Heh. I can just see suburbanites displaced to the country, building 'stills to make the beverage for their rheumatis'.
Posted on 04/24/2011 9:42:07 AM PDT by library user
All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait.
Instead, China has decided to serve the world another surprise. Following last week's announcement by PBoC Governor Zhou (Where's Waldo) Xiaochuan that the country's excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the "buy US debt" Nash equilibrium will be.
Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so.
And to think that this comes just as news that the Japanese pension fund will soon be dumping who knows what. So, once again, how about that "end of QE" again?
From Xinhua:
China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.
Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.
And as if the public sector making it all too clear what is about to happen was not enough, here is the private one as well:
China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.
The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.
Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.
Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.
However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.
The last sentence says it all. While China is certainly tired of recycling US Dollars, it still has no viable alternative, especially as long as its own currency is relegated to the C-grade of not even SDR-backing currencies. But that will all change very soon. Once the push for broad Chinese currency acceptance is in play, the CNY and the USD will be unpegged, promptly followed by China dumping the bulk of its USD exposure, and also sending the world a message that US debt is no longer a viable investment opportunity. In fact, we are confident that the reval is a likely a key preceding step to any strategic decision vis-a-vis US FX exposure (read bond purchasing/selling intentions). As such, all those Americans pushing China to revalue, may want to consider that such an action could well guarantee hyperinflation, once the Fed is stuck as being the only buyer of US debt.
I have no problems in waiving my rights to all future entitlements if that’s what it takes to choke off the beast now.
I’m heartened that you want to kill all entitlements. That’s the only way out.
Funny...the “free trade” bosses here are using their slippery, diplomatic language to say that Chinese are all devious, retarded monkeys.
This works until the local government has to raise the valuation to drive enough tax revenue to pay the firemen, police and themselves. If your source of income doesn’t inflate at the same rate, for example as a full-time farmer who can charge $10,000,000 per bushel, you lose that property and the house.
Like you, I used to think land was the answer, if for no other reason that I could become a dirt farmer. But a look at Weimar Germany during the hyperinflation period is more apt that the US Depression period of the 1920’s.
Thus, the things to hold are the things you can MOVE. Compact stored food, tools, industrial metals (not just silver & gold), and your brain. If this can be stored on your land and you land made to look abandoned/uninhabited (including from the air), then you may be fine. Otherwise, a moter home and trailer might be the way to go.
(Vanity) On Beyond Zillion, by Dr. Sue-us (with a nod to Fredrich Hayek)
Cheers!
...oh, and Happy Easter!
Who would have been if not for the USA defending her against the Nazis, and who will be due to the uncontrolled 3rd world, Islamic immigration. We're on out way to the latter, and there's no one to ally with in case of the former.
Which is why I’m betting on the US, because there’s simply nowhere else to go.
Gold up $7.50, Silver up $0.85 in the opening minutes of trading.
You didn’t read my post did you? My wife and I already live in our motor home and we have a trailer behind. We could leave her tomorrow if needed. The trailer can easily contain the hydroponics systems that we would need to grow all we need for vegetables and the chickens with roosters produce fertile eggs that we can eat or hatch to grow meat. I can assure you that there will be no problem finding a place to park.
I said lazy or clueless. To work hard and put faith in the government of the last 100 years to protect the fruits of your labors would be classsified as the latter. Living in a city as things fall apart would be classified likewise. Sorry.
Yes, some of those people are resourceful, and, if so, will get out of Dodge. The rest are not likely to fare well.
The Christian God is quoted as saying many things, a great many of them contradictory. Taken as a whole, the entire conglomeration never made a heck of a lot of sense to me. I am not Christian - please quote them to someone else who buys into all that. An appeal to scripture will not work with me.
It's going to get worse than 15%.
An option we don't hear discussed is an official devaluation of the dollar. Stroke of a pen, move a decimal point. You and I would get screwed, but the US government would benefit.
sorry dont cut it...you Nad I were screwed, robbed [pick yer choice of word] by fedgov...that doesnt give us cause to do it to our grandchildren...
you and i shouldve fought back and decorated lamposts yrs ago...actually my granparents shouldve when the new deal was sold...
continuing destructive behaviors only gurantees more misery...
gold an silver up...www.kitco.com
“You can’t have situational morality......”
It’s happening while we speak....with the Waivers of Vampire-Care. (It’s also happening with Qe2.)
I think you overestimate their chances.
Once hyperinflation hits and those 1st of the month checks are no longer are enough to pay for their HBO or the insurance on their Cadillac Escalades, they will 1st turn on each other and burn their own cities down.
Look at Katrina, they didn't threaten any of the out lying areas. When the SHTF they waited for the government and when the government didn't come soon enough, they didn't know what to do with themselves and they turned on each other.
Same will happen next time, except this time the government will never come and they will die waiting for Obama to come save them.
The only consolation is white Liberals will get what they deserve. And I wonder, when they are huddled all alone and the mob shows up outside, as they are dragged out into the street, will it finally dawn on them on what fools they have been?
“That said I do know many persons who are actually keeping physical cash in the house and keeping the checking accounts as flush as they can waiting for a pop of the bubble and/or complete social collapse. Whether that’s a trillion dollars, I don’t know. But it might be.”
I think that’s part of it. I do think there is some stashing of cash going on. But my theory is it’s a growing cash economy. It’s not like that part of the economy is captured in traditional economic surveys.
I'm starting to think of doing this, as well.
Dave, that’s how the picture looks to me as well. They have enormouus options with every nation clamoring to do business with them...it’s their smorgasboard to pick and choose as I see it. I’m not into understanding the details of trade and the laws governing but China is not stupid and playing their bets very well so far.
Furthermore their investment in resources throughout the globe isn’t exactly secret. They are actually buying land in Africa to grow food for their population as it prospers and the demand for more esculates in just food consumption.
A pleasure reading your post..thank you.
Buh-bye, US dollar.
It was good knowin’ yuh!
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