Back in 2008, at the onset of the derivatives and credit collapse, I wrote several economic editorials discussing what I saw as the single most vital trend in the global fiscal system, and how it would cause a disastrous upheaval that would leave the U.S. and the dollar financially sunk. This trend, which seemed to take serious root in 2005, was the massive shift by China from an export dependent source of cheap manufacturing and labor, into a moderate exporter, and consumer hub, and currency powerhouse. In my view at the time, the evidence suggested that China was positioning itself to decouple from its dependence on U.S. markets and the dollar. I was, of course, attacked as a “doom monger” and “conspiracy theorist”. Five years later, the critics have changed their tune…
For the past decade, China has been slowly but surely issuing Yuan denominated bonds and securities around the globe, while simultaneously forming bilateral trade agreements with multiple nations and cutting out the U.S. dollar as the world reserve currency. This process has gone mostly ignored by the mainstream financial media. However, I and many other independent analysts could not overlook the red flags. I tried to summarize as much of the situation and facts as I could in my article ‘How The U.S. Dollar Will Be Replaced’, which was published in May of last year:
http://www.alt-market.com/articles/784-how-the-us-dollar-will-be-replaced
The biggest question for me was, if China is one of the largest holders of Forex reserves on the planet, and had the largest savings of any nation, WHY did they feel the need or desire in 2005 to begin issuing Yuan denominated debt? Why begin borrowing capital from foreign creditors? They certainly didn’t need the money. Why were they moving away from export dependency and building a consumer base? And why attempt to proliferate their currency? Wouldn’t the pursuit of global Yuan circulation lead to an eventual increase in valuation? Didn’t the Chinese want their currency cheap so that they could maintain export superiority? What did the Chinese know in 2005 that we didn’t?
Well, apparently they were either psychic, or SOMEONE gave them advanced warning. They knew that there would be a crisis in American consumption and that this would lead to severe reduction in imports, which is why they began building trade deals within the ASEAN trading bloc to insulate themselves. They knew that there would be considerable devaluation in the dollar, which is why they converted much of their long term treasury holdings to short term treasury bonds that they could dump with far more ease, and they knew that the IMF would be promoting Special Drawing Rights as a new reserve replacing the dollar, which is why they have been spreading the Yuan everywhere, earning them favor with the global banksters and inclusion in the basket currency. In fact, China has been pumping Yuan into global markets even faster than the Federal Reserve has been printing the dollar:
http://www.zerohedge.com/news/2013-02-08/china-accounts-nearly-half-worlds-new-money-supply
China is flooding the system with Yuan! This means only one thing; China is no longer seeking to maintain the traditional trade relationship it has had with the U.S.
To make my case even more clear, I would point out that China has not only become the world’s largest gold producer, but also its largest BUYER, recently surpassing India. Official estimates place Chinese gold purchases in 2012 at around 800 tons; an astonishing increase in their stockpile.
The U.S. and the Federal Reserve can’t even deliver gold it is supposed to be holding for others, including Germany.
China has also recently quadrupled imports of rice and tripled wheat and corn imports in only one year. Why? Again, I ask, what do they know that we are not being told?
http://ajw.asahi.com/article/economy/business/AJ201302020056
As I have stated for many years, China is being groomed as an alternative economic engine in opposition to the U.S., and that this will lead to an eventual dump by them of the Greenback. This scenario is not only based on my opinion, it has also been spoken of openly by elitist financiers, including George Soros:
This past month, the same plan has been reiterated by Zhu Min, the deputy managing director of the IMF. In his statement, he proclaimed that the shift by China into a more consumer based system had been successful, and that the Yuan or RMB, was on the way to becoming a world reserve currency:
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130118000075&cid=1102
I believe that the moment for the epic changeover, and all the political and financial conflict that comes with it, has begun…
It has been announced this week that China surpassed the U.S. for the first time ever as the number one trading power in the world:
http://www.bloomberg.com/news/2013-02-09/china-passes-u-s-to-become-the-world-s-biggest-trading-nation.html
U.S. exports and imports last year totaled $3.82 trillion, the U.S. Commerce Department said last week. China’s customs administration reported last month that the country’s total trade in 2012 amounted to $3.87 trillion. China had a $231.1 billion annual trade surplus while the U.S. had a trade deficit of $727.9 billion:
“It is remarkable that an economy that is only a fraction of the size of the U.S. economy has a larger trading volume,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said in an e-mail. “The surpassing of the U.S. is not because of a substantially undervalued currency that has led to an export boom,” said Lardy, noting that Chinese imports have grown more rapidly than exports since 2007.”
“According to O’Neill (Goldman Sachs Jim O’Neill), the trade figures underscore the need to draw China further into the global financial and trading architecture that the U.S. helped create.
“One way or another we have to get China more involved in the global organizations of today and the future despite some of their own reluctance,” O’Neill said, mentioning China’s inclusion in the International Monetary Fund’s Special Drawing Rights currency basket. “To not have China more symbolically and more importantly actually central to all these things is just increasingly silly.”
For those who are still not aware of why this is such a big deal, it is essentially a turning point moment in global trade. There is no doubt that China will now be inducted into the SDR, and that their importance as a trade and consumption center will quickly lead to a move away from the dollar. To put it simply, the dollar is going to lose its world reserve status VERY soon. Many will cheer this change as necessary progress towards a more “globally conscious” economic system. However, it’s not that simple. Total centralization is first and foremost the dream of idiots, and in any mutation (or amputation) there is always considerable pain involved. The proponents of this “New World Order” (their words, not mine) seem to have placed the
U.S. squarely in their crosshairs as the primary recipient of this fiscal pain.
In my early analysis, I felt it possible that Japan would be inducted willingly into the new ASEAN trading bloc and that they would swiftly fall in line with a dump of the dollar, mainly because their export markets were suffering greatly due to the decline in American purchases. Now it appears that Japan has not been as pliable as the globalists wanted, and so, a war may be on the table in the Pacific.
Rhetoric in Chinese newspapers has been very heated and provocative, and the tensions surrounding the Senkaku/Diaoyu Islands is reaching a boiling point. The two countries have done everything so far EXCEPT shoot at each other, and that will be happening in due course now that China is allegedly locking offensive radar onto Japanese ships. Even Chinese films released in the past two years have been soaked with anti-Japan propaganda, most of them usually set during WWII around the brutal invasion and subjugation by the Japanese in Chinese provinces.
The recipe is one of inevitable disaster, with the U.S. at the center of a boiling pot. As I pointed in my last economic piece, we must now look to events rather than numbers to gain insight into where we are headed. The time has come. China is nearly ready for IMF inclusion. Volatility around the world is high. Our government has a final decision to make on the Fiscal Cliff in March, not to mention the sudden push for possible gun registration and confiscation. My instincts tell me that so many explosive aspects coalescing together at the same tenuous moment is not a coincidence. The next few months call for hyper-vigilance and every ounce of energy we can muster to educate as many people as possible in as short a time as possible.
I say again, China has surpassed the U.S. in global trade. A drop of the dollar is the obvious next step…
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written by Oathkeeper_Scott , February 10, 2013
And look at how Wall Street is just BOOOMING! The powers that be really need a diversion and scapegoat for the deepening sh!tstorm as more bubbles burst big.
Nothing quite like a war. Syria. China-Japan over the Senkakus.
Thanks Brandon. Your thinking/writing can't be found anywhere else on the 'net.
written by Alananda , February 11, 2013
of predictions of all sorts pointing to April - June as a "more likely than not" period in which (FINALLY! [as if we really want this to happen sooner than much, mcuh later]) SHTF in and throughout the US, Inc.
Clif High offers his recent take on when, how, and where at www.halfpasthuman.com, and also describes how his linguistic analyses dovetail with relatively recent results of "remote viewing" experiments.
Perhaps it's time for our asking ourselves the key question: "If you knew for certain that SHTF -- say, during the Ides of March 2013, for instance March 15 -- what would you do differently today than you would otherwise?"
Alternatively, if you have greater optimism, "If you knew for certain that SHTF -- say, between May and the Summer Solstice in June -- what would you do differently today than you would otherwise?"
Please share your insights and wisdom on appropriate thread of the alt-market.com forum.
written by Steve B , February 11, 2013
Some further nuances to an article that is so on target it will be hard to improve.
Soros on China reminds me of a critical annual meeting from 1937 (!) of the CFR and parent organization Chatham house. The text is not available but I heard an internet discussion of it by a person who has a copy. In that year, these characters produced the Script for the next 100 years. Items noted by the Boyz as the sequence: upcoming planned WWII, in which Germany would be annihilated as a nation and culture (precondition for the EU); contrived and phony Cold War wherein "friend" Russia becomes the adversary (in order to fund the massive weaponization of space and other suave ideas for controlling the masses around the world as the NWO was prepared and we did "duck and cover"); construction of the US and European welfare states, especially in the world policeman designee, the US, as the riches to create the tax money funding for the job--and to fund Russia as well--were temporarily needed, also of high imporatnce being the creation of lassitude, stupidity and dependnce of the populace on government; dismantling of the welfare state and looting all that wealth, leaving the US a shattered husk; and, finally..wait for it...emergence of China as the world's leading productive and military power in the early 21st century. The factories, of course, are already humming (think Nixon and Kissinger as the initiators, as China was suddenly capitalist after David Rockefeller's best pal, Mao, "standardized" Chinese culture much as Germany had been standardized earlier. Those US military bases will be occupied to the extent needed by China after the demise of the US into the Third World. These guys were clairvoyant, don't you think?
(BTW, the long time (16 year) head of the AFL-CIO during the zenith of the US labor unions and worker wealth, Lane Kirkland, was a frequent visitor to the Bilderberg meetings over those years. And we think anything is by chance and that real oppositions exist?)
Of course, the UN Agenda 21 will shortly herd us all into the little mouse trap cities. Strictly an interim measure, as once we are there, the Big Pandemic that we are being prepared for with incessant propaganda will be actually launched. 90-99% cull depending on what one reads. The Chinese population will be decimated along with all the rest, as transhumanism and robotics will obviate the need for human beings. Remember Bill Joy's Wired article from what, 1999/2000, entitled "Why the Future Doesn't Need Us"? He had just emerged from a globalist meeting and the only question was slow kill or fast kill. We're clearly in slow kill but Joy noted that fast kill was the preference. That will be the pandemic.
Well, here we are, all pieces of the Script successfully produced except the finsihing touches on the last bit, which, as we see, is happening in overdrive. Unless we stop it.
Will we?
written by bill derberg5 , February 11, 2013
http://www.bloomberg.com/news/...world.html
And let's not forget other significant news. Everyone wants possession of their gold.
written by Leon H , February 11, 2013
http://www.youtube.com/watch?v=0-lEDiUFXUk
written by john witherspoon , February 11, 2013
hey brandon, while i have no doubts that china will certainly be the 21st century axis by which the world turns, i think you may be jumping the gun regarding it readiness. first and foremost, china is still hugely export dependent. as of october 2012, the u.s is still chinas biggest export market. see this:
http://soberlook.com/2012/10/china-cant-break-dependence-on-us-as-it.html
while there is no doubt china is attempting to shift to an internal consumer market, any acute economic implosion in the united states would be equally catastrophic to the china as long as the u.s. remains an integral piece to their exports. a plunge in u.s. consumer demand would leave millions and millions of chinese quickly jobless. this would create massive social unrest--which is the last thing the communist party wants. im sorry, but i dont see this playing out as quickly as you state.
written by A. Hunt , February 11, 2013
The US dollar was used to build China, it's factories, military and infrastructure. Our leaders have been lieing to us for the last 100 years and thats a fact. We need to prepare for coming Third World Status. Think Detroit every place.
written by Brandon Smith , February 11, 2013
@Witherspoon
An implosion of the United States would hurt all nations, but that isn't necessarily going to stop it from happenning.
It really doesn't matter what you think might happen if China dumps the dollar. They are ALREADY doing it. In bilateral trade agreements with Russia, Japan, Germany, India, Brazil, etc. Also, China is no longer dependent on exports to America. This is a common mistake. The ASEAN trading bloc comprises an export market which is now larger than the U.S. China (or should I say the globalists) has already found a replacement for us.
I don't think I'm overestimating the speed of our time frame at all. China was not supposed to surpass the U.S. as the primary trade nation until 2016-2020, and yet, here we are. People always think that the danger is "over the horizon". They never want to admit that it is right at their doorstep...
written by krb , February 11, 2013
You are right Brandon, the danger has arrived. There are a lot of folks out there still suffering from "normalcy bias". I think the big wake call is coming sooner than later.
written by DDP , February 16, 2013
@ Brandon,
Witherspoon is far more on target than this article. It is clear that the author does not have a financial background and does not really understand his assertions.
There is more then one area that affects this trend. The US yes, will probably not be the global leader in exports. China is not attracting the same amount of high end manufacturing and getting the low skill jobs. The majority of the population still remains uneducated and in deep poverty. They are on par with the United States in pulling their poor out of poverty at the moment. Much of what is written in this site is about keeping people in poverty and not moving toward a more social society like the rest of the world has. India is one of the fastest working toward bringing its citizens out of poverty. They are more poised to take over the jobs then China in the future. China is now having to compete with other countries like Africa for low wage employees.
China has a very unstable economy right now. Flooding the market is more about stabilizing their money then some take over of the US dollar. China is also rampant with bankruptcy from bad foreign investors. Because China has a truly unregulated market there is little recourse for companies in their legal system to get anything back.
I would not be so quick to jump off the China bridge... They became the new bad guy after Russia fell... You need to worry more about Europe not China, because they are more unstable and do buy a lot from the US..
If you want to see the US stay ahead, you need to support bills that help students get an affordable good education. Ensure that people are not starving in this country so they can think about self improvement over getting feed. Think about what it takes to make our cities as efficient as cities in Germany so you can keep more money in you own pocket instead at the gas pump, heating and cooling bills. Growing food instead of corn for cows that use up more of our land with far less return per pound of meat. Stop killing Mexico economy so their labor stays in Mexico where I am sure they would rather be than thousands of miles from their families for make nothing. Put pressure on banks to stop sending billions of American dollars into Mexico from undocumented workers and tax free money at that. Reform work visas so we can tax the money....
I can go on and on.... get an education most of you and stop thinking Ron Paul is smart and that we should let people die in sake of profits and then whine when China gives large corporations the profits the want over US workers you might actually get some real change. I suggest you start in you community and create a business that grows for the workers and not just to make you rich. You will get rich a lot faster with the help of other not shunning them....
If whoever is reading this get this far I hope you walk away with a broader point of view.
written by Brandon Smith , February 16, 2013
@DDP
A typical response from a person suffering from economic normalcy bias.
You obviously know little to nothing about economics, which is why your post consisted of a long string of baseless opinions and assumptions backed by no tangible evidence whatsoever.
You didn't confront a single fact I presented in the article with a fact of your own. Who taught you how to present an argument? We expect concrete evidence to back claims here at Alt-Market.
If you really want to show us how "knowledgeable" you are on our economic situation, then you should probably try refuting my points, instead of making meaninglessly broad generalizations. I am thoroughly unimpressed so far...
