Chi-Coms To Dump One Trillion In US Reserves

Chi-Coms To Dump One Trillion In US Reserves
December 20th, 2006  

Topic: Chi-Coms To Dump One Trillion In US Reserves

Chi-Coms To Dump One Trillion In US Reserves
Chinese tell visiting Bush administration officials they will not sit back
and lose their shirts as U.S. Dollar collapses; they are getting out fast and large.

BEIJING -- Sources with a U.S. Delegation in Beijing have told The Hal Turner Show the Chinese government has informed visiting Bush Administration officials they intend to dump One TRILLION U.S. Dollars from China's Currency Reserves and convert those funds into Euros, gold and silver!

China was allegedly asked to withhold the announcement until Bullion Markets closed for the weekend to prevent an instant spike in gold and silver prices. This delay will give the world the weekend to consider appropriate actions rather than have a knee-jerk reaction which could see the U.S. Dollar totally collapse in value Monday.

According to this Senior source, China told the U.S. delegation they no longer have faith in U.S. Currency for several reasons:

1) The Federal Reserve Bank ceased publishing "M3" data in March, making it nearly impossible for anyone to know how much cash is being printed. China said this act made it impossible to tell how much a Dollar is worth.

2) The U.S. Dollar has lost upwards of thirty percent (30%) of its value against other foreign currencies in the recent past, meaning China has lost almost $300 Billion simply by holding U.S. Dollars in its reserves.

3) The U.S. has no plans whatsoever to reduce deficit spending or ability pay down any of its existing debt without printing money to pay it off.

For these reasons China has decided to implement an aggressive sell-off of U.S. Dollars before the rest of the world does so. China reportedly told the US delegation; "we are the largest holder of U.S. Currency and if the rest of the world unloads theirs before we unload ours, we will lose our shirts."

Early this week, in an unusual move, the Bush administration sent virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Dec. 14 and 15.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke lead the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation is Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.

The Bush administration wanted to get China's cooperation in preventing a dollar collapse. The Hal Turner Show has been told the effort failed.

According to the source, Fed Chairman Bernanke left the meeting "pale and in a cold sweat" as the implications of China's decision seemed to sink in.

The implications are enormous: The U.S. Dollar is likely to collapse in value against all other major currencies as early as Monday, December 18.

This would cause a worldwide sell-off of dollars, create almost immediate "hyper-inflation" in the US and also impact world markets at a level "worse than the Great Depression of 1929."

Arabs to the rescue?

In a strange twist of fate, Arabs and OPEC may come to the rescue of the U.S.!

Senior officials in OPEC made clear that they too would be severely harmed if the U.S. Dollar collapsed, and hinted they "would not be inclined to sell oil to any particular nation that intentionally caused such a collapse."

This was a thinly veiled threat to China, which depends heavily on OPEC oil for its rapidly developing energy needs.

The OPEC officials even went so far as to say "Since China lacks the ability to project their military power, OPEC nations need not worry about any Chinese military response to an oil cut-off."

Such brutally candid remarks will not sit well with China; and signal ominous things for the U.S. .

Arabs and OPEC will want something in return for saving the U.S. from economic collapse and it is already widely speculated what they want will be a complete change in U.S. backing of Israel in the Middle East.

If such demands are made by the oil-rich Arabs, the U.S. would be left with little choice but to virtually abandon the jewish state to preserve itself.

UPDATE - 10:18 PM 12-14-6
The Washington Post confirms. . . .
'US, China Clash On Currency'

Saturday, December 16, 2006:

Additional sources, one in the U.S. Commerce Department and another in the US Treasury have confirmed the initial report above and referred me to another, Third, source in the Pentagon.

Both the Commerce and Treasury Sources report that while China will not be able to simply trade their Dollars for other paper currencies, they will spend their U.S. Cash on commodities such as gold, silver and Rhodoium as well as military hardware; ships and planes, placing large orders and paying for those orders with the one point one trillion in cash dollars they possess.

Extreme Military Concern

In speaking with the contact at the Pentagon, I am able to now report the Pentagon views this currency-killing as a cunning military aspect to Chinese plans:

The Pentagon says that while China has a 2 Million man army, they lack the logistics and heavy lift capability to move that army and supply it. They can, however, get that military to South Korea and to Japan.

The Chinese see that the U.S. Military is over-stretched and almost exhausted by its globe trotting Commander-In-Chief. They feel that by intentionally destabilizing the dollar, the U.S. economy will fail, putting tens of millions of Americans on the unemployment line and putting unbearable pressure on the US Government.

Then, with the U.S. economy in shambles and its manufacturing base eroded by a steady stream of manufacturing plants moving out of the US., the American government will be too occupied with troubles at home to do much internationally. America will be in no position to challenge China, allowing the Chinese to act militarily elsewhere in the world;

Further, if the U.S. attempted to intervene against any Chinese military action, the only plant in the world which can manufacture the specialized gyros needed for U.S. Cruise Missile guidance systems, is now located in. . . . .China.

China could prevent that plant from shipping to the U.S., and once our arsenal of cruise missiles was depleted, it would take a long time to re-tool a plant to make more gyros and resupply cruise missiles for battle. The Chinese feel they could accomplish certain military goals before the U.S. could re-tool.

They are also confident the U.S. will never "go nuclear" as long as the U.S. itself is not attacked.

The Pentagon source went so far as to say "Even if China was to lose the entire one trillion in cash to a collapse of the Dollar as a currency, they will have succeeded in taking the U.S. off the world stage as any type of effective military or economic power -- without firing a shot!" A 'classic' Sun Tzu paradigm of victory - the art of fighting, without fighting.

The crippling of the US is a highly desirable military benefit for China at a relatively cheap price since it will leave their human capital and infrastructure assets in place; assets they know they would lose if a hot war erupted with the US.
December 20th, 2006  

That's about all I can say. Jesus. If anyone doubts me reread Chinese reason #3 (the part where they basically call us deadbeats, and the painful thing is they are right).

Now go back todays headline about esteemed Leader wanting to increase the size of the military to get himself out of the Iraq mess (not that it will ever work, but thats another subject). Wars are very expensive, whose is going to pay for this, Mr. President? Check your credit line, You're about busted out.

Forum rules prevent me from insults, but what am I see things like this I just cringe.

"Bush's Economic A-Team" - is that some sort of joke?

I know how Colbert (Louis XIV financial guru) must have felt.
December 20th, 2006  
Perhaps we should just do what the Chinese do and keep our currency at a fixed value and put a maximum on all prices within our nation, eh?
Chi-Coms To Dump One Trillion In US Reserves
December 20th, 2006  
this is rather alarmist and probably not true. The US is the #1 purchaser of chinese goods, so why would they sabotage their best customer? The chinese are also owed a lot of money by the US, so they would they basically make us default on the money we owe them? doesnt make any sense.
December 20th, 2006  
Originally Posted by therise21
this is rather alarmist and probably not true. The US is the #1 purchaser of chinese goods, so why would they sabotage their best customer? The chinese are also owed a lot of money by the US, so they would they basically make us default on the money we owe them? doesnt make any sense.

There's is actually a brilliant train of thought behind our debt, a majority of it is foreign owned, this way if we ever face some serious crisis the rest of the world will be forced to prop us up or else our economic collapse will trigger a world wide disaster, it's a way of keeping foreign governments in line.
December 21st, 2006  
Don't count on that. More likely the world would simply dump the dollar and buy Euros instead. I know I certainly would. I have heard stories that Columbia Drug Czars have already made the switch...

Fixing the currency rate would really solve things it would create new problems. The only way to avoid catastrophe is to put Uncle Sam on a spending diet, as well as raise taxes.

As I said before the real problem facing us is the debt and its getting bigger. This is a warning (and its not surprising). The warning is that the Chinese and Saudis will not keep throwing free money at us forever. When they
December 21st, 2006  
The sell off will kill the dollar and plunge the US into a massive and instant depression because the rest of the world is going to follow suit because no one wants to be left holding. This is EXACTLY what Eisenhower told the Poms he was going to do to the British Pound if they didn't get the hell out of Sinai back in the 50's. I told people four years ago the Chinese would do this as soon as they had enough ancillary markets to offset their own personal losses in economic terms and they spent the last few years cementing new market ties in the EU and Africa and now those markets are of more value than the US market. If this is more than a threat but what they are actually going to do it will be worse than the stock market crash in the 30's. The US will be in the exact same position as post WWI Germany.
December 21st, 2006  
just to show you how reliable a source this is coming from this is from the same page as the above article. i especially like the part about killing off our own gov't officials:
"The Hal Turner Show"

airs this Wednesday evening from 9:00 - Midnight Eastern US Time (GMT -0500."

I will have brand new, inside information about the pending collapse of the U.S. dollar; we'll discuss what steps have to be taken AGAINST OUR GOVERNMENT OFFICIALS if a collapse happens (who might have to be killed) and what you should do to prepare.

We'll also talk about the huge surge in Black and Hispanic Crime, and how to create a political environment IN YOUR TOWN to free-up the police to stop these savages!

As usual, we'll have complete FREE SPEECH, where you can call-in and say what's on your mind without censorship. It promises to be a terrific program. You can tune-in FREE by clicking the LISTEN LIVE logos at the top right side of this page!
December 21st, 2006  
Originally Posted by mmarsh
Don't count on that. More likely the world would simply dump the dollar and buy Euros instead. I know I certainly would. I have heard stories that Columbia Drug Czars have already made the switch...
Their own losses would be too great, criminals doing such is one thing, national governments are totally different because of issues of accountability. Donald Trump did this same thing, he took out so many loans from banks that when his business started to decline the banks had to step in and give him more money or else they would have collapsed also. Same thing, larger scale.
December 21st, 2006  
Well for what its worth I agree with Therise21, the source is unreliable at best and even its quoting of the Washington Post is somewhat hit and miss but for the record here is the WP document and please note the date on which it was released. Nothing more than alarmist nonsense.

China Set To Reduce Exposure To Dollar
Move Would Probably Push Currency Down
By Peter S. Goodman
Washington Post Foreign Service
Tuesday, January 10, 2006; D01

SHANGHAI, Jan. 9 -- China has resolved to shift some of its foreign exchange reserves -- now in excess of $800 billion -- away from the U.S. dollar and into other world currencies in a move likely to push down the value of the greenback, a high-level state economist who advises the nation's economic policymakers said in an interview Monday.
As China's manufacturing industries flood the world with cheap goods, the Chinese central bank has invested roughly three-fourths of its growing foreign currency reserves in U.S. Treasury bills and other dollar-denominated assets. The new policy reflects China's fears that too much of its savings is tied up in the dollar, a currency widely expected to drop in value as the U.S. trade and fiscal deficits climb.
China now boasts the world's second-largest cache of foreign exchange -- behind only Japan -- and is on pace to see its reserves climb past $1 trillion later this year. Even a slight diminishing of the dollar as a percentage of those holdings could exert significant pressure on the U.S. currency, many economists assert.
In recent years, the value of the dollar has been buoyed by major purchases of U.S. Treasury bills by Japan, China and oil-exporting countries -- a flow of capital that has kept interests rates relatively low in the United States and allowed Americans to keep spending even as debts mount. Some economists have long warned that if foreigners lose their appetite for American debt, the dollar would fall, interest rates would rise and the housing boom could burst, sending real estate prices lower.
The comments of the Chinese senior economist, made on the condition of anonymity because the government disciplines those who speak to the press without express authorization, confirmed an analysis in Monday's Shanghai Securities News stating that China is inclined to shift some its savings into other currencies such as the euro and the yen, or into major purchases of commodities such as oil for a long-discussed strategic energy reserve.
In a report circulated this week, Stephen Green, senior economist with the bank Standard Chartered PLC in Shanghai, identified several signals that China is intent on limiting its exposure to the dollar -- not least, a recent pledge from the State Administration of Foreign Exchange to "actively explore more efficient use of our foreign exchange reserves."
"We believe this adds to the downside pressure the USD [U.S. dollar] is currently facing," Green wrote. "It is the first official expression from SAFE that they are looking at switching away" from the dollar.
The comments on SAFE's Web site reinforced earlier public warnings from Yu Yongding, an economist on the monetary policy committee of China's central bank, that the country's reserves are now vulnerable to a drop in the value of the dollar.
"The general trend for the U.S. dollar is continuously weakening," Yu said, speaking to reporters at a conference in Beijing last month. "Countries with huge foreign-exchange reserves will have their assets shrunken."
Last week, Hu Xiaolian, director of the foreign exchange administration, said China plans to "optimize the structure" of its reserves. Analysts took that to mean China would pursue a higher return than it can get from holding dollars by diversifying its reserves.
Not all economists anticipate negative repercussions for the U.S. economy. Were China and Japan to engineer a significant fall in the dollar, those nations also would suffer the consequences -- sharply diminished exports as Americans lose spending power, plus a drop in the value of their dollar assets.
"It is thus extremely unlikely that China would do anything to harm its own balance sheet," wrote Stephen Jen, an economist with Morgan Stanley, in a research note distributed Monday.
In 2005, the dollar rebounded against major foreign currencies as the Federal Reserve raised short-term interest rates -- making dollar assets relatively more attractive than others -- but has slid a bit early this year. Meanwhile, China continues to amass foreign-exchange reserves at a pace of roughly $15 billion per month.
Warnings about an impending Chinese sell-off in dollars emerged in July, as China slightly altered the way it sets the value of its currency, the yuan, bumping it up against the dollar by about 2 percent. At the time, China announced that it would gradually allow greater movement in the exchange rate -- something that has yet to materialize -- while also shifting from a system in which the yuan moves with changes in the dollar to one where it tracks a basket of currencies including the yen, the euro, the Hong Kong dollar and the South Korean won.
The move temporarily muted criticism on Capitol Hill from those who accuse China of currency manipulation, asserting that an artificially low yuan has made China's goods unfairly cheap on world markets. But as the implications of the new currency policy rippled out, some analysts suggested that China would thereafter have less need for dollars and greater need for the other currencies in the new basket, sending the greenback down and risking higher U.S. interest rates that would dampen economic growth.
China sought to quash such talk. In September, a senior central bank official told a ballroom full of international executives gathered in Beijing that China would not sell significant quantities of U.S. bonds, cognizant that such a move would "cause the price to plunge."
Even if a Chinese shift away from the dollar weakened the currency, that would probably not soothe tensions with those in Washington calling for an increase in the value of the yuan to help U.S. manufacturers. Unless China severs the link between the value of its currency and the dollar -- a move Beijing says could destabilize its economy -- then a weaker dollar would simply mean a weaker yuan as well, leaving in place the current debate over whether China's export earnings are being netted unfairly.