Skip to comments.China And Russia Are Ruthlessly Cutting The Legs Out From Under The U.S. Dollar
Posted on 09/12/2012 9:19:48 PM PDT by Tolerance Sucks Rocks
The mainstream media in the United States is almost totally ignoring one of the most important trends in global economics. This trend is going to cause the value of the U.S. dollar to fall dramatically and it is going to cause the cost of living in the United States to go way up. Right now, the U.S. dollar is the primary reserve currency of the world. Even though that status has been chipped away at in recent years, U.S. dollars still make up more than 60 percent of all foreign currency reserves in the world. Most international trade (including the buying and selling of oil) is conducted in U.S. dollars, and this gives the United States a tremendous economic advantage. Since so much trade is done in dollars, there is a constant demand for more dollars all over the globe from countries that need them for trading purposes. So the Federal Reserve is able to flood our financial system with dollars without it causing a tremendous amount of inflation because the rest of the world ends up soaking up a lot of those dollars. But now that is changing. China and Russia have been spearheading a movement to shift away from using the U.S. dollar in international trade. At the moment, the shift is happening gradually, but at some point a tipping point will come (for example if Saudi Arabia were to declare that it will no longer take U.S. dollars for oil) and the entire global financial system is going to change. When that tipping point comes the global demand for U.S. dollars is going to absolutely plummet and nightmarish inflation will come to the United States. If such a scenario sounds far out to you, then you have not been paying attention...
(Excerpt) Read more at theeconomiccollapseblog.com ...
I hate to say this, but China is a very, very big problem.
Apples are made there.
Cars are made there. Most everything is made there.
And they continue to steal jobs from America.
Stop it. Now.
Not without enthusiastic accomplices in the White House and at the Federal Reserve.
If i was an exporting nation like Russia (gas and oil) or China (manufactured products) i would not want to be paid in dollars that are being printed as fast as we can make them.
They should absolutely owe no allegiance to the dollar,,WE SHOULD. If we took care of it and everybody knew it was a solid store of value that would not be inflated away, nobody would feel a need to make moves against it. Whether gold backed, or just backed by the morality of a nation that does not print them without limit to cover insane spending, the world must know it is solid, or they will find alternatives.
Well, I hate to say it but, if I was a mortal enemy of the United States, much like China and Russia are, I’d attack the ever lovin’ **** out of us right now while we have this un-****ing-believable moron for president elected by the un-****ing- believable moron citizens of this country.
If you want your enemy finished, then you kick him while he is down so many times as hard as you can so that he never stands up again.
That is the way it is done, and we haven’t been this far down ever.
There are only two stable currencies that could replace the dollar, the yuan and ruble. The ascension of either would destroy the Clinton-Soros plan to strip Russian wealth by currency manipulation, and Soros would be forced to manipulate the dollar for profit.
Irony at it's finest.
And the State Department.
The Euro? Not with the failing economies of southern Europe threatening to bring down the Eurozone like a house of cards. The Japanese yen? Not with Japan's sluggish economy. A new currency from the Middle East? Not anytime soon given the rivalry between the United Arab Emirates, Bahrain, Qatar, Kuwait and Saudi Arabia on who will be the financial center of the Arab world. The so-called special drawing rights? How many countries around the world recognize that?
In short, right now there is no really viable alternative to the US dollar. Maybe in the future, but not now.
The article itself says it - Bernanke and the Federal Reserve have been flooding the world with dollars.
If you want to know how the US currency will collapse, look no further than Washington DC
China would rather keep the big dollar going in order to continue the trade imbalances and get rich by selling to us. But with our USA no longer manufacturing enough products for trade and our decreasing capability to buy many products, Chinese interests are naturally afraid. They’re exporting to a dwindling market. They’re trying to find other customers and a currency that won’t be worthless before long (dollar shrinking due to lack of American exports).
The real solution for us is to repeal/abolish many regulations in all levels of government—regulations that stand against American production.
There are two problems with this analysis.
First the Chinese have a couple trillion dollars of US debt.
If they collapse the dollar, their reserves are worthless.
The second problem with this analysis is that the US will become energy independent in less than a decade. This fact has already reverberated across the world. This fact, has already put a floor under the dollar.
This has enormous financial implications. The chief consequence is that the dollar will return to being a hard currency. Why? There are no oil exporting countries with soft currency.
Those people who have bought gold will find that gold will go into decline.
There may be one more blow off top in gold but that’s it. We’re at or just below a long term secular top. If you don’t believe me, look at all the barkers on TV telling you to buy gold.
You should know what that means.
Not gold or silver, but related...
I think it deserves a goldbug ping. What say you?
We have heard this song before.
What currency would replace the dollar as the reserve currency?
Not the Euro because the ECB will not issue sufficient Euros to replace the dollar.
Not the Swiss franc for the same reason.
Not Japan nor China.
Goldbug related Ping
On the other hand China purchases massive amounts of US Treasury Notes not out of the goodness of it's heat. China buys it's massive amounts of US Treasury Notes to to keep the value of the Dollar high and keep the value of the Yuan from rising above it's already vastly and artificially low value relative to the currencies of it's major trade partners.
This currency manipulation by the Chinese to keep their currency at ridiculously low levels allows China to keep it's export product prices at rock bottom lows.
The vastly artificially low value of China's currency allows China to keep it's economy growing but it is bankrupting the overseas competition in any country that has not imposed import quotas or punitive import tariffs on Chinese goods.
China's predatory currency manipulation effectively allows China to effectively achieve the economic goals of Export Dumping on ALL Chinese manufactured goods across the board because they are not selling individual products below cost, but because they are selling all Chinese made goods collectively at artificially favorable currency exchange rates far below the real value of the Yuan due to China's massive currency manipulation.
The minute China stops buying T-Bills the value of the Yuan will soar relative to the Dollar, the Yen, the Pound and the Euro which will effectively kill off about 30% of China's manufacturing output over night.
China's economy would collapse as the cost of importing raw goods into China would soar and the price of Chinese goods on the world market would increase to the point that China would no longer have a competitive price advantage on most goods.
Domestically, prices for food and consumer goods inside China would also skyrocket fueling an already inflationary economy at a time when income growth would be negative and unemployment would be high.
In reality , if it comes to economic brinkmanship the US still has the upper hand in our symbiotic economic relationship with China, but China's hand is getting stronger every day and one fine day in the future China will be stung enough to get the upper hand with us.
The culprits are Barack Obama and Ben Bernanke.
What was it the governor of TX had to say about the latter, lo, these many months ago?
Remember the government can print all the money it wants, but they can not print the confidence to make the money have any value ..
Shame that so many people are needing to invest in precious metals.. i.e lead and brass. We are about to enter a down hill spiral... Question is, will be pull out of the dive or just crash and burn?
US debt is absolutely tremendous and the new oil/NG won't kick in that quickly.
Even with oil/NG in place the Government can devalue the currency (by deficit spending on Socialism) far faster than fracking can harden it.
Remember: Governments that have their sticky fingers on oil aren't under pressure to cut spending - nor to govern wisely. See: Saudi Arabia, Russia, Iran, etc
With what? China is older than the US. Is China really going to risk their sons and daughters that they cannot afford to lose?
The inflation (devaluation) is coming but it is not Russia and China causing it. Their actions if real, are to protect their own economic interests. The devaluation is the unstated goal of the American government. It has been underway for some time and will continue until the debt is reduced to a manageable level.
What is coming is a gold standard. The change will probably be introduced by nations not America nor Europe. They will simply demand settlement for trade debt in gold. The International Bank of Settlements will settle the national accounts in gold and things will go on. Who? I suspect the nations will be East Of Suez........ the GCC, Maylasia, Indonesia, Singapore, maybe China and India, probably Russia.
Although the transactions will be settled on International Bank of Settlements ledgers in Switzerland, payment might actually be made in New York or London. The physical gold is merely moved from one room to another in the US Federal Reserve vault in New York.
Eventually America and Europe will revert to gold as well. There will be no real choice in the matter. It will just happen.
-——There are only two stable currencies that could replace the dollar——
Nope, there is another, better and universally accepted medium of exchange........ gold.
Currency as a medium of international trade is anomaly. Gold is the norm. World trade will revert to the norm for settlement between banks negotiating the international transactions .
The jury is out on the yuan, but the ruble has a long history of instability. Why should this time be different? Czarist bonds, anyone?
That said, our government has taken advantage of the dollar's reserve role time and time again. In fact, our government seems to like a weak dollar, because it makes the value of US wages go down, and therefore makes US manufacturing more competitive.
Wouldn't a strong dollar, weak union policy be a better way to go about that than our current weak dollar, strong union stance? Our wages are relatively high compared to the rest of the world because we carry a lot of dead weight in the form of unionism and regulation. Our workers have enough capital to be very productive, but they can't overcome that deadweight without help. A deliberately weak dollar is not the right way to provide that.
True, and both Russia and China have been acquiring large stocks of gold, I suspect to declare a gold standard for their currencies.
The effectiveness of this will be if Russia and/or China are perceived trustworthy by the rest of the world.
The US (government) has been going the wrong direction (as opposed to Russia and China) in monetary and debt policy for two decades, and is becoming perceived as untrustworty.
Should Russia and China back their currency and be accepted as trustworthy, there will be foundational changes in world economic activity.
All that is common sense, compatible with natural economic law, and not allowed, currently, in the US.
Nations can and do grow out of historic currency instability (we did), and China (very stable and very undervalued) and Russia (growing stability over the last decade and winning over the Soros-Clinton attacks) have been moving strongly in the right direction.
With any method of attack available.
Refer to the title of this thread if you need an idea.
Compared to Obama’s deficit spending....
Dollar should do just fine with no legs at all.
I wonder what would happen if Russia, China, various muzzy homo countries, and various south american communists countries all united and attacked us right now today...
Wait, wait I know!
Isreal would protect us and our gay and lesbian military would kick all their asses to kingdom come.
We are so ****ed.
Obama’s deficit spending has done more to damage the dollar than any external influences.
Yes, I know.
My point is what if our enemies decided to help us in our self destruction...
And, the will of the people being what it apparently is - after many years of amoral, godless, self-oriented and/or misguided leadership - we're not about to change that foolish course in any meaningful way until we're forced to do so.
Guess that’s why there are so many shops buying gold - it goes right out of the U.S. making America a poorer place.
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