
stant's picture

Well there's no tanks at ft Knox but the ones at the Patton museum. All packed up and moved ft Benning or 29 palms. Tank schools gone to .As for the depository last time I drove by it needed preasure washed and a weed eater

Sun, 08/23/2015 - 06:36 | 6457339 OldPhart
OldPhart's picture

There's still a tank school at Fort Irwin.  Thier manuvoeurs are pretty impressive as you drive on the 15 near Barstow.  And getting around I-15 traffic on Yermo Road has complications.  Those convoys have steel shit falling off them as they go down the road.  Kind of interesting to pass a couple tanks, fall into formation, pass a couple tanks, fall into formation...etc.  You know you're at the head of the parade when you pass that one hummer with a flag.  That's when I start slowing down.

By the time we get to Peggy Sue's we're doing 30.

 

http://www.tripadvisor.com/Restaurant_Review-g33295-d1116154-Reviews-Peggy_Sue_s_50_s_Diner-Yermo_California.html

Sun, 08/23/2015 - 09:25 | 6457492 post turtle saver
post turtle saver's picture

https://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm

I'm just going to keep posting this until you lunatics get it... this shit is being tracked down to the thousandth of a troy ounce but every goldbug mouthbreather here is always "audit the gold reserves hurr durr"... you guys are confusing "audit the Fed" which of course never happens with "audit the gold reserves", which fucking happens ALL THE TIME...

we've got over 8k metric tons of the stuff here and there which is worth about around $320 billion USD as of Sept. 2014... period, end of story...

then we look at the CHINESE, the models of robust accounting practices and transparency (ha!)... we somehow are supposed to believe they have oodles and gobs of gold yet there's *** no way to tell at all, not even from their own government ***... and if you're looking for proof that those sunsabitchez will never tell you just exactly how much, observe how well their efforts to become a basket currency in the IMF XDR structure are coming along... the ChiComs run from a real audit like cockroaches run from light, that much is certain...

US gov isn't perfect by any means but if you're asking me from an audit perspective who do I trust more, the US or China, that answer is pretty damn easy and it ain't China...

Sun, 08/23/2015 - 10:13 | 6457582 roddy6667
roddy6667's picture

Soooo, there is gold in Ft. Knox. BFD. Whose gold is it? Was it hypothecated (used as collateral) and now belongs to somebody else until the loan is paid back?

Sun, 08/23/2015 - 09:39 | 6457521 LoneStarHog
LoneStarHog's picture

The refusal to allow an audit of all gold - both domestic and stored for foreigners - is analogous to the phantom planes that hit the Pentagon and Shanksville.  

If there was gold the audit would be a public spectacle.

If claim of two planes was real the FBI would not have confiscated all CCTV recordings within hours of the so-called Pentagon attack.  No planes to show, so no recordings allowed.  In fact, CNN did a live report from the Pentagon just after the "crash" and stated live on air that there was NO plane wreckage- I watched it LIVE.  That was never aired, again.

Gold...planes...so many phantoms.

Sat, 08/22/2015 - 19:48 | 6456734 gmrpeabody
gmrpeabody's picture

The gold is in Fort Knox alright..., I saw it in a James Bond movie.

Oh..., wait.

Sat, 08/22/2015 - 20:01 | 6456751 knukles
knukles's picture

You can have the ingot, I got dibs on the gold plated chick

Sat, 08/22/2015 - 20:20 | 6456794 kaiserhoff
kaiserhoff's picture

Never understood why that is so sexy,

  and don't think I want to know;)

Sat, 08/22/2015 - 20:54 | 6456854 Ginsengbull
Ginsengbull's picture

Chicks generally are...

Sat, 08/22/2015 - 21:10 | 6456737 Ham-bone
Ham-bone's picture

Very interesting but I don't think China is coming into this in a position of strength...these are two fatally wounded animals squaring off over the remaining scraps but neither aware they are two sides of the same coin, both already terminal.  Neither will come out of this a winner...both lack balance and are easily toppled due to this...they are locked into opposite sides of a no-win scenario and I'll be amazed if this doesn't end in war

World

http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-1-advanced.html

http://econimica.blogspot.com/2015/08/population-growth-will-never-be-fix-to.html

http://econimica.blogspot.com/2015/08/depression-does-not-come-close-to.html

China and BRICS

http://econimica.blogspot.com/2015/08/chinas-collapse-is-last-straw-of-global.html

America and OECD

http://econimica.blogspot.com/2015/06/0ne-simple-chart-explains-great.html

http://econimica.blogspot.com/2015/08/the-imminent-demographic-collapse.html



Sat, 08/22/2015 - 22:44 | 6457019 daveO
daveO's picture

A Japanese proxy war to topple China is being scheduled.

http://www.nytimes.com/2015/07/17/world/asia/japans-lower-house-passes-b...

"But the legislation is supported by the United States, Japan’s wartime foe turned ally and protector, which has welcomed a larger role for Tokyo in regional security as a counterweight to a more assertive China."

Sat, 08/22/2015 - 20:20 | 6456798 Uber Vandal
Uber Vandal's picture

My friend asked me once how my bear ETFs are working out for me, and I said I was being anally raped every day, and I thought I was starting to get used to it.

He almost spit his drink out, for I said that nonchalantly, in a calm voice, and didn't even crack a smile.

I went on to say, I can take a lot more pain, and so long as I remain solvent, and once this cracks, the bleeding, pain, tears, everything will be worth it.

Perhaps.

Perhaps that is the same game they are playing.

 

Sat, 08/22/2015 - 20:45 | 6456837 indygo55
indygo55's picture

It only works if the markets are open and you have someone to convert your ETFs into something other than the likely worthless computer digits on a screen that may or may not be working. 

Sun, 08/23/2015 - 01:57 | 6457215 bid the soldier...
bid the soldiers shoot's picture

The Chinese are not into instant 'tit for tat.'

If you stick around, you'll see it.

Sun, 08/23/2015 - 03:05 | 6457253 mt paul
mt paul's picture

thousand year revenge...

Sun, 08/23/2015 - 08:02 | 6457410 SilverDOG
SilverDOG's picture

 kaiserhoff,

 

 

Instead, you would rather be distracted by US performing all the ass blowing up ?

HHmmm... short term problem(China) or perpetual problems(USA).

Unless of course, you accept US ass blowing as a normality.

 

Sat, 08/22/2015 - 19:36 | 6456704 kchrisc
kchrisc's picture

Zion went too far and too long in their plunder of the west, especially of the American country. The east ended up with title to much of the west, leaving Zion trying to manage their exit from the picked-clean American country, while quickly taking up new digs in Europe.

Zion is a scheme, not an ethnicity.

Sat, 08/22/2015 - 19:45 | 6456725 serotonindumptruck
serotonindumptruck's picture

The Tribe has been unable to sink their claws into the BRICS monetary union, and they are extremely frustrated by this fact. This is clearly why the IMF has not allowed China any Special Drawing Rights in their diabolical scheme for a NWO.

WWIII is definitely "on the table".

Sat, 08/22/2015 - 19:50 | 6456739 Winston Churchill
Winston Churchill's picture

Don't watch the news much ?

WWIII started two days after the final olympic ceremony at Sochi.

Nobody declares war anymore, so you need to pay close attention.

Sat, 08/22/2015 - 20:04 | 6456760 Handful of Dust
Handful of Dust's picture

I have to agree. China will continue to grow stronger for many reasons. While Merikans watch the latest Kim and Caitlyn fashions, stare in awe at Whoopie on TV in the morning, eat more FF in a day then all the people in China eat in a year, and update their FB every five minutes, the Chinese will continue to buiild expand and surplant SWIFT, the IMF, the Dolla, and so on.

 

We see it happening before our eyes.

Sat, 08/22/2015 - 20:55 | 6456857 Squid-puppets a...
Squid-puppets a-go-go's picture

yer, 'yankee nuke our city?... thats ok, we got spare ones already built'

Sun, 08/23/2015 - 06:43 | 6457347 OldPhart
OldPhart's picture

What'll happen is we get reports of multiple cities being nuked.  Everyone of them ghost cities.  We atone for 'billions' while the actual death will be between zero and tens.  China nukes  our major cities in reprisal.  US Globalists annouce success because populatiojn was reduced by the billions.  The entire world is cured of americanism, and we can now remake 'the world' in the US by pushing everyone remaining into the surviviing cities.

Meanwhile, the war goes on.

Sun, 08/23/2015 - 12:19 | 6457829 worbsid
worbsid's picture

It will only take a few very high altitude nuclear bursts to get rid of 90 percent of the people in a year or so and not ruin the land.  WWIII will be completely different than any other.

Sat, 08/22/2015 - 19:54 | 6456744 Motasaurus
Motasaurus's picture

As if the plunder of the Untited States and the enslavement of her people wasn't the plan all along.
Make no mistake, London is Zion is London, and you are paying for your forefathers decision to ditch London's financial control. Everything that happened in the US after independence has been framed by the attempt of London banking to reclaim her colonies.

Sat, 08/22/2015 - 20:24 | 6456804 THE 4th Quadrant
THE 4th Quadrant's picture

I see those MSM outlets praising the royals, ohhhh look at the cute babies, kate's baby basket, the wonderful queen....

Oh really?

IRA are terrorists? Oh you Americans, you will learn.

Sun, 08/23/2015 - 09:30 | 6457502 Motasaurus
Motasaurus's picture

They will learn, but it will be the hard way. They will learn to beg for London to save them. The former colonies will be brought so low by "their own" systems that they will beg London to take them back - never knowing that it was London who brought them low all along.

Sat, 08/22/2015 - 19:38 | 6456706 Dsyno
Dsyno's picture

Best cartoon ever. No need to read the article.

Sat, 08/22/2015 - 19:50 | 6456738 Antifaschistische
Antifaschistische's picture

Let's compare the only weapon that really really matters.

# of humans willing to work their ass off 6 days a week..

China: 1,000,000,000

US:    < 100,000,000 (6 days, actually, probably < 10,000,000 )

Sat, 08/22/2015 - 20:33 | 6456817 Bluntly Put
Bluntly Put's picture

Robots work for the cost of electricity and maintenance AND they don't form unions or complain about work hours or work conditions.

Sat, 08/22/2015 - 21:19 | 6456823 Master Toms Dog
Master Toms Dog's picture

Americans work just hard enough to afford simple "luxuries" like cars, TV, and cat food, thinking this makes them middle-class.  I'm pro-robot mostly because I hate cats.

EDIT:  Junkers, my apologies for alluding to consumerism on an economics forum.  My bad.

#catsaresmugretards

Sun, 08/23/2015 - 09:30 | 6457503 MsCreant
MsCreant's picture

I am a cat lover. However, I don't know why you are being junked. Of course a dog would say this if he or she got online. Duh!

Sun, 08/23/2015 - 13:02 | 6457888 Master Toms Dog
Master Toms Dog's picture

(LOL)  Perhaps I left out indifferent children.

Sat, 08/22/2015 - 21:59 | 6456955 AGuy
AGuy's picture

"China: 1,000,000,000"

China labors are being replaced by Robots. A lot of Chinese factories have been switching to automated systems, Lots of factory workers are getting canned this year. The issue is that after leaving the rural farm to go work in factories, they can't go back, after finding their farm has been paved over with empty cities.

 

 

 

Sun, 08/23/2015 - 01:53 | 6457209 bid the soldier...
bid the soldiers shoot's picture

"Beautiful Dreamer, wake unto reality..."

Sat, 08/22/2015 - 20:41 | 6456801 Seeing Red
Seeing Red's picture

Agreed, but Peak Cartoon Efficiency is a lagging indicator of a market top.

{show me where the science of economics says otherwise}

Sat, 08/22/2015 - 20:50 | 6456847 Master Toms Dog
Master Toms Dog's picture

Pretty abstract -- so probably correct.  Did you study at the same University as Paul Krugman?

Sat, 08/22/2015 - 20:52 | 6456851 Seeing Red
Seeing Red's picture

He signed my yearbook.

Sat, 08/22/2015 - 19:45 | 6456714 The Next Millen...
The Next Millennium is Now's picture

"because it gently reminds us of an unanswered question always ducked by the US Treasury: what evidence is there of the state of the US's gold reserves?"

We have gold reserves??? hahahahahaha!

Sat, 08/22/2015 - 19:44 | 6456717 Jack Burton
Jack Burton's picture

"the welfare economies of the west"

This is a great point. China is watching the growing millions of migrants starting to move towards the EU. Breaking down borders and breaking in. The EU is a total Welfare State! Migrants are running to where teh Welfare is found. This is just a fact! Why is the UK and Sweden the two most sought after destination countries for illegal migrants from all over the world?

YOU KNOW WHY! We all do. Those two have the most complete and total lifetime welfare for everyone coming in. The UK offers a free life in a nice apartment, with free health care for life, with handouts of money every week. Never can be kicked out, or made to work.

China will do nothing but laugh at the hapless EU and the tens of millions of migrants racing to get in and get to the top of the welfare roles.

All this is the plain truth, and the EU knows it. They face a crisis like no other. Half of the poverty stricken world is planning to move to London. And this is not a lie either!

Sat, 08/22/2015 - 19:48 | 6456732 Stuck on Zero
Stuck on Zero's picture

Welfare in the U.S., Britain, Scandinavia, etc. far exceeds the value of a top notch income in the companies the refugees are coming from.

Sat, 08/22/2015 - 20:39 | 6456797 Seeing Red
Seeing Red's picture

Clearly we need to export more jobs and help those "companies" out.

Sat, 08/22/2015 - 23:39 | 6457082 Never One Roach
Never One Roach's picture

It's kinda funny the way they label China as 'comunist' when the USA, Sweden and UK are far more extremes of communism with far-reaching welfare and free chit. In fact, that's Hitlery's main platform, "Moar Free Chit for Everyone!"

 

When I see those crowds on the Greek-Macedonian border or in Kos or Malta, I feel kinda lucky we only have Mesican to worry about.

Sun, 08/23/2015 - 04:15 | 6457284 K_BX
K_BX's picture

I think it is good - countries will have to rethink the wellfare systems. Btw. For Europe in the long run that means cheap labor...

Sat, 08/22/2015 - 19:52 | 6456724 ThrowAwayYourTV
ThrowAwayYourTV's picture

China and the U.S will meet Head On. Time to squish these bugs.

https://youtu.be/pTMpyjrUR0M

 

Sat, 08/22/2015 - 19:47 | 6456729 CHC
CHC's picture

If nothing else, one can never say the Chinese are not a patient people.  What's the old adage - Patience is a virtue.  Completely unlike the United States where patience is abhored and hubris and arrogance reign.

Sun, 08/23/2015 - 09:38 | 6457518 Grimaldus
Grimaldus's picture

What a crock of shit. Apparently you have never been run over waiting in a que by the "arrogant chinese bastard". The rudest, uncouth mannerless assholes I have ever met. I encountered into far too many of them during my trips to HK, glad I never made it to the mainland. Yeah the chinese are so patient it reflects in the very high quality of their manufactured goods. /sarc

 

 

 

 

Grimaldus

Sat, 08/22/2015 - 19:51 | 6456740 Big Corked Boots
Big Corked Boots's picture

My gold is right where I left it. *no worries*

Sat, 08/22/2015 - 20:04 | 6456747 Renfield
Renfield's picture

Good article, but only hints at the main issue, that China has now made clear that they will not be supporting the USD any further.

The best take I have heard on the yuan devaluation so far is Peter Schiff's:

https://www.youtube.com/watch?v=kewkIwIbLAw

Points out that:

1) What stopped the USD fall after the 2008-09 Panic was the Chinese supporting it, via the yuan peg;

2) This de-peg is a move to begin valuing the yuan more fairly (relative to the currencies of the rest of the world, who this way will be encouraged to use it more in trade); and

3) The devaluations are not big in percentage terms, but very big in impact. (Other currencies have been devalued far, far more than these little steps by the Chinese.)

Schiff's case is that the reason the devals are causing so much outcry is b/c this is where China stops implicitly supporting the USD "world reserve". USD currency is now on its own. I agree with this take.

Yuan will rise up again later, supported by both trade and PMs. So I'm seeing these and further devaluations as a time period to do as the Chinese are, and buy some - especially with USD, which can get you a lot of it while it is cheap. Buy low, sell high.

Sat, 08/22/2015 - 20:59 | 6456863 Squid-puppets a...
Squid-puppets a-go-go's picture

meritorious theory

Sat, 08/22/2015 - 22:54 | 6457030 daveO
daveO's picture

That forces the FED to hike. 

Sun, 08/23/2015 - 02:22 | 6457231 reTARD
reTARD's picture

Love Schiff. Peter Schiff will be right yet again.

Sat, 08/22/2015 - 20:02 | 6456753 Gab Timov
Gab Timov's picture

arr matey...she this and she that. how romantical.

 

yeah China's real strong right now, lol

their model of parasitizing away industry from everyone else has left them without customers.. To be fair, they had help from the big banks in those countries so they couldn't have done it on their own. 

Sat, 08/22/2015 - 20:16 | 6456785 serotonindumptruck
serotonindumptruck's picture

China has the manpower and the work ethic that the West is sorely lacking. Their recent alliance with Russia makes them especially formidable, both in a military and economic sense.

We have always been at war with East Asia.

Sat, 08/22/2015 - 22:01 | 6456957 AGuy
AGuy's picture

"China has the manpower and the work ethic that the West is sorely lacking."

Perhaps in the volume of labor, but not in the quality of produced products. China quality is absolutely dismal. Also China is now replaceing workers with robots.

 

 

Sat, 08/22/2015 - 23:24 | 6457065 l8apex
l8apex's picture

And what do you think the quality of the robot's output will be?

Sun, 08/23/2015 - 07:18 | 6457374 Rollo57
Rollo57's picture

Everyone's replacing workers with robots!

When have Corporations been interested in quality, it's always the money!

This is why we are seeing their One World Government being implemented. World dominance by the Corporations, under the guise of TPP-TTIP-CETA-TTFA and TiSA as the rules, which doesn't include any BRICS nations, as these will be forced in by war, price or conventional!

Sat, 08/22/2015 - 20:11 | 6456767 Son of Captain Nemo
Son of Captain Nemo's picture

SDR?...

Who the fuck cares?... After two major explosions in it's strategic commerce within the past two weeks foreign dumping through short sales in it's markets I'd say that the least of China's worries is SDR, membership in the Anglo/Euro club next October...

At least we know with this announcement of the 1 year penalty to China's admittance into the "club" that those shipping port detonations came from the same crew in D.C./London/Tel Aviv and Brussels!!!

Won't need it when the IMF is replaced by the SCO/BRICS in that timeframe!

 

Sat, 08/22/2015 - 22:38 | 6457011 Hyjinx
Hyjinx's picture

The BRICS are currently in a BRIC shithouse so I don't think that will happen anytime soon.

Sun, 08/23/2015 - 10:04 | 6457564 Son of Captain Nemo
Son of Captain Nemo's picture

The BRICS are currently in a BRIC shithouse so I don't think that will happen anytime soon.

Which is why the Anglo-American bank has to resort to such level(s) of pretexts of subterfuge and outright war to get what they want.  When you have to move to those lengths you lose the battles and the war with any partners who realize they're only getting screwed when you are the only one that calls the shots!

Just as in Saddam Hussein's attempt to sell his oil in 2001 in currency other than the Petrodollar which the Europeans were more than willing to sign onto  shortly before being annihilated by the Anglo-American contingent that moment was a turning point in 2003 and it's only gotten worse since the U.S. is provoking war on Russia's border in Ukraine and these nice little stunts with China's industrial ports.

My point.

Sat, 08/22/2015 - 20:11 | 6456770 JailBanksters
JailBanksters's picture

Interesting thought

Nobody has ever asked the FED to show any proof any US Gold physically exists. Politicians have asked can they see the Gold, and they are unpolitely told, NO, except 60 years ago. But even then it was the Magicians that picked out the Closet to view.

Even 60 years ago they doubted the Gold was there, which is why the Magicians put on a show. 60 years later there's an even bugger doubt the Gold is there.

 

Sat, 08/22/2015 - 23:24 | 6457047 daveO
daveO's picture

http://www.huffingtonpost.com/charles-kolb/august-15-1971_b_4284327.html

Friday the 13th of August, 71. 

https://en.wikipedia.org/wiki/Nixon_Shock#Event

France picked up 170 tons just before the Nixon shock.

Germany and the Dutch are getting some. 

http://www.bloomberg.com/news/features/2015-02-05/germany-s-gold-repatri...

...some bars in New York had to be melted and recast. To Boehringer, the recasting was the ultimate red flag. It meant any trace of original serial numbers had been wiped out. “Their untouched existence since the 1960s is no longer provable,” Boehringer says.

Then in November, the Dutch central bank announced that it had secretly moved 122.5 tons of gold from New York to Amsterdam. In apparently just months, the Dutch had shipped almost 25 times the gold that Germany moved in all of 2013---(Airliner payback?)

On Jan. 19, the Bundesbank delivered its own surprise, publishing a tally of its 2014 gold repatriations. During the year, the German central bank had shipped 85 tons from New York to Frankfurt, blowing away the mere 5 tons from 2013 and setting a pace at which the Bundesbank would easily meet its target of 300 tons returned by 2020.

There were still 1,447 tons of German gold under Manhattan at year’s end, and he wants all of it back in Frankfurt.

 

Sun, 08/23/2015 - 01:39 | 6457202 Curiously_Crazy
Curiously_Crazy's picture

Ooops. Excactly the gist of what I mention below. +1

Sun, 08/23/2015 - 01:37 | 6457201 Curiously_Crazy
Curiously_Crazy's picture

"Even 60 years ago they doubted the Gold was there, which is why the Magicians put on a show. 60 years later there's an even bugger doubt the Gold is there."

Oh it was there alright. Some of it at least. Then that pesky France came along and realised the US was spending waaay more than it could afford invading countries left right and centre and actually started taking delivery. Eventually - rather quickly actually - you ran out so bye bye gold standard.

There is a reason Germany was asked (erm *told*) they'd have to wait 7 years to get theirs back. And that's their bloody gold. If the the US can't provide delivery of other countries gold think they still have yours?

Sun, 08/23/2015 - 07:10 | 6457365 Rollo57
Rollo57's picture

Back in 2011 both France and Germany asked for their gold back;


The German government recently asked for the return of some of their gold bullion from the Bank of France and the New York Federal Reserve. France has said it will take 5 years to return Germany's gold. The United States has said they will need 8 years to return Germany's gold. This suggests strongly that the Bank of France and the NY Federal Reserve have used the deposited gold for other purposes, and they are scrambling to find new gold to cover the shortfall and prevent a gold run. So it is inevitable that suddenly France invades Mali, ostensibly to combat Al Qaeda, with the US joining in. Mali just happens to be one of the world's largest gold producers with gold accounting for 80% of Mali exports. War for the bankers does not get more obvious than that!

Sat, 08/22/2015 - 20:13 | 6456778 NoWayJose
NoWayJose's picture

If China had half its population, they would kick our butts. But combine too many people with too much corruption and too much speculation, and you just have to think they will take themselves down.

Sat, 08/22/2015 - 20:39 | 6456829 Gab Timov
Gab Timov's picture

China will have a civil war most likely if the government decides to arm hundreds of millions of soldiers and mobilize them. Big country, lots of hate for the Commie Party's repressive regime.

Sat, 08/22/2015 - 22:38 | 6457012 techpreist
techpreist's picture

Nah, they just need to stir up anger toward the Japanese. Japs are the Chinese version of Al Quaeda, or more like what the North was to the South for a few generations.

Still, you are probably right, and they took the guns away for a reason. That's why I like to take Chinese students shooting when they come over here.

Sat, 08/22/2015 - 20:17 | 6456786 Deus Irate
Deus Irate's picture

It must be nice to have smart, dedicated and long-sighted people making plans. We have thebomba, the clintons, the eeeee yuuuuu. ... As Russia and China grow ever closer -- a direct result of idiotic, half-assed and short-sighted western "policies" -- it's ever more certain that things are simply going to continue to get worse for all us schmucks crawling around on our bellies trying not to get stepped on. Soon the only safe place to be will be gone and I'm already there and I ain't lettin anybody in. Well, maybe if you are 18, female and willing to service me whenever I wish, then I might let you live on a chain on the back 40.

Sat, 08/22/2015 - 20:27 | 6456808 Ms No
Ms No's picture

China is trying to maneuver to survive as we all may be shortly.  We are watching the beginning of a frame job on China for collapsing western economies and eventually currencies.  We are on the brink of economic collapse and world war and yet so many people still don't see it.  Who brought us here? 

If Zionists are tired of being "falsely accused" by "anti-semites" there is a very simple solution.

1) Surrender all central banking institutions back to their respective countries.  2) Immediately remove your foreign spies and lobbyists from respective countries and furnish a list of those who engaged in treason on your behalf.  3) Abolish global predatory organizations IMF, IBS etc. 4) Stop killing people and enciting global conflict on a satanic scale.

 I am sure I'm forgetting some things but it's a good start.     

Sat, 08/22/2015 - 20:59 | 6456864 Arthur
Arthur's picture

Really?

 

Most be all those Chinese Zionists.

Sat, 08/22/2015 - 22:23 | 6456994 Ms No
Ms No's picture

Why in the hell do you think that the US is posturing going to war with China and Russia?  They are not exactly going along with the program.  Who controls the monetary system of nearly the whole damn planet?  All wars are bankers wars, why is this so hard to understand?  This currency war is about to go hot and incase you haven't noticed there have been 4 explosions between China and Russia recently and the news is plastering stories about Chinese nukes and artificial islands. 

Sat, 08/22/2015 - 20:32 | 6456816 luckylogger
luckylogger's picture

Be careful with bear etf's for longer than 1 week holding.....

The decay will destroy any value that you make on a big day like last Friday....

I know this from experiance and alot of research......

They are swing and day trading instruments only...

I hope my mistakes help somebody out there.....

Sun, 08/23/2015 - 10:35 | 6457625 Omega_Man
Omega_Man's picture

are you referring to 3x etf? they really suck and are dangerous

Sat, 08/22/2015 - 20:49 | 6456833 TeethVillage88s
TeethVillage88s's picture

As if you can list ships, airplanes, weapon systems, cyber warfare efforts, or financial weapons to determine the outcome of war.

- Not True

War depends on a lot of things

- Training
- Doctrine
- Readiness
- Logistics
- Sustainability, fuel, water, food, hubs with stores of whatever is needed, ability to replace troops, ability to maintain weapons systems, ability to adapt to new capabilities of your enemy,... and some weird stuff about resupply in space, in air, at sea

Edit:

Yeah, USA might have used financial warfare against the USSR along with bribes to bring down the government... Anyway that was a design of US War against a poor country.

China has low value on Soldiers or citizens. Obviously they could send people to the USA(like after 1990) to confuse the enemy.

Sat, 08/22/2015 - 20:50 | 6456846 Ginsengbull
Ginsengbull's picture

Ability to maintain stockpiles of hazardous chemicals...

 

without them going boom.

Sat, 08/22/2015 - 21:00 | 6456866 serotonindumptruck
serotonindumptruck's picture

You speak in "conventional" terms.

Once the nukes start flying, we're all fucked.

Sun, 08/23/2015 - 03:07 | 6457258 dag
dag's picture

Nuclear bombs will be used in the next war but it

will not be the "end of the world" - just more toys broken. 

People still live in Hiroshima and Nagasaki.

More people were killed by firebomb in Tokyo and Dresden.

 

Sun, 08/23/2015 - 07:02 | 6457361 Rollo57
Rollo57's picture

Exactly, they used thermo nuclear to bring down the Twin Towers. I saw one shot [still frames] of the metal corner of one of the towers, disintergrate has it was falling over? Just disappeared into powder!

http://911review.com/errors/wtc/spire.html

And this released by Snowden, via Putin, after US brought down MH17;

http://stateofthenation2012.com/?p=7858

Sun, 08/23/2015 - 09:28 | 6457500 NoBillsOfCredit
NoBillsOfCredit's picture

Not thermo nuclear.

Sat, 08/22/2015 - 21:43 | 6456932 tarabel
tarabel's picture

 

 

Since the US has been busily exercising its entire gamut of warfighting capabilities for more than a decade, it has an enormous unquantifiable advantage over the neophytes who think that their forces match up well on paper.

In the Super Bowl, you always bet on the veteran team that has been there, no matter how talented the rookie competitors might appear to be.

Sun, 08/23/2015 - 03:08 | 6457255 Lurk Skywatcher
Lurk Skywatcher's picture

Yes, exercising its entire gamut of warfighting capabilities for more than a decade *against 3rd world adversaries*

You might be betting on experience, but the Super Bowl ain't like the junior highschool teams you played to get that experience. 

Lets see how they fare when the jets flying overhead in the halftime show ain't their own.



Sat, 08/22/2015 - 20:43 | 6456835 SMC
SMC's picture

He who has the gold, makes the rules.

Sat, 08/22/2015 - 20:49 | 6456843 mijev
mijev's picture

Didn't the chinese revalue the yuan right after the IMF (US) decision to delay the SDR until 2016? Perhaps the US didn't want anyone rocking the boat until they had another puppet POTUS in place.

Sat, 08/22/2015 - 23:20 | 6456868 Yen Cross
Yen Cross's picture

  My explanation of nucular (BUSH) weapons.

  I'm your next door neighbor, and you're having a pool party.

 The cops come by a couple of times and you start to get pissed off.\

 

  Any sane conservative, would have shut off the lights and rented a room in a motel down the street.

 Then you just ask for the " check-in list". All the scum ain't going home! Bitchez

 Children are stupid! I'm talking under 25-65 sounds better.

   Stupidity has no limits.

 I accidentally sprayed some orange scented furniture polish to wipe my sink, and the ants that were invading were gone the next morning. No SHIT

 

Sat, 08/22/2015 - 22:26 | 6456999 Hyjinx
Hyjinx's picture

You rike flied rice?!

Sat, 08/22/2015 - 23:03 | 6457042 Ms No
Ms No's picture

If China and Russia make it through this they may very well have a future but making it through this remains to be seen and they both know it.  China has made smart moves but they are not an omnipotently wealthy country that can withstand the uprisings of 1.3 billion jobless hungry people and possibly fight off a world war simultaneously as if it's a for sure deal.  The Chinese are afraid, so is Russia and so should we be. 

Sun, 08/23/2015 - 04:59 | 6457303 mr coffee
mr coffee's picture

Excellent points!

Sun, 08/23/2015 - 06:52 | 6457353 Rollo57
Rollo57's picture

"but they are not an omnipotently wealthy country"

Neither are America, who are bombing the shit out of nations because they wont use their 'dollar'?

All China need to do is drip feed their US debt, they have already off loaded $120bn, only another $1tn to go! Russia are doing the same, hence the wars in Iraq, Libya, Syria who all said no and the soon to be Iran, who also said no in 2009, which was why they were sanctioned. US couldn't bomb them, because they knew, like Russia and China, Iran do have nukes!

http://forum.prisonplanet.com/index.php?topic=212332.0

Sat, 08/22/2015 - 23:16 | 6457056 falconflight
falconflight's picture

"China believes, with good reason, that she is more politically and economically robust, and has a better grasp over the actions of her own citizens, than the welfare economies of the west in the event of an economic downturn. Therefore, she is pursuing her foreign exchange policy from a position of strength."

I'm not hawking for any of the world powers (They all will impoverish and/or murder their respective populations for maintenance of the status quo), but the above is beyond laughable, it's per se pathetic.  No one could quantitatively and/or qualitatively support such an assertion.  In fact there isn't a government on this effing planet that even comes close to resembling Daffy Duck's cousin's supposition.  

Sun, 08/23/2015 - 03:06 | 6457256 CHX
CHX's picture

Auto-fluffer.

Sun, 08/23/2015 - 09:51 | 6457547 MsCreant
MsCreant's picture

Not even a good fluff.

Sun, 08/23/2015 - 01:57 | 6457214 ironymonger
ironymonger's picture

"and has a better grasp over the actions of her own citizens"

Mmm-mm. Gotta love that old-fashion unrepentant fascism.

Awfully refreshing.

Sun, 08/23/2015 - 02:10 | 6457224 Manipuflation
Manipuflation's picture

That cartoon screams buy silver.

Sun, 08/23/2015 - 03:42 | 6457276 enloe creek
enloe creek's picture

I don't see how China is in a position of strength. Gold reserves or not they own somewhere around $1 trillion UST. Good for US.Dollars. that may turn out OK may not. But the main source of economic wealth is manufacturing for foriegn markets.  Last  time I looked all the markets have been drying up and barely functioning without massive reserve Bank help. So it is like having a guy owd you money who does not mind beating you to a lump any day of the week and twice on Sunday. Having a debt and collecting arentwo different things

Sun, 08/23/2015 - 04:47 | 6457299 BurningBetty
BurningBetty's picture

I actually believe there is a lot of merrit to this article. The US has always been the big bad bully cornering everyone everywhere to bow for the US dollar and its Petrodollar status. In silence over long period of time, as always, the quiet guy keeps "compounding" and compounding on the hard labour and commitment regardless of the bullying. While the bully is still raging, shouting, screaming, threatening rest of the "victims" have now grown up, strenghten their weaknesses and as always moved on. Leaving the bully all by himself. This is literally what comes to mind when I think of the US.  

Sun, 08/23/2015 - 05:04 | 6457305 Debugas
Debugas's picture

why would china want to destabilize the USD ? On the contrarty

China wants to continue to export to USA for that china needs strong dollar

Sun, 08/23/2015 - 06:42 | 6457346 Rollo57
Rollo57's picture

The 'dollar' is strong, so strong the Fed Res were going to raise interest rates next month [so they said] now they don't have to, as the Yuan has always been 'overvalued' to the dollar!

What they don't like, is the fact China 'explaining' how it can control US finances.

Sun, 08/23/2015 - 07:14 | 6457369 monad
Sun, 08/23/2015 - 07:19 | 6457379 EurGold
EurGold's picture

500 x 1oz Silver Vienna Philharmonic Master Box €7,159.69

 

 

https://www.eurgold.eu/silver/500-x-1oz-silver-vienna-philharmonic-2015-...

Sun, 08/23/2015 - 08:21 | 6457421 OutaTime43
OutaTime43's picture

I'll wait for the next 2008 style deflationary crash and then pick it up for $4 per ounce. 

Sun, 08/23/2015 - 11:45 | 6457756 Not My Real Name
Not My Real Name's picture

LOL. Good luck with that. The paper price may say one number, but the physical price will be offered only at much higher prices -- just like in 2008.

Sun, 08/23/2015 - 08:19 | 6457418 OutaTime43
OutaTime43's picture

These types of articles crack me up. Since the Yuan is pegged to the USD, then how can that possibly be a "position of strength"?  When China finally ends its manipulation and lets their currency float, THEN we can talk about positions of strength or weakness. 

Sun, 08/23/2015 - 09:21 | 6457487 lakecity55
lakecity55's picture

Heey, if they don't get into the SDR, they might de-peg or reveal more of their gold then press the western banks to show their cards goldwise.

Sun, 08/23/2015 - 08:22 | 6457422 Handful of Dust
Handful of Dust's picture

We can teach China a lesson just stop selling them treasuries. That'll teach them!

Sun, 08/23/2015 - 11:22 | 6457694 Hope Copy
Hope Copy's picture

The US Treasuries and Bonds are coming home to roost anyway.  The should STOP issuing all T-Bills and US Bonds, or they will have to amend the laws to claim them as taxable income and then there will be a real crash of the lazy rich upper class and this great country will have gone more socialst that the USSR.  WE ar F#cked. 

This is how it has been working.  China takes US securities and lets them out on their stock and bond market.  Rich prosperious and maybe thieving Chinese buy these instiments as they are the only meens to get money out of China.  These Chinese 'investors' take their securities to places they like, similar in climate and where they can physaically blend in (closely look like the local population) as they also bring their loyal workers.  Where is this?  Ceneral and South America.  So Who is selling investments to them?  The super rich that have an interest in the US that may or may not have legally aquired wealth and holdings.  So what do they buy in the US..  The 'good life'.. party, party, party...  NYC and Miami.  Alright.. now you are getting part of the picture.  There are others also, like Dole, that really don't want to own, just be in the trade, but the point is that US Bonds are interest free and the T-Bills are sold at a relative discount.  You'll say, so what. I say that what is happening is a genedration of upper class 'Welfare' recipients that do not contribute anything significant to the 'trickle down' system and are able to indfluence the political system.  This is a recipe for disaster.

Sun, 08/23/2015 - 15:35 | 6458501 kumquatsunite
kumquatsunite's picture

Ha. Don't forget San Francisco is 50% Asian; as well, the LA Times had an article (couple of weeks ago) on the Chinese developer building "a city-within-a-city" in Los Angles. Made, designed, and to be occupied ONLY by Chinese. We used to call this appropriation of territory and act of war.

Too, Washington State is now owned by the Asians on the west side of the Olympic mountains. You don't even see a white face in many places, and they don't want you there either. Bellevue, Washington, once considered upper class, is now more than 40% asian. Funny how we are told diversity is soo good for us, but apparently not for anyone else.

Sun, 08/23/2015 - 08:56 | 6457447 falak pema
falak pema's picture

In the China USA match, whatever the outcome, we see a rivalry of two centralized mantras :

1° Inverted Totalitarianism; aka private Oligarchy controlled "official government", oligarchy and Mr Moneybags capitalism LEADING the crony combine. That is the USA of today.

2° Convention Totalitarianism; aka central uniparty control and private Oligarchy periphery whose power is dependent on central government handouts or regulatory dictats.

Both are pseudo command economies working in top down mode with little bottom up democratic input.

Which is more EFFICIENT in terms of cohesion and  generating trust?

Cos without TRUST the central control is damned as the base will never follow and anarchy will checkmate cohesion and discipline.

We have an awesome face off in perspective; a bit like in the beginning of 20 th century when "Democratic at home cum colonial abroad" empires (Britain/France) faced up to autocratic Empire (German/Habsbourg/Ottoman) alliance.

It led to the destruction of both models in Europe (just saying)...

Sun, 08/23/2015 - 09:18 | 6457483 withglee
withglee's picture

And the increments that will now be added to gold reserves month by month are a signal that China believes she can destabilise the dollar through her control of the physical gold market, because it gently reminds us of an unanswered question always ducked by the US Treasury: what evidence is there of the state of the US's gold reserves?

This smoke and mirrors of a financial system will never be fair to traders as long as the notion that a Medium of Exchange (MOE) can be made sound by "backing it" with a commodity.

The entity that "first" properly manages a MOE will be the entity that leads us out of this mess. Notice, I didn't say this entity will "prevail".

With a properly managed MOE:

  • Money is only created by traders getting their trading promises certified
  • Certificates (money) circulating in simple barter trade as the most valued object of all trades
  • Money is destroyed by traders delivering on their trading promises
  • Defaults from irresponsible traders is mitigated immediately by equal interest collections
  • Money is in free supply all the time everywhere
  • Supply and demand for money in perfect balance all the time everywhere
  • Zero inflation is guaranteed
  • There is zero interest load on responsible traders

... with such a properly managed MOE, no entity prevails because the process is totally transparent and objective, and cannot be gamed.

Money is not a tool for throttling an economy or obtaining human behavior. Money is a tool allowing simple barter trade over time and space.

Inflation has become a principal source of funding for "all" governments. Guarantee inflation to be zero and excessive government (government people aren't willing to support with taxes) goes away.

Sun, 08/23/2015 - 11:57 | 6457765 Not My Real Name
Not My Real Name's picture

Money is a tool allowing simple barter trade over time and space.

No. Certificates are not money. And barter is defined as "The exchange (goods or services) for other goods or services WITHOUT using money."

You are confusing currency (e.g., USDs, Euros,"certificates," etc.) with money (e.g., gold, silver). Again. 

Sun, 08/23/2015 - 14:23 | 6458213 withglee
withglee's picture

And barter is defined as "The exchange (goods or services) for other goods or services WITHOUT using money."

So, if you're going to be so stupid as to accept a definition like that, what are you going to call an exchange that involves money. It is, in more ways than any other, an exchange of value for value. The person accepting the money can then use it to exchange for the object they want, but which the initial trade cannot deliver. And such exchange can take place at a different time and different place. Thus it extends simple barter over time and space.

So I ask, if I'm not describing actual barter (perceived value for perceived value), what do you call what I'm describing?

Sun, 08/23/2015 - 10:30 | 6457614 fowlerja
fowlerja's picture

From the author's point of view..as with many of his articles...gold solves everything that ails you...

Sun, 08/23/2015 - 11:04 | 6457665 Hope Copy
Hope Copy's picture

The answer is that US gold reserves are with 'the people' and controlled by the terms of Frank-Dodd.  Yes, if needed they will come and take the gold.  LoL

Sun, 08/23/2015 - 11:25 | 6457695 Dr_Snooz
Dr_Snooz's picture

You goldbugs really take the cake. You spin out these theories and explanations that have ABSOLUTELY NO association with reality! China's yaun is not in the SDR because you don't put currencies from countries that have opaque finances and questionable economic metrics and that move their currencies around erratically with surprise overnight devaluations. Bugs keep expecting the USD to vaporize when every move in the forex markets is for the dollar to get stronger. You keep waiting for a gold-backed currency to put the world back on track when history shows it to be a colossal disaster. You insist that China has all the gold, then China announces holdings far below what anyone expected. You keep waiting for hyperinflation while deflation grows. You keep hoping gold will save you even as it breaks your heart. How do such uneducated people obtain such prominence? WAKE UP!!!

Sun, 08/23/2015 - 13:43 | 6458072 Deez Nuts
Deez Nuts's picture

The gold bugz see the jewish usury USD scam for what it really is..

The biggest pyramid scheme ever to be devised in human history.

The bugz are also a very very patient lot.

YOU will have your "come to jesus" moment. Be patient as well.

Sun, 08/23/2015 - 22:35 | 6460243 Dr_Snooz
Dr_Snooz's picture

OMG! It's Deez Nuts! Deez Nuts for President!!!

http://www.infowars.com/deez-nuts-more-popular-than-fiorina-huckabee-and...

ROFL!!!!

Sun, 08/23/2015 - 14:09 | 6458162 bid the soldier...
bid the soldiers shoot's picture

 

Gold Shmold

 

What everyone is waiting for the Chinese to announce is that after careful investigation and due consideration  --  in the manner of of MH17  --  Goldman Sachs is responsible for the two chemical explosions at Tianjin and Shandong.

Preparations are being made to bring GS's top officers to the ICC in the Hague.

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