The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
More Here..
Bring it on!
ReplyDeleteBuy silver or perish...
That article is from 2007.
ReplyDeleteThe value of the Yuan and Dollar and the profitability in both the American and Chinas economies are as connected as hand mouth and stomach .
ReplyDeleteOn the surface the total value of Americas trade with China for commodity goods is small. But that is because Chinese imports to America are valued at their exported value
But look in the US shops , a pair of socks from China may have a cost price of say fifty cents ex china ,but sold in American retail for $ 4 creating a huge realized profit of say $3.50 in America for say Wall Mart.
This profit from cheap labor production is counted as American GDP!
Both use Sovereign debt paper currencies . The American dollar is openly traded in the world economy and two thirds of its paper circulates in the world as cash.
But the Yuan is circulated internally within China and is only little used in world trade.
Trillions of dollars in savings by the Chinese and other countries are invested in US Treasury and other American debts These $ debts are a claim against an America, that promised to to make dividend returns on its debts with strong dollars.
Inflationary destruction of the US dollar value threatens the value of the savings of the world held in US dollars and of dollar denominated debt incomes .
America seeks to solve its own debt crisis problems by exporting inflation to the rest of the world by devaluing its dollar so as to make dollar denominated debts easier to pay off in devalued dollars .
America by manipulating the value of its own dollar by money printing devaluation ,claims that as the value of its own dollar falls via excess money printing ,that the Chinese Yuan should be valued higher ,so that the value of the dollar will rise in comparison, maintaining the fiction of a strong dollar !
American ‘hard currency” Fiat paper dollars entering China as payments for exports ,
But because they are the standard reserve currency in international trade and finance are ‘Sterilised” removed from the Chinese economy and replaced with printed Yuan Notes
This Chinese money printing injected into the Chinese economy creates inflationary pressures ,the cost must be borne by the Chinese people. The dollars are returned to America mostly as investments in Treasury and until recently government backed mortgage Bonds . Thus creating “demand” for American $ denominated debt.
This functions as vendor supplied credit for American consumption.
As America has turned to the printing press and issues $ money at near interest free cost to the American bankers they export a lot of this money as capital ,seeking profits returns
In the last Quarter inflation in China was 9% and the ‘hot $ money” flows from America helps to fuel Chinas own Property bubble.
Since the collapse of American Ponzi economy in 2008 because of Americas perceived inability to make its promised dividend payments on trillions of dollars worth of fraudulent but “AAA” rated and valued bonds ,the government was forced to nationalize the mortgage bond markets and socialize the bond and derivative losses of the finance sector
A bi-partisan supported financial coup to socialize these vast losses and to gain control of the $ printing press so that Trillions of printed dollars could be digitaly printed for bail outs .
It is now difficult investing money in a bankrupt, insolvent, bailed out by the printing press America .Even Americans with saved money are unable to invest as capitalists competing in the marketplace with the interest free money of the banksters.
In addition ,in a collapsed Ponzi economy America had run out of ability to make further loans , its debt peons could no longer be a growth center for new debt income creation
Foreigners too are increasingly unwilling now to buy US Treasury debts ,So the biggest customer for Treasury funny money debt is now the privately owned Central bank .
The good financial name of the USA and confidence in its dollar and debts has been trashed .
Not true destructive troll @ 2.04 comment
ReplyDeleteWhat is your game?
Paid agent Working for Ben and the Sunstein government trolling scheme to restore confidence in the US dollar?
And informative websites.
The main linked article here was in the UK Daily Telegraph
“China threatens 'nuclear option' of dollar sales”
It is dated 10 of may 2011
Good Ole Tom!
ReplyDeleteso no qe3-for now..let china mellow out a little..strong doller and all that
ReplyDeleteYup, 08 August, 2007. The blog entry clearly references Henry Paulson as US Secretary of the Treasury.
ReplyDelete3:58
ReplyDeleteYour wrong about the Ponzi scheme collapsing -
merely a hiccup and then off to the races once more. Our worthless paper and the privately owned and operated fed that comtrols all;
remind me of P.T. Barnum = theirs a sucker born
every minute.
So it is with the new age digital money that;s not worth the paper it's not printed on.
It's perception ! AS long as enough percieve the
dollar to be a store of wealth, a safe haven -
it will remain king of the hill and their always
seems to be a new sucker on the other end of the
line eh?
Their is currently no other fiat paper currency
that can match the dollar for the worlds reserve currency - hell man the only one with any strength is the swiss franc and the volume percentage is so low that it would be swallowed
whole for breakfast on the first day of trading.