THOUGHTS ON “WHEN WILL CHINA END THE DOLLAR PEG” Part 1
George Harry MARCH 25, 2015 AT 3:08 AM Maybe Keynes was right. If this is all pulled off and the world carries on as normal (minus a few bumps along the way), perhaps we could ‘outgrow’ the debt by means of technology such as alternative energies and automative technologies and AI/robotics.
By ‘we’ I mean only the top 0.01% (because they’re the only people that matter on this planet, remember). Another 10 years of us plebs building them cool stuff and that gives them enough time to build their elysium.
Michael Glenn MARCH 25, 2015 AT 5:21 AM China will not end the USD’s price peg to precious metals. It’s a head-fake, unless China actually wants war.The peg is what saves the USA on the basis of real-time gold-as-money being monetized and utilized going forward.
Why do you suppose China has all this easy access to gold bullion purchasing ? When bullion has a monetary application, its value, like that of any currency, is in the movement, not just in the having. The USD is the measurement turnstile .
JC Collins MARCH 25, 2015 AT 11:13 AM Michael, there is no USD price peg to precious metals. The USD peg to gold ended in 1971. The Nixon Shock.
chuc1997 MARCH 25, 2015 AT 11:36 PM The peg ended. Management of precious metals never did. The U.S. only allowed its citizens to own gold again in 1975, when the U.S. gold futures exchange opened…that way they could manage the price with levered paper futures.
This management ended in 2013 when China broke the gold derivative markets. The “new China price of gold” has not been announced yet. We will likely all notice when it is.
Michael Glenn MARCH 25, 2015 AT 11:51 PM Any gold price other than USD pricing is nothing but a derivative of the USD pricing. You have to gain market traction and credibility for the market to accept a new measure. The yuan does not have it.
Having said this, there is a difference between a reserve currency and a pricing denomination, technically. They just happen to have gone hand-in-hand on the historical level. Could the yuan gain reserve status while the USD still has the pricing mechanism into PM’s ? Maybe.
The US cannot lose the pricing mechanism. It’s the future of the USD on a transactional level.
JC Collins MARCH 26, 2015 AT 1:19 AM Not when the amount of USD in the foreign reserve accounts around the world is reduced. I respectfully disagree with your line of thinking. The real world trend strongly suggests that the thesis presented on this site is the correct one, as hard as it may be for some to accept.
Futuret MARCH 26, 2015 AT 1:25 AM MORE ON THE TOPIC FROM FEDERAL RESERVE AND ALAN GREENSPAN:
chuc1997 MARCH 26, 2015 AT 1:33 AM Usd does not set reserve pricing…oil determines what the reserve asset is. And Saudi spoke last fall – no more dollars.
JC Collins MARCH 26, 2015 AT 1:41 AM We’ve been at this dance before Chuc1997, and my feet are sore. Think I’ll sit this one out.
Nevenmeic MARCH 25, 2015 AT 8:03 AM I have a clear head from reading this post.
Safety Fishnet (@SafetyFishnet) MARCH 25, 2015 AT 9:26 AM Thank you for this J.C, you keep surprising us with new information, I’ve never come across the Chinese debt to U.S on the web and am sure many of fellow POMers haven’t as well.
This post summarizes the whole situation perfectly by bringing different pieces together- AIIB, CIPS, U.S debt limit, IMF talks etc. Next step will be to watch Land&Maritime Silk Road initiative led by China and how much of the SDR allocation will be used for it.
I hope you get well soon, the pressure(not in a bad sense) to write posts and satisfy the cravings of so many passionate followers of the multilateral must be exhausting at times.
Daneackerman MARCH 25, 2015 AT 9:46 AM Wow JC! I can see why you have a headache. Thank you for sacrificing yourself to help pull this complexity together for us and for sharing your wonderful and carefully created perception. Seems very probable.
Dripfood MARCH 25, 2015 AT 10:02 AM What a marvellous article! I keep being amazed by your ability to put so many distinct pieces of the puzzle together. Chapeau!
Chris Peters MARCH 25, 2015 AT 2:06 PM Very thorough and excellent work. I for one look forward to the end of US hegemony, though I suspect that there will be many inside the US government who will fight and rage against the tide of history.
In order to truly transition to a more harmonious and cooperative system, the US military hegemony will need to be broken as well as economic.
I realize that the two go hand in hand, but I fear that unless European leaders make some bold moves (ending NATO) this will not be accomplished without a regional or global war.
The US military-industrial complex will not go gently into the good night.
Dripfood MARCH 25, 2015 AT 5:16 PM Chris, maybe that’s where the blame, shame and guilt tribunals will come in. Or perhaps other grassroots guilt CSI campaigns like those circling within the alternative media already. A society that feels guilty, won’t go to war.
Chris Peters MARCH 25, 2015 AT 6:19 PM Thanks for that response. The problem as I see it is that the people no longer have a say in whether we go to war. The military has been largely privatized and wars are fought by proxy, as in Ukraine.
The two countries with the most ability to neutralize the situation are obviously Russia and China. J.C. I’d be eager to hear your take on how the Canadian media are portraying Putin vs. the US media. Here the demonizing and jingoistic propaganda is reaching a fever pitch. We are definitely being conditioned for a war, IMO.
JC Collins MARCH 25, 2015 AT 6:35 PM It’s similar here in Canada. The media portrays Putin as an “evildoer”.
I am concerned about war in Eastern Europe, but I think they will bring it to the brink, before pulling back. Perhaps it will be the rallying call by the rest of the world to prevent more war, and isolate the US and its veto in the global institutions, such as the UN and IMF.
It’s hard to imagine such changes taking place because most of us alive today have not lived in a world which hasn’t been dominated by America.
But considering the scope of events which have taken place already, I would not be surprised. Keep the western population relatively ignorant until the script is flipped. Fits with the utter lack of intelligent and meaningful media presentations.
cassiefoley911 MARCH 26, 2015 AT 7:49 AM I believe when they have totally achieved their goal there will be some suppposed full disclosure and Nato will be the scape goat as is the Rothchilds and Bilderbergs etc
They have served their purpose and are no longer required. New corporations will emerge. We, the people will believe corruption has been gutted and cleaned up, only to find we are yet in another illusion.
Ryan Reef (@Reefer7593Reef) MARCH 25, 2015 AT 2:34 PM JC, My first post although somewhat off topic. I would like to start off by thanking you for the time and energy you have put into this blog.
Your commentary and analysis is refreshing in comparison with other alternative media sites.
I estimate that I have read at least half of all available blog posts and comments on your site over the past week however one area I have not found much discussion on is the domestic US bond market after SDRM occurs.
Currently the FED is able to export inflation across the globe however I see this radically changing once USD loses reserve currency status.
You mention 30%-50% inflation in a few comments I have found however I think you are referring to this as a one-time adjustment/revaluation in USD exchange rates. I have found no mention of annual inflation rates due to the loss of reserve currency status and structural trade deficit.
Do you believe that foreign holdings of US Treasury debt will be swapped with SDR bonds as part of the SDRM? I assume this will reduce the US National debt by roughly 6 Trillion?
However I see serious cost-push inflation due to currency debasement as the structural trade deficit will not be resolved overnight.
This will force US interest rates to increase dramatically to keep the USD from collapsing. The increase in interest rates will manifest in a government funding crisis as the interest on government debt will soar.
I see this culminating in a major US political crisis by the end of this decade. I would love to hear your thoughts on this subject. Thanks, Ryan
JC Collins MARCH 26, 2015 AT 1:37 AM Ryan, first I’d like to thank you for the compliments. You’re on the right track. A large percentage of the existing US Treasury debt will be exchanged for SDR bonds.
But there will still be a portion of foreign reserves held in Treasuries. Nations will still seek diversification, as they have done under the USD system. Though the majority will indeed be in SDR.
Interest rates will probably climb higher than most expect. The Fed announcement later this year may scare many. But the global mandate on inflation numbers, as a part of the multilateral macroprudential framework, will seek to keep inflation within a manageable band across the spectrum.
The US may see some sudden and dramatic swings here, depending on how far they push the geopolitical issues, but I reckon it’ll settle down before long.
Futuret MARCH 26, 2015 AT 2:02 AM THE SICK AND MOST CORRUPT CABAL ARE ONLY INTERESTED IN CONTROL AND NOT THE WELFARE OF THE PEOPLE IN ANY COUNTRY:
Ryan Reef (@Reefer7593Reef) MARCH 26, 2015 AT 11:47 AM Your response is greatly appreciated. Aside from the inherent truth and integrity of your writings, they also provide some level of hope and optimism for the future.
This obviously sets you apart from the preponderance of fear based information on the internet. I have two small children and not a day goes by that I do not think about their future on this planet.
I hope and pray that our transition to the MFS is as benign and virtuous as you anticipate. Looking forward to your future writings and commentary. Take care!
Susan Morris MARCH 25, 2015 AT 3:14 PM How do you do it?
Michael Glenn MARCH 25, 2015 AT 7:59 PM Susan …. now that’s what I call an intelligent question ! “How” is the whole trick. It has to be market driven, IMO because of the real-time factors. Abrupt change (top-down from hierarchy) would only prove to be devastating to the legacy system.
So many people would suffer without say in the matter. It can be lossely compared to the challenge that FDR would have had in 1933 when gold (and the USD) were re-evaluated. That process was by fiat. Very unfair, imo.
This is the same view we can take with the monetization of bullion, now that the weight value floats in real-time. Any official monetization (by fiat or proclamation) would be far too abrupt and would likely cause the debt based system to fail rather quickly and rather harshly.
The process for either of the above must be organic and market driven by way of grass roots efforts.
This is actually the biggest reason that “this time is different” because the real-time environment prohibits the elite from making the changes that we need.
The elite have managed to “paint themselves into an apex”. We are the governors of change and our own freedoms now. They set the stage but are powerless to complete the job. All they do now is buy time and “carry the stick” as a motivator.
Gold and silver are now real-time currencies… debt-free and with completely scalable liquidity , based on the trade value. it’s up to a bottom-up process to bring them into circulation.
We must be as a wise as serpents, yet as gentle as doves.
JC Collins MARCH 25, 2015 AT 9:21 PM Michael, that actually wasn’t the intent of Susan’s comment. And your continuous statements of the USD being pegged to gold, which it clearly isn’t, only limits the influence of anything your attempting to communicate.
Such obvious errors, including much of this current comment, being that gold and silver are real time currencies, make it frustrating to approve. I like to give everyone the opportunity to express themselves, but when its so off the mark its challenging.
That is not to say that I don’t agree with your statement that top down management is skewed, but try to base more of your statements on facts and the actual reality. Such as the USD is not pegged to gold.
Michael Glenn MARCH 25, 2015 AT 9:28 PM JC , my reference to the price peg is the price peg, not a valuation peg. Said another way, bullion is priced in USD’s. It goes right back to the formation of BW and is still a leftover to this day.
JC Collins MARCH 25, 2015 AT 9:35 PM You likely meant denominated, as peg is very specific, and does not convey what you likely intended. Soon gold will be denominated in SDR, but not before China has their own gold fix denominated in yuan.
You see what I’m getting at? Peg. Denomination. Big differences.
Comments may be made at the end of Part 2 Thank You