It was only a matter of time (a very short time) before China (and their new partner Russia) wakes up to being poked and prodded by the U.S. Last week saw the biggest geopolitical news possibly since the end of WWII nearly 70 years ago. I do not make this statement for shock value, it is true. 70 years ago the United States held a global monetary conference in Bretton Woods N.H. that formalized the dollar as the world’s reserve currency, this arrangement is about to change drastically.
Unbelievably this past week went by with almost no Western press coverage of China and Russia’s new partnership. What coverage there was did not even look 5 seconds into the future as to what it really means. The biggest events were the $400 billion energy deal which will include pipeline infrastructure and the exclusion of dollars. We accused China of spying and indicted 5 of their military officers of espionage. The Russians also test fired an ICBM just prior to a massive “joint” naval exercise with China. This was all followed by a Chinese fighter jet passing within 50 meters of Japanese fighters, a dangerous game of “I dare you.”
China as I mentioned last week dropped using Microsoft’s Windows 8 on state owned computers and since then in very big news told all state owned entities to discontinue business with U.S. consulting firms. Cisco says that they have not received any new Chinese orders in a month and IBM supercomputers are now being taken out of service. It is of utmost importance that you understand what is happening right before your very eyes. The U.S. is being isolated and cornered on its own with WWIII already begun. No, no shots have been fired yet (with the exception of Syria and Ukraine so far) but this is yet to come. So far it has been a war of words and finance, finance being what it’s all about.
I wish that Americans would for their own sake wake up to what is happening because one morning soon we will wake up to go to work (or not) and our world will have changed. Actually, it is better said that our world will have “been” changed for us. Our world is changing right in front of us and in the open yet so few see it. China and Russia (along with over 100 other countries) are none too pleased with the way we have “run the world.” Unfortunately, this tandem now has the ability to steer our destiny and if they wish, destroy our way of life.
I have seen analysis that states the Chinese will (can) never cut ties with the U.S. because it would kill their exports, I disagree with this. I truly believe that this latest announcement of state owned companies dropping business with U.S. consulting firms is only a precursor of things to come and ultimately the start of a trade war. I wrote a week or two back that “They Don’t Need Us We Need Them” and this is true on so many levels. It is true financially, economically and from the standpoint of “our way of life.”
I don’t think that even those who understand this concept really understand just how easy it now is for the Sino Russian partnership to cripple the West. A concerted dumping of dollars and U.S. treasuries coupled with demands for the delivery of gold and silver from our impaired vaults would pretty much do the trick financially. If this were followed by a trade embargo of physical products, a trip into Walmart will become a past luxury. You can pooh pooh this analysis if you’d like, if I (we) understand this, the military minds in both Russia and China understood it far earlier.
I ask you this, do you believe that our “dependence” on China for capital and goods was a fluke thing or happened just by chance? No, just as a drug dealer gives enough “freebie” products early on to “hook” the junkie, this is what has happened to us. China made it easy for us to borrow money and to consume products because they supplied us, they can just as easily shut off the spigot. Could they have just shut off the spigot for no reason? Physically yes but practically no because then they would be the bad guys in the eyes of the world. No, they waited for the U.S. to “cheat” enough times in visible fashion so that the world saw with their own eyes. We have spied, cheated, stolen, killed foreign leaders and supported coups all over the world, were China to shut us off in any or every fashion the “world” would more than likely applaud at this point.
I am so saddened to have come to this conclusion because I grew in the era where the U.S. wore the white hat and stood for justice. Unfortunately this is no longer the case. Neither allies nor business partners know what to expect from us anymore. What we say, we don’t do and what we do, we say we didn’t do it. Foreigners see this as plain as the nose on their faces; for the most part Americans unfortunately don’t see it at all. “We” don’t see it because we don’t want to, we don’t want to because it is as “ugly” as anything we’ve ever seen.
Please understand that the Chinese are assuming a leading role in many separate yet connected areas. This is being done “gracefully” and they have allowed the U.S. to flail our arms and speak poorly for the world to see. On any given day the Chinese have the ability to change our lives forever. No charts or crystal balls exist to tell us when this will happen, all I know is that they will… because they can and we have abused our power to the detriment of others and done it publicly. If you truly understand the Eastern mindset, they have “helped” us do it of our own free will.
I have been asked why I am writing so much about Russia and China. You must understand that as I see it, the Sun is rising in the East and setting on the West. We (the U.S.) have been hanging on to past glory and power literally since the turn of the century. Economic numbers have been grossly fudged; our news has been massaged, altered and even hidden from us. It’s as if “if we don’t see it or know it…it mustn’t be.” The reality is that the rest of the world sees it and knows it; the reality is that wealth and power are shifting and changing hands. I believe that if you see this, understand it and know it, you can at least attempt to protect yourself from what is coming. The timing of your “personal economics and finances” will be directly affected by decisions that are being made in Russia and China. This was not the case 20 years ago, unfortunately it is today. If you ignore the current geopolitics, I believe that you do so at your own (and your family’s risk).
I plan either for Monday or later in the week to write about a “stockbroker” that I recently met. He was a very nice guy… but oblivious and I believe “representative” of why doing your own homework and why geopolitics is so important to truly understand. Until next week I will leave you with this thought, he asked me, “But everything is doing so well, how can what you are telling me be true?”
You and I must know the same “stockbroker”! I am totally amazed at the profound ignorance of the financial services industry. I visited with a colleague of mine at his office several months ago with the hope that he had finally seen what was going on but, like the individual you mentioned, he was convinced that everything was just fine. He is a few years older than I am and has been offering financial advice longer than I have. He has a substantially larger client base than I have too and he is heavily involved in asset management game so I would have thought he would have seen the scam for what it is. I tried to suggest that the economy was in tatters but, if you can imagine this, he informed me that the unemployment rate was falling and that the economy was recovering nicely. Obviously, he gets his edonomic outlook from the mainstream outlets and is clueless regarding the coming disaster that awaits him and his clients. The frightening thing is that he is one of the better informed “advisors” in the industry!! Keep up the GREAT work you are doing my friend, I really appreciate your insights.
Thanks Craig, I’ll have more on this next week.
This is exactly what I’ve been saying for years! Consider this… almost every computer in our country has a hard drive made in China, not to mention all the other components in them. When they start failing, with no other source, exactly what will we all do if China ceases trade with us?
And that is just one small, but very important, market.
People may bury their heads in the sand, but that just leaves the rest of their bodies as easy targets.
yes.
Bill,
I have broker friend as well and he sent me a very bullish report on May 1st and then added this comment:
“I also, think you can always find something that supports what you want to think.” He knows where I stand which is with you and he just don’t get it. I am about to retire and am going to manage my own money because of the apathy or ignorance that I see in the investment world. I missed the last big stock market crash and plan on missing the next one.
only you can look out for your own money.
Love reading your articles. Right on point. I asked my local grocery store “if the dollar collapses, the banks close, how will you sell you inventory and what do you intend to use (money) to buy new inventory”.
I received a look of disbelief. “That will never happen” was his answer. We are all screwed….
never neverland
Bill,
Right on again with this article.
The USA has shafted and screwed the rest of the world for many years and now the rest of the world has our number!
The USA is the “black sheep” of the entire world.
Your personality shows with the kind of people you hang out with. No wonder other countries don’t want to hang out with us thives any more.
Of course you and I personally had nothing to do with it, but the world sees Americans as thives, war makers, ponzi scheme operators, conterfiters, liars, assholes, and many other not very nice names.
Our reputation has finally caught up with us.
Look at all the natural resources and goods we bought from other countries all these years and gave worthless pieces of paper as payment.
What suckers the rest of the world has been.
When a country went against what we liked we just told our folks a big lie and then and went and bombed the hell out of the country that was out of line.
Gosh, we don’t have enough bombers to take care of all the countries that are not going to do it our way any more!
We should have realized “…what goes around, comes around…”, but our greedy government and the corporations that run the government have no morals !!!
Rome (aka America) is collapsing.
“slowly at first and then all of a sudden”.
How interesting! I had dinner with an acquaintance Wednesday evening, who works for the Federal Reserve in “public relations”. He very patiently explained to me that what was being done was necessary to preserve our “way of life”. I retorted by saying that it wasn’t so much that as the fact that we are sacrificing everything to preserve the lifestyles of the ruling “elite”. He about went ballistic and accused me of being “unpatriotic”. I assured him I really do love my country but I abhor the practices of both government and the financial community. Therefore, I agree with you, and not out of some religious belief but rather basic mathematics.
I wonder what his response would have been if you asked about our gold reserves…ballistic might have been an understatement.
“But everything is doing so well, how can what you are telling me be true?”
Umm, because you are being lied to and you believe these lies?
Yes, the level of ignorance IS staggering these days. But those who would know the truth have no such problems. Thanks to guys like Bill Holter and Andy Hoffman, not to mention Eric and the Doc at Silver Doctors, and Sean at SGT Report, MUCH can be learned and virtually all of it is important.
The real truth in all this is that there are TWO US economies these days. There is the Wall Street economy, which is doing very well by being gorged on cheap freshly-printed currency, and that of Main Street, which is doing poorly and has been for the past 6 years. The only saving grace in all this is that we have not had to hear the stupid expression, “green shoots”, used in a while.
Got silver, gold, and other useful preps?
yes
Americans had better Wake The Hell UP, and William, (Sorry, “Bill”) would do All a great service by pointing out that not everything which fits within the parameters, or definition of, “Currency” are equal. Ergo, likewise not every form of Gold or Silver are afforded the same recognition, and/ or protection in the eyes of the Law! While I may be totally wrong, I am pretty sure that Miles Franklin Associates can explain the difference between what is merely deemed as “Bullion” and that which is Statutorily defined as: “lawful money” thus protected from confiscation by TPTB. And to those who deliberately and continuously refer to F*N IOUs as either “dollars” or actual “money”, the Day rapidly approaches when such complicit cognitive dissonance is shoved up the nose, down the throat, and out the lowest orifice!
Spartacus, I couldn’t agree more.
Bill, I was reading a piece from Eric Sprott, from Sprott Global tonight, that listed all the ways the Gold market is coming to a head.
Gold ETFs have lost huge amounts of Gold to Switzerland, who refined it into 1 Kilo bars and forwarded it onto Shanghai.
Germany is getting no more than 5 tons per month in return of its gold, suggesting that the vaults are running on empty; and Austria now wants to have a shufty (that’s a look) at its Gold holdings in London’s Vaults.
Of course the Bank will show them some Gold perhaps in a far corner, and say “That’s your gold over there.” But I bet they won’t let them see the bar numbers.
The Middle-East is opening up a new refinery to handle upto 1,400 tonnes, and yet the world output per annum is about double that…
I also read recently of some new Silver Vaults in China, that were FULL within a few months, suggesting that Silver too is being hoarded in the Far Continent.
And the recent visit to the BoE vaults by Her Royal Highness, was IMHO, a public relations exercise to say to the wider public – look we have all this gold, without mentioning that the ownership of said Gold is potentially owned by a few dozen people/organisations or more via derivatives. (Our Regina, might not even know that she was being used either)
And the “pièce de resistance”, apparently some analysts think that China consumed almost 4,800 tonnes of Gold in 2013.
2014/15 will be an interesting year.
W.
(http://moneymatterstoo.wordpress.com)
“yes” to most of what you wrote except Germany has received 5 tons TOTAL so far and 4,800 tons seems to be too high a number but it is within the realm of possibility given “unofficial” avenues of import. Also, the viewed bars may have 100 different claims on each real bar, we just don’t know.