China announced swap agreements with Argentina over this past weekend, they also said their mutual trade would be settled in yuan. If you recall, Argentina just recently defaulted on debt. A New York judge then ruled against Argentina’s plan to hopefully restructure. This looks to me like China has ruled against the New York judge!
China has also in recent months been globetrotting while putting in place “swaps” and lines of credit with many potential trading partners. Unlike the U.S., they have not ignored African nations either. They have also set up “yuan trading” hubs in some very “Western” nations including Britain, Germany and France. Very methodically, China has put in place trade and finance systems which have no need for dollars and/or clearing functions performed by the U.S.
I mentioned Argentina because they are the latest deal struck by China and you’ll notice that dollars “were” the alternative currency in Argentina …until now. This brings us to Russia. We have for the last 6 months been putting more and more pressure on them in my opinion with the hopes of starting a war. A war would surely “distract” attention from our current economic failings and in my opinion it is viewed as “necessary” by our rulers.
I also wanted to mention Argentina not because they had previously been under the U.S. dollar umbrella but because China has come to the rescue so to speak. In the case of Russia, even assuming the Western sanctions do work and they do not throw the “natural gas card” at Europe, do you really believe China will let Russia fold? Not that I believe Mr. Putin could be pressured in any way to say, “Aw shucks, you win” but do you really believe China would ever let it happen?
The hope is that Russia’s energy sector gets squeezed. The new “lower prices” for oil, coupled with Russian energy firms not being able to borrow for more than 30 days is the plan to get Mr. Putin to say “uncle” and admit that Russia needs the Western funding system. This is not the case in the real world today, this is not the late 1980’s where the very same scheme actually broke the Soviet Union.
Think about what has happened in just the last six months? The BRICS have formed their own “IMF” or World Bank if you will in competition. China has done deal after deal with anyone and everyone, East or West, NATO or non NATO, with whomever wants to do business with them. Do you really believe China will not supply Russia’s funding needs? However much they are? Do you really believe Mr. Putin does not know or is not fully aware of this? From a financial or economic standpoint there is no way Western sanctions can make Russia do anything Russia doesn’t want to do …China will see to this.
Why do you think China has made all of these trade deals? Why have they set up yuan trading hubs all over the world? Why do you think they have imported at least 5,000 metric tons of gold over the last 3 years on top of what they already had? Why have they done deals for raw materials in long term contracts which are payable with dollars? “Because!” Because China knows the U.S. is financially broke and they are preparing for a world which has moved away from using dollars. They know gold and silver are real money which is why they have furiously imported so much. They have done these many raw materials deals payable in dollars because this is an easy way to “spend” their dollar hoard…and they have lots and lots of them to spend.
Is it a perfect plan? No it’s not, nothing is perfect. Once the dollar collapses I would expect to hear screaming and yelling from countries like Australia who have contracts to supply raw materials to China in return for U.S. dollars. In my opinion, China will probably renegotiate many of the contracts but keep in mind, they will have the “bargaining power” at the table. China only will have to say “we did these deals in good faith, now you want to change them?” If China wants the raw goods, they will have to negotiate but you can bet the terms will be to their liking as all they have to say is “no deal” and walk away only to do a deal with someone else …more desperate. Do you see what I am getting at here? China is pulling the strings, they are choreographing the wane in power of the U.S. No, had we not done the foolish things we have over the last 20-30 years, China would not be able to do this …but we did and they are.
I want you to understand the what, how and why China is doing and has done what they have because they will soon be “making the rules” when it comes to business and finance. I also think they will very soon be “making price” in the gold and silver markets. They have a cash market about to go live to perform this function. China is merely preparing for a world which is no longer dominated by the U.S. We have abused our privilege as the issuer of the reserve currency. We have lied, cheated and stolen our way out of the good graces of the rest of the world.
Many have heard the theory of the “new world order,” I believe there is a plan for this. I also believe there is more than one plan for this, China’s and the East’s being the other one. In my opinion there are only two real possibilities, first, China’s plan working where the U.S. is isolated and no longer able to make the rules and pull all of the strings. The other alternative is the horror of a global war where unfortunately man now has the ability to destroy the planet. The West has a most archaic view of the new world order, one in which the U.S. remains dominant, everyone uses dollars and smiles while being abused. The most likely outcome is none at all or nothing, I believe we will see some of both, China’s strength growing while U.S. dominance wanes and unfortunately some sort of war.
Like it or not, the U.S. has put itself in a position of growing isolation. Everything we do is one sided. Our financial and economic reports are blatantly bogus and foreigners know this. We even allowed U.S. banks and financial institutions to omit or falsify financial reports after 2008 in the interests “of national security”. Think about this, you are an investor thinking about investing in a bank or a broker (in a moment of delusion) and you decide to read their financial reports. Only thing is, they are not correct. The reality is the bank is insolvent and broke but they don’t have to tell anybody because of an Executive order (I think it was Bush who signed this).
Here is my point, the Chinese know, the rest of the world knows, our allies (Germany in particular) knows, we are broke, we lie, cheat and steal. If this can be done in private, good. If not, “oh well, who’s going to call us on it?” Well, what is happening in my opinion is the world, led by China are preparing to “call us on it” with China pulling the strings. We will wake up to an entirely different world one day where the table is no longer slanted in our favor…I see a future where the “slant” to the table will be in a direction not favorable to the U.S.. This will surely be more than a wakeup call to the unsuspecting!
The big problem I see with China’s plan is that conditions in the US will be absolutely horrible once the dollar reserve status ends. Manufactured goods will basically no longer be imported for any price the average person can afford since there is nothing available to offer for foreign trade, except maybe food exports. Oil prices will go sky high, in an economy that has developed around copious cheap oil and is now totally dependent upon it. Decades of city development have been centered around building highly dependent and dense suburbs whose one driving engine is consumption. These will die a fast death. No one is independent anymore.
Basically, it will be Hell on Earth in the US. The populace will be very angry, the leadership is narcissistic and warmongering, and the media will be laying the blame for all this squarely on Russia and China (with some degree of , but blame goes to both sides). A nuclear war will be inevitable.
The problem is that China seems positioned for a total wipeout of the US. Well it’s not good to totally wipe out an opponent as unpredictable, aggressive, and dangerous as the US. I don’t see how provoking an inevitable world war with the US is in any way in China’s advantage. It would be in their advantage to at least let the US limp along with some dignity after the crash, although I’m not sure how that would be possible once the dollar dies. I think China knows this, but what can they do? I guess what they could have done is allow the US to retain some of its historical gold reserves but given the nature of the western banksters I don’t really think China was in control of that.
Unfortunately you are in my opinion entirely correct. There are variables but as you say “Hell on Earth”.
It’ll be interesting to see how long Europe can hold out without Russia’s gas and oil. A lot of folks out there think we can fill the gap, however, we won’t be able to export LNG until at least 2016, maybe later. And a lot of that has already been contracted out to other places.
maybe until Jan. or Feb., Russia has already cut supply to Poland by 24% in the last 2 days.
Jesus…can’t this wait until next spring? It’s Football season!
yeah, but then it’ll be baseball season.
I sincerely hope no other paper system emerges after the event. That would be a waste of intellectual capacities.
very well could happen.
I will very likely throw up, if such new set-up is announced. lol. Let’s put that scenario in the background for a while.
I agree with Bill.
It is very likely that the fiat system will continue after any collapse since the West has virtually no gold left and will fight any form of a gold standard, tooth and nail.
Remember, as well, that the Chinese are not as yet ready to have the Yuan nominated as a Reserve currency. So they cannot insist on having Gold predominantly in the mix. My guess is most likely it will be a basket of currencies with a small percentage of gold thrown in.
maybe…maybe not.
Paper currencies require faith and confidence by the average person, otherwise no one will use them as a store of value and inflation will rise. Once the current system dies, everyone will have lost faith in the system and will not save in any paper currency. You can be sure no one will continue to willingly contribute to imaginary 401K’s at some bank after this happens, they will be trying to get anything they can out of the bank. So we won’t have a continuation of the same with a new paper currency. If they try there will be constant high inflation and then by definition if you own something else real that holds its value, ie PM’s, then you will have “won”.
it’s called “Banana Republic”.
Great analysis and yes China is in the drivers seat, we put them there.
FYI – Harvey Organ mentioned you in his interview with Greg Hunter 🙂
yes thanks dishman, I watched it. Harvey is quite brilliant but he is so smart his mind gets ahead of his mouth. He very well may be correct in his timing, I would not put a date on it because no one really knows, that said, Shanghai IS almost out of silver which could really pose a huge problem.
I, too, saw this interview and his reference to you. I was charmed to hear it. Great minds think alike?
Link:
http://www.youtube.com/watch?v=aZwSiHBxm0c&list=UUG-G8LLr38fQUNZU8K0t-EA
thanks Todd, Harvey prints my work on his blog and we do converse quite often. Not sure about mine sometimes but Harvey is quite brilliant and a walking file cabinet of information.
Bill,
Our leaders have betrayed us and now we will all pay the price.
Americans are hated because of our leaders that hhave the rest of the world thinking we are liars and robbers.
Life is getting to get really hard and those with college educations have wasted their time and money.
it looks that way.
RF, Agreed. And taking out a huge chunk of debt for a degree is a terrible thing to do now.
Excellent article Bill. Again, your articles make you think. Another scenario which combines both of yours above. First, I believe MAD (Mutually Assured Destruction) is still in effect. Nobody wants that, even the Megalomaniacs who are running things. They want something Left for them to Control after They bring America down. The Maniac Banksters, I believe have a deal with China for their Rise to economic dominance. They have opened our borders and everything else to our enemies and propagandized the American people to the point that, now we the people are the Enemy of the State. So, when They pull the plug and Collapse the economy and the dollar, this will throw our Nation into Chaos and internal War. This will necessitate the imposition of Marshal Law and the dissolution of the Republic and the advent of the Police State in the New Amerika. Oh, the Maniacs will still be in Control. We shall see. I believe this is Their plan according to all I see going on in this country and abroad.
it will be ugly.
It sure makes one wonder RF… I believe to detect some very weird things. Typewriters back in the game, smartphones outside closed door meetings, Belgian powerplant being sabotaged, German chemical plant blowing up, where does it end (?!) “Bastards” need to acknowledge they have been clearly identified and they need to cut the crap. They need to understand that the cat is out of the bag and they’ve crossed a red line BIG TIME. It is all too easy to HIDE behind the apparatus, which is now spread worldwide. People either act on behalf of their own name, or they become part of the 0.1%. I very well know what part I belong to. Ever since the DIRTY reporting of the Guardian/Telegraph/Reuters, some fridays ago, nations have been forced to take positions. I believe it is happening behind the scenes, not publicly (yet) as formerly stated. I stick to the observation that this is the beginning of a new age of enlightenment/reformation. And we’re all pretty much screwed. Not sure what to expect. I do understand there will be hell to pay. It’s a good thing to exchange thoughts.
Time to bone up on nuclear war survival skills.
That includes moving to safer areas e.g. southern hemisphere
I agree this is happening on a scale and velocity never imagined. I always “knew” this was a natural progression for any empire. It is happening about 50 years earlier than I contemplated.
In the short term, after the tables have tilted, things will be rough for the US. It will be Hitting Rock Bottom. Like any junkie, it is the point of recovery.
We the People are indeed made of different stuff. Not good enough to prevent this from happening, but recover we will – IF we have the sense to return to our roots, with a faithful interpretation of the Constitution and never allow the soft money crowd any where near the Centers of power.
There are still enough of us who get it and value Real rules and the right stuff.
I sure hope so.
Congratulations on your excellent report including China’s development. Chinese president Xi Jinping visited the Port of Duisburg in Germany on March 29, 2014, welcoming the arrival of a freight train from Chongqing in China. Put into operation in June 2011, this rail link will serve as a conduit for products traveling between China and Germany, but it also has more profound significance. Experience demonstrates that more connections between China and the world will stimulate China’s development, and that tighter connections between China and the world will lead to more economic opportunities being shared.
thank you Victor.
Beijing (AFP) 11 September 2014 – 07:45 – China and Russia will build one of the largest ports in northeast Asia on Russia’s Sea of Japan coast, reports said, in a further sign of the powerhouses’ growing alliance.
The seaport is expected to be able to handle some 60 million tonnes of cargo a year, China’s state-run People’s Daily Online reported late Wednesday — comparable to Britain’s busiest port Immingham or Le Havre in France, according to European Commission statistics.
The new facility will be located in far eastern Russia, just 18 kilometres (11 miles) away from the Chinese border. The region is also close to North Korea.
Chinese and Russian leaders inked a deal on the port at May’s Conference on Interaction and Confidence Building Measures in Asia (CICA) in Shanghai, the report said.
The move represents the latest step by Beijing and Moscow to boost their energy and infrastructure ties.
Resource-hungry China is seeking to diversify its sources of energy amid booming domestic consumption, while Russia — at odds with the West over its annexation of Ukraine’s Crimea peninsula — is seeking to refocus its gas and oil exports towards Asia.
…and the U.S. is prompting the alliance.
It will be interesting to see the Chinese Cash Price for Gold and Silver for sure.
The way both have been heading south in price for ages now with all that
“manipulation” and “shortages” going on, I presume some folks might start buying in case there is a short squeeze. Ha Ha Ha Mr Turk.
Personally I will wait, because before this is over $16 is on the cards for silver. Who needs the stuff anyway in an industrial downturn?
Gold.? well it could hit $1000 and will not surprise me.
Anyway back to the Pistorius Trial live verdict.
Regards SS aka Bo P
silver is in severe backwardation in Shanghai and they now have less than 100 tons down from 1,200 tons last year. We will see.
Could this be the final push down in the price of gold and silver as physical starts trading in Shanghai.
Hi Russell, I was thinking to myself this morning that “premiums” on physical will now start to rise as paper price has gone too deep. We will see but I bet the price to procure physical does not go much lower than where it is now.
As long as the west still lingers to hang on, the price of Gold and Silver will go as low as the manipulaters need it too. But non of this matters cause you can only manipulate something for so long, manipulation is a temporary flaw, but the value of Gold and Silver will always show its worth sooner or later, it always has. On the topic of China and Russia, they know every move the West will or could make, patience is their virtue and knowing the US economy, debt, and banks are a ticking time bomb, they hoard Gold and continue to resource and build infrastructure ready to equip and deal with the desperate and fragile nations of NATO, the scary thing is they may just decide to leave us to our own destruction and then pick up the peices later, then it’s on their terms. This of course could only happen if the US don’t start a war that will involve every nation, and thinking on this I can only assume the war has already started in the political sense, it will be interesting to see how China and Russia will continue to out manouver them.
we think “next quarter”…they think “next century”.
I don’t care too much about the G&S manipulation. In respect to the current mess, that is just peanuts. I care alot about all my wonderful Western friends that will be screwed to such an extent, some of ’em will just fall down. They’re screwed. Sometimes I need to write it off, literally, with words. I feel like an outcast, where in truth, in know to be 100% correct. I got rid of the smartphone, gmail, name it. All this crap. I lost confidence. “The bastards” I often refer to, are to be identified as Big Brother with bad intentions. Who the h*ll do they think they are (?!). Some “foreign” friends, I put at the same level as my parents. Bill, sorry for sad message, anyhow, I really look fwd to your next set of words. It’s a good thing to exchange thoughts.
gold and silver manipulation are THE CORE of what is happening. I will explain Tues. or Wed..