Posted on 11/29/2006 5:30:58 PM PST by GodGunsGuts
WILL CHINA LEAD A STAMPEDE OUT OF THE US DOLLAR?
by Gary Dorsch
Editor, Global Money Trends Magazine
November 29, 2006
The $2 trillion per day foreign exchange market never sleeps. Yet for the past six months, the big-3 central banks, the Federal Reserve, the European Central Bank, and the Bank of Japan managed to lull the currency markets into a deep trance. Since last May, the big-3 central banks corralled the US dollar to within a 3% to 5% trading range against the British pound, the Euro and Japanese yen.
The big-3 central banks utilized their three major weapons, (1) relentless jawboning, (2) Japanese threats of intervention, and (3) coordinated rate hikes, telegraphed far in advance to avoid any nasty surprises in the markets. But the big-3’s spell-binding magic act began to wind down on November 25th, when Chinese deputy central banker Wu Xialong jolted the foreign currency markets, warning other Asian central bankers of the future risk of a US dollar devaluation.
Beijing is having second thoughts about the composition of its $1 trillion portfolio of FX reserves, with 70% held in low yielding US fixed income securities. “Firstly, long-term US interest rates are falling. Secondly, the exchange rate of the US dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for east Asian reserve assets,” Wu said.
On October 10th, Fan Gang, another member of People’s Bank of China’s policy committee, made similar comments, “China risks an erosion of its holdings because the US dollar will probably decline.” On August 29th, Gang wrote, “The US dollar is no longer a stable anchor in the global financial system, nor is it likely to become one, therefore it is time to look for alternatives.”...
(Excerpt) Read more at financialsense.com ...
Sorry about the underlining. I forgot to turn it off
So I can find it again ping.
Which makes sense. Despite what many believe, debt is not wealth, and eventually you have to pay the debt off in blood or gold.
So, which stage are we in?
We have to many trade agreements that would be declared null and void shortly after a trick like that.
Other nations have tried to just write off the debt, it never works.
Wrong. The Chinese currency is pegged to the U.S. dollar because without this link the currency is completely worthless. Nobody with an IQ over 40 would ever conduct business in Chinese currency if it were left to stand on its own.
I see us in late Stage 2. China quietly accumulated gold last spring and the banks that had been short gold by way of derivatives- JP Morgan, for example, have just recently taken long positions in metal futures which have the effect of covering their shorts.
I don't think the last train has left the depot yet, but if you hear talk on Letterman or Oprah, that's the conductor yelling, "All aboard!"
As long as they continue to not allow their currency to be freely traded (And become grossly devalued as it should be) they will have the upper hand.
You should really stop talking about gold while posting a chart of HUI. It's a bit dishonest.
I'd say it applies more than ever. The Chinese banks, run by the party, have more than 500 billion in bad loans to industry that can never be repaid, because the party leaders are trying to keep the machine running and fund their clients. If their industrial system falters, there could be a revolution or civil war. Equally, they need customers to sell to in order to survive.
What's more likely is that if a collapse occurs, it will not be at the instigation of China or our other competitors and enemies, but will come because the Fed and the other central banks no longer have the ability to sustain a financial pyramid past a certain point. Then no one will have any choice in the matter.
Those are old figures--it's almost a trillion now.
Also, a lot of the "bad loans" involve money that was borrowed and then stolen. That money will never be repaid because it's sitting in Swiss accounts--and the account owners have titles like "Minister" and "General."
socialists compete too, their labor just costs less.
Are you asking me to explain that the HUI consists of gold stocks every time I post an HUI chart? I think I will give FReepers more credit than that. If anyone is confused as to its meaning, it takes but a moment to go look it up.
That's why I said "more than." It's what they admitted to, in that article Ambrose Evans-Pritchard wrote for the Telegraph.
A trillion wouldn't be surprising. The Nomenklatura of Communist parties have a way of turning into kleptocracies. Some of it they stole, I'm sure, but some of it has simply been spent to keep their supporters loyal and prop up the command economy.
I should have added that there is also evidence that workers all over China are being paid more than the profits from the goods they produce are worth. That will eventually have to be reckoned with.
Is there a chance that you'd be willing to consider the possibility that when something costs less, it's because that thing is worth less?
I mean, everyday we hear the America bashers on these threads complain about how US workers are not worth what they're being paid, but these same lying traitors turn right around and use their own money to pay Americans to do what they wouldn't dream of paying a foreigner to do.
When you talk about gold, post a chart of gold. If you talk about gold stocks, post a chart of HUI.
Communist labor costs less because it is slave labor. So in that sense, both the Communists and the Capitalists have conspired to contract labor that is treated like it is, for all intents and purposes, worthless. I don't mind free trade with free countries. But it is immoral to trade with, and thus buildup, the Communists... who are inherent enemies from top to bottom.
You might want to recheck where you got that info. Half of China's workers don't make goods, they're farmers struggling to grow enough food to feed themselves.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.