Have you ever wondered what the world will look like when China decides to no longer use the dollar? I could have said “Russia and China” but Russia has already been forced away from the dollar in one of the worst policy moves ever enacted by the U.S. Rather than “punishing” Russia by kicking them out of the SWIFT system, the U.S. would have been better served if they tried to lock them within it, so it goes.
I will get to my above question shortly but I think a quick look at exactly what China has been doing recently is in order. China you can be sure is at the foundation of the forming of the new BRICS bank. This will compete and I believe ultimately replace the West’s SWIFT system. China has also gobbled up a minimum of 6,000 tons of gold over the last 4 years. This amount added to their already 1,054 tons brings them to 7,000 total. In my opinion, China has far in excess of 10,000 tons of gold as I believe the 1,054 number was grossly under reported and they also have “legacy” gold which is accounted for nowhere except within China. I remind you that the U.S. claims to have 8,133 tons of gold and the Chinese are very adept at mathematics. They know what the global production numbers have been which means they also know they have imported gold that had been held in reserves in the U.S. If we can do this math on the back of a napkin then trust me, they know full well the gold reserves status around the world. By process of elimination they know exactly what our “hole card” is.
Recently, China has quietly shed their “passive” face. Their actions in the South China Sea and jousts with Japan over “ownership” of oil rich territory are quite telling. The Chinese are well known as a “gracious” people and culture “publicly.” You may recall John Kerry’s visit where he showed up 30 minutes late to a meeting, that “favor” has been returned several times. Mr. Kerry has even had his audience declined by his Chinese counterpart, does this tell you anything?
Last week, a Chinese fighter jet and U.S. spy plane were involved in a “Top Gun” style encounter, do you really believe the Chinese pilot would have done this without permission? Or how about a couple of weeks ago when the Russians probed our air space 16 times, would any of this have been done without a “plan?” Before finishing this part, remember that gold will be traded in Shanghai beginning in October … and yes it will be real gold which is traded and settled. “Unlimited” futures contract for sale without the metal to settle will not be tolerated. This is just a little more than one month away!
So what will the world look like once China decides to no longer use dollars? First, I want to point out that China’s trading partners will also be “drawn in” to no longer using dollars …because they won’t need them any longer. This will start a rush of dollars heading back to where they were first printed …because they will still be “accepted” here. The effect of dollars crashing our shores will be what the government “calls” inflation. “CPI” will explode as “stuff” gets bought up by the oversupply of dollars.
Conversely, since dollars will be “less accepted” globally, by necessity dollars will be used to purchase the foreign currencies of whomever we are trading with. This will tend to raise the value of the foreign currencies and depress the dollar even further. As dollars will be less sought after, any “trade” will require MORE dollars to settle. I also want to point out that the U.S. does not have much in the way of foreign reserves currently because in the past we “never needed them.” This is because the dollar was the reserve currency which was accepted everywhere and could settle any trade. THIS will change.
The best question is “what will this mean to you personally?” If you are an American, your cost of living will explode higher as more dollars will be required for the same amount of previous goods. Another way to say this is “your standard of living will decline greatly.” Also, I believe there will be shortages in any number of everyday goods. This is because we no longer make all or even many of the goods which we use in everyday life …they were “outsourced” long ago and are produced overseas …we now import them and pay with dollars. Do you see the problem if foreigners don’t want to accept dollars anymore? Or if they do, they want more of them because each dollar is worth “less?”
This is what we are staring right in the face, right now. Undoubtedly the Chinese will move away from the dollar. Economically, financially, diplomatically and militarily they are mocking the U.S. Do you really believe the Chinese would do anything at all like this if they did not already have a plan as in the “Art of War”? Do we have a plan for when the dollar is no longer accepted? Any plan? Do you?
YES, the U.S. does have a plan … the rich will be condemned and those who have thoughtfully managed their resources and prepared for just a contingency will be vilified. The government will confiscate savings and investments from responsible Americans who spent their lives educating themselves, working and paying taxes, and then give it away to the uneducated, non-working “freeloaders” … AND, anybody who balks at this idea will be labeled as selfish, unpatriotic and unsympathetic, and will be treated accordingly.
Karl Marx and George Orwell wrote about this?
“This will tend to raise the value of the foreign currencies and depress the dollar even further”. Another reason to expatriate to one of these nations? South America is my option, have dual citizen ship, speak Spanish my parents are from there. But I know what you mean when you’re the “gringo”. I won’t be able to shake that, but still feel I’m at a huge advantage. It’s just hard leaving everything you’ve ever known behind. Getting your metals there is another question. I trust no governments. But like you’ve said nothing will go unscathed. The collapse will be endured in varying degrees throughout nation’s. Guess the objective is to pick one that will rebound the best &/orcome out most intact. Good stuff Bill
thanks Gil, yes it’s a big decision.
A few years ago I seriously considered riding my bike into the Chilean desert and burying some gold for a future date if need be. It may get very difficult to bring gold across borders at some point, unless you can disguise it as other coins. The benefit of diamonds is that they don’t set off metal detectors.
I used to strongly consider what I will do when the SHTF and was considering being an ex-pat and moving to Australia, Brazil, Singapore, etc. Then I started thinking, and praying, about what our fore-fathers have said about this country. That this land is blessed when with enough good people to cherish it. (thats not a quote but something like that…) So, I think about where I live, in the Rocky Mountains and about states like Texas, Wyoming, Montana, Utah, Idaho, the Dakota’s. I truly think, that when the SHTF, they will be so worried about places like LA, the NE, Ohio valley cities, the Californias, older urban areas, even Seattle so much, that self reliant and self sufficient people will fare better in certain regions of the USA. Nothing against other states… its just that the west is less dense and people tend to be more self sufficient. So, about 2 years ago, I decided that i will stay and see this thing through or die trying.
My hope is that we can fare well enough so when the whole thing re-sets, we can be here to bring back the values of our founding fathers and principles based on the constitution and sound economics. So, I just hope enough good folks are still here to earn the blessings that this North America has to offer us.
You miss the point.Who cares what the government takes at this point?I’is ALL just paper anyway,not worth a crap ,firestarter,etc.Bill and others have been telling you for years now, gold and silver in your hand now.All you can carry.If you can’t carry it?That is why God INVENTED DIRT!!!!
Steve does have a point in his last lines regarding be branded unpatriotic.
Been wondering for years what my name was???? Branded or Unpatriotic.Guess it depends on what side of the fence your standing on at any given minute.Hope you have a fast horse,you might need it.
not fast but he does dance Spanish style.
Meh, we have plenty of time…according to the great Richard Russel, things won’t tear themselves apart until 2015 now…no rush…
Something tells me we won’t notice Shanghai’s effect on the depressed price of gold because it will be rigged too, but I hope you are right. Bill, check out the new article on Zero Hedge about the Council on Foreign Relations recommending that central banks “give money to the people.” It goes on to suggest giving free money to the bottom 80% of income earners. Will we soon see the proverbial helicopter drop? Utter BS, as I am in the top 20% so will only see the inflation effects (except PM appreciation). Why work when you can get free shit for doing nothing?
The Chinese have already put many fraudsters to death including a billionaire, something tells me that market will NOT be rigged. As for the Zerohedge article, yes I saw it and will probably write about it for Thursday.
I agree in that it will have to be the opposite of rigged in order to establish the trust and credibility it needs to become the new top game. They will stay solid and ethical and sound and gain the trust of the entire world and that will be the demise to the rigged and corrupted systems. I can’t say if it can maintain this kind of integrity for 20+ years, but initially it will in the very least be a more transparent economic model in oder to be able to become the “go to” exchange. Of course the current rigged system is where all the big money is now and those players are whom are corrupt and making it rigged… so therefore they will not give it up easily. But they are not indefineately immuned to the physics of economics…. I’m surprised it hasnt already happened. So the new exchange opening in October may very well be the very cause of it happening.
it will be on the up and up to begin with as this is an armament of taking power from the West.