9 votes

China is now trying to DELAY the US Dollar collapse

They have now issued a statement backing the US Dollar after sending a letter to the G20 in June 2012 that a new Global Reserve Currency is required to replace the dollar.

http://www.telegraph.co.uk/finance/currency/9881410/China-lo...

Perhaps the Chinese are now trying to delay the collapse in the dollar until they are more prepared.
Perhaps they can see how close the US now is to a dollar and economic collapse with current US government and Federal Reserve policy.
They must of been amazed at the level of stupidity in the terms of the Fiscal Cliff deal for example.

I find it difficult to believe they haven't looked into the numbers. Government deficits of $2.5tn in 2020 and rapidly rising due to increases in debt servicing, pensions and Healthcare costs.
http://ian56.blogspot.co.uk/2013/01/fiscal-cliff-deal-obamas...

(The retirement age and Medicare qualification age will have to significantly rise at some point - there isn't another solution. The retirement age will have to be at least 70, perhaps as high as 75 by 2050.)

National Debt of $36tn by 2022 - but then you have to add in this which will take it to $40tn+.
NOBODY has yet factored this into deficit or National Debt calculations - the Federal Reserve charging the Treasury for their multi trillion future trading losses on trades they are making now.
http://ian56.blogspot.co.uk/2013/02/there-is-no-way-out-for-...

The Chinese are not yet ready for a dollar collapse. They have their own domestic problems with the slow down in exports to Europe and the US. Some realistic estimates put current Chinese GDP growth as low as 0% (the government has always overstated official GDP growth and are saying it is about 6%).

The Chinese HAVE already conducted rough surveys to determine America's net worth.
Principally it's natural resource assets but also the value of it's farmland and water resources.
The Chinese are expecting a fire sale of America's assets at some point in the future.
They are currently putting their foot in the door with things like buying up 3 small chains of retail banks and chunks of farmland in Idaho.

The Chinese are still working on plans to marginalise, isolate and then replace the dollar.
They have already done several non USD trade deals with several countries.
These countries include, Russia, Japan, India, Brazil, Australia, Chile and South Africa.
Half of Africa is becoming interested and the rest of SE Asia is too.
Even Germany are considering their options.
http://ian56.blogspot.co.uk/2012/02/greek-scenario-and-us.html

There is no mention of Gold in the article - why not? China has bought hundreds of tonnes of Gold in the last few years and continues to buy large quantities of it. Russia and Brazil are also now becoming large buyers.
Previous talk out of China was that the new Global Reserve currency (after the US dollar) should have a proportion of Gold in it - as well as a mixture of a few currencies and SDR's.

The US is already nett energy neutral. It still imports oil but it has an excess of natural gas. Gas production is being slowed down by energy companies, because it is on the economic margins.
The US would now be producing a lot more natural gas, if the price was say 10% higher. A relatively small switch between the current gas and oil usage in the US would mean it was economic to produce more natural gas in the US.
The US needs to use less oil and more natural gas to become completely energy independent.
The US will become a significant nett exporter of energy and the largest producer of energy in the world (overtaking Russia) in the next few years.
The US government is actually trying to stop this from happening and keep the US energy dependent on some politically dodgy sources (like Venezuela) by things like stopping more energy exploration in 1.6 million acres of Dakota.

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this is all for them to keep

this is all for them to keep buying cheap gold. Stronger the dollars they hold, the more gold they get for it.

“Let it not be said that no one cared, that no one objected once it’s realized that our liberties and wealth are in jeopardy.”
― Ron Paul

Cyril's picture

Oh yes

That's what I was thinking, too, before the OP's post.

Such a 180 degrees turn is only reassuring grand theater and isn't the actual rationale.

They only buy themselves time... And gold.

Let us have no doubts that they will AS FREELY give the world another update any day they want later:

"Well, actually we've changed our mind again. Sorry about that.

Oh, you guys wanna use gold, too?

Ah, so soooorry again, but you gonna have to wait."

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Bingo!

Bingo!

This sounds completely logical in a currency war

It's a return salvo on their part. Since they cannot cheapen their currency the same way that the BOJ, FED and ECB can, the next best thing they can do is trip us up. This is after all, a race to the bottom and while there is no logical conclusion to a currency war the only one who seems to come out on top is the one who depreciates the most and gets there the fastest...

I recently listened to this interview with Jim Rickards, and it is not just good but I would say it is exceptional. Give it a listen.

http://www.financialsense.com/node/10533

they have 1.8 trillion of

they have 1.8 trillion of those dollars or more they need to spend on Gold, silver and oil. so ofcourse they want to delay the coming dollar crash.

I agree

with the comment below. How will they get their money back? or get another large market like this?

It would be best to borrow from them as much as possible imo lol

donvino

China does not want our dollar to collapse...

If the dollar depreciates, so does the thier stake in our debt. So they obviously want to slowly offload the debt they own before this happens. They will do everything in thier power to keep the dollar stable until this can happen, otherwise they are just as screwed as we are.

Food for thought.

For Liberty!

Viva la R3VOLution!!!

That's My Feeling Too (Though I'd Add One Thing)

I think they're also trying to buy as many precious metals as possible before the dollar does collapse. They have all their USD saved so if they can convert to PMs, they may as well.

Cyril's picture

Thanks for sharing your thoughts.

Thanks for sharing your thoughts.

Makes sense, yes, the string being pulled is a bit too thick, if one asks me.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius