As the dollar loses value and importance, many nations are preparing to dump it.
News with Rick Sanchez –
China dumps US debt, fears dollar plunge
– Flash Points –
1 – The Fed’s unrestrained money-printing has frightened China.2 – China realizes that US dominance is coming to an end.
3 – China explicitly stated that these moves are only “the beginning.”
4 – The dollar’s status as global reserve currency puts China and other nations in a “politically and economically disadvantageous” situation.
– Synopsis –
Wary and Worried
In fact, back in August 2015, China had already sold off $180 billion worth of treasuries. In 2019, it dumped another $110 billion worth of treasuries, and over the past month or so, it has sold off a further $10 billion.
Apart from its fears owing to the Fed’s money-printing frenzy, China is also wary of the Fed’s threat to lower interest rates to below zero. While the Fed recently stated that it will not do so in the near future, China is obviously concerned about holding a dollar asset that is becoming increasingly weaker.
(Selling) Off to a Good Start
Although China has been divesting US treasuries for over 5 years now, it refers to the recent moves as only a “beginning.”
The real “beginning” dates back at least 5 years. We can say that China is off to a slow but steady start, and now it seems to be kicking into high gear. Apparently it plans to dump more and more of the US debt that it holds. Once it goes into full “dollar-dumping” mode, the effects will be profound and horrific.
An Utter Lack of Confidence
– Insight from Outside –
Once China’s treasury-dumping kicks into high gear, and once other nations start following suit, it will becoming increasingly difficult for all holders to offload treasuries. For those countries, it will be a tough and merciless market. For the US, it will be horrific and, ultimately, destructive.Ditch, Dump, and De-Dollarize
I see china being the next economic giant. its so sad that this is what it is. The reign of the US is gradually sliding down. The Feds have to find a way or else they will loose their status as the economic reserve of the world. i think they can still salvage things.
another fear is that once china removes its support and may be Germany, it just means that the doom is iminent.. nice post
Actually, while the Fed and the other powers-that-be in the US could conceivably do something in response to the current situation, they seem to be clueless about the extent of their dilemma.
In other words, if they responded properly, they might be able to rescue their economy and currency. But they do nothing, apart from digging themselves a deeper hole from which their will be no escape.
This is so sad .. i can't imagine the effect of this. I just hope they stop digging deeper
It seems like the US is in such a position nowadays that it cannot stop digging a deeper hole for itself. That means, quite simply, that it will not stop. Dig, dig, dig!
This is so sad
I'm wondering why China is dumping that huge sum of dollars in Treasury.
What's their aim? Is it dragging us dollar that bad?
Probably because they believe that the dollar ( and all US bonds) will drop in value. So, they're trying to get rid of as much as they can, without dumping so much that the price drops.
Well dollar is not dropping that fast I suppose. Why the rush from China. Unless dollar is facing a threat that only the few know about. It can be seen in their actions cause of their quickness in dumping huge sums if dollars in their treasury
This economy is an illusion and the system will be reset with WW3.
Is that your solution? After a pandemic like this, i don't think you would wish for war. I just feel people should divide their money into precious metals, crypto,some stocks then small fiat. I feel having all your money in fiat is quite risky right now
We need to avoid that at all costs, but we the present level of consciousness with the human species. War will occur because people want power, fame, and is something that will occur again, unfortunately.
Indeed, the warmongers will continue to take us to war, until the system changes and we put peacekeepers in power.
I don't think anyone here is hoping for war. Except, of course, the masters of war in various governments.
Yep, most (if not all) of the so-called "wealth" that's been supposedly produced over the past few decades is illusory. When everyone starts to realize how bad the situation actually is, entire economies will collapse, and, as you say, another world war will likely break out.
Peace....
The things that bug me the most, people work all their life with paper money...
Right. Paper fiat money, whose value can soon be debauched by the issuer. That amounts to outright theft.
Thanks for the info. I wonder what will replace the dollar?
Maybe the yuan, or a basket of currencies. Maybe bitcoin.
I really hope for the last option, but its reality is about 0.01%
It has been pretty clear for a while already that countries are considering returning back to gold pegged currencies... It would save the world economy but kill US economy in the process. US government would need to sell all privatized oil to restore value of US dollar, essentially pegging the value of US Dollar to oil like the krone in Norway.
Countries all around the world must decide fast if they want to peg their currency to gold or another precious metal (or valuable) as people are pressuring governments for violation of constitutional protection of assets.
Word has it that the Chinese are working towards backing the yuan with gold. For the past 10 years or so, China has been stockpiling more and more gold. It reports that it has only a few thousand tons, but most observers assume that China holds about 3–5 times as much gold as it claims to hold.
Once China decides to do so, the US dollar will be toast. Burnt toast.
It is known fact that China never tells the whole truth... China is pretty much the leading country when it comes to world economy... Before US cancelled trade agreement with China, trade with China accounted about 20% of US economy...
Good point. Actually, most governments do not tell anything near the whole truth.
As for the US, it claims to have over 8 tons of gold, but its holding have not been audited in decades, and nobody can confirm that it actually still has those 8 tons. Many believe that most of the gold the US used to hold has in fact been lent out or sold, and that the actual US gold holdings are minimal.
Why would USA need gold as it has no value inside their own borders ;)
Every country needs gold, as their own fiat currency has only phantom value. Without gold, a country has no "real" money.
There hasn't been real money in decades... Even Norway, which is one of the wealthiest countries in the world, has own currency pegged to oil, not gold.
Here is another fine entry in the DDD series. No doubt, the flippant printing of the dollar has dangerous consequences which, in the near future, will become very obvious. I'd like to ask what you think will take the place of King Dollar. Thanks!
I doubt that another fiat currency will replace the dollar, not even the yuan. So, it will most likely be a basket of currencies. At the same time, it's not like the world actually needs a single reserve currency, and it might be better off without one.
The other day, I watched a Keiser Report, on which the guest asserted that bitcoin is the most likely candidate to become the next global reserve currency. That makes complete sense.
Could be basket containing USD, EUR, CNY and JPY...
This really answers the question. I think Bitcoin will be the next big thing in the nearest future. Onwards!
There's a good possibility that BTC might be the reserve currency.
Gold and silver will continue to be a store of wealth. But, in terms of currency, cryptos in general and Bitcoin in particular seem to be the best option.
a great post! congratulations