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[Why Is China Getting So Uppity With The U.S!]

China May Not Need U.S.
Anymore !

U.S. & World Early Warning Report
by Richard Maybury
June-July 2009

China Already Out Of The Dollar?

    China contains the world's largest stash of foreign currency, reportedly valued at roughly $2 trillion, with more than half in US Treasuries and other US dollar-denominated bonds. Yet, in recent months, Chinese officials have made denigrating comments about the dollar.

    Why would they make remarks that could trigger a panic to get out of dollars, and thereby drive down the value of their own holdings?

    I don't know this for a fact, but I strongly suspect they have already bailed out of the dollar.

    First, look at the statistics. Not the numbers, the reliability. The mainstream press quotes Chinese statistics as if these are verifiable fact. We hear, for instance, that China's gross domestic product has been growing at a rate of 6.1%.

Why should we believe that?

    Look at the history. in the 19th and 20th centuries, China was invaded by numerous foreign powers, including the governments of Britain and the US. Millions were killed, and today the Chinese are famously contemptuous of foreign governments.

    I could be wrong, but it seems likely to me that Chinese statistics are designed not to tell the truth but to generate an effect. The numbers reveal not what is happening, but what Chinese rulers want us to think is happening.

    Now let's look at more recent history.

    At present, a commonly cited estimate of China's dollar holdings is $1.3 trillion. How did they get those dollars?

By falling for a swindle.

    In the 1980s, the regime was moving toward free-market reforms, but the population had been raised under the very primitive conditions of Red Chinese socialism. None knew anything about modern industrial capitalism or financial systems. They were, in two words, stupendously naive.

    The US Federal Reserve was pumping out dollars by the carload, and Americans were using these newly created greenbacks to buy goods from the Chinese.

    The Chinese unknowingly settled on a very simple business model: work hard producing valuable goods and services, then sell them to a counterfeiter.

    So now, Americans have closets and cupboards full of Chinese products, and the Chinese have a mountain of fiat paper dollars. (Recently this has become a win-win for everyone. We send them counterfeit dollars and they send us counterfeit goods.)

    By the mid-1990s, many Chinese had learned a lot about economics and finance, and I think they realized they'd been had.

If you were them, what would you do?

    I'd face the fact that I cannot trade away many of these dollars without triggering a run that would destroy the value of the entire hoard. Then I'd look for a way to get out of greenbacks without anyone noticing.

    I'd create a lot of front companies to buy factories, offices and other assets in foreign lands.

    I'd pay for these assets with long term contracts denominated in dollars — my dollars.

How Would Anyone Spot This?

    Let's say one of my front companies buys a popcorn plant in Patagonia, and a buggy bumper factory in Baluchistan.

    Will the sellers in Patagonia know anything about those in Baluchistan? Will they notice the pattern: the Chinese buying tangible assets by offering long term contracts denominated in dollars?

Even if the entire $1.3 trillion has been pledged, how would anyone know?

    One reason I am very suspicious that this is happening -- or has happened -- is that everyone I talk to who travels outside the US has stories about stumbling onto Chinese signs in front of big buildings in out-of-the-way places. I think that, translated into English, all these Chinese signs say essentially the same thing: "A Bushwhack-the-Federal-Reserve Project by the Great Dragon."

    Outsiders cannot look at the Chinese accounting records -- at least not the real ones -- so there is no way for us to know what's really happening in China.

    This brings us back to the strange mystery question: why have Chinese rulers been making denigrating comments about the dollar, which could trigger a run on the greenback and wipe out the value of their own dollar holdings?

    Because, I suspect, they don't care what happens to the dollar. They're already out. The $1.3 trillion that appears on their books isn't really dollars, it's the real estate and other valuable non-dollar assets they've purchased all over the world. As soon as they receive a dollar, they lay it off on someone else in the form of a long term contract to buy whatever that someone is selling. It's the sellers who will be left holding the bag, not the Chinese.

    Chinese rulers probably not only do not care if the value of the dollar goes to zero, they'll be happy about it. One of their long-time enemies — Washington — will be seriously embarrassed and impoverished.

    Granted, an attack on the dollar would damage the Chinese economy, but the RULERS might consider the trade-off worth it.

    Here, I think, is what the scheme secretly looks like in terms of the basic accounting equation (assets = liabilities + net worth). The greenbacks are on the books in China, but they are surreptitiously in the liability column, not the net worth column. Real goods and services -- non-dollar assets -- purchased with the dollars are in the net worth column.

Are the Chinese really operating this . . . . Bushwhack-the-Fed Scam?

    Impossible to say, but if they aren't, they are a lot more stupid than I think they are.

    The occasional Chinese public statements against the dollar seem to me to be shots across Washington's bow. Chinese rulers are saying, don't make us angry or we will admit that we have secretly bailed out of the dollar; your greenbacks will be worthless within days, and your empire will be as dead as that of Rome.

    My guess: one of the great shocks of the next decade will be the discovery that the Chinese -- and a lot of other people -- were effectively out of dollars long before the Great Calamity (Maybury's name for the current worldwide financial crisis) began.

    At one time or another, every country on earth was attacked by the governments of Europe or the US. I am sure the descendants of the victims feel no obligation whatsoever to be truthful to the West.

    Indeed, should we all be surprised if, once all of Washington's enemies have laid off their dollars onto someone else, they deliberately trigger a run on the dollar?

    I can think of no more effective way to punish Washington for its hubris and bring it to its knees.

    Is that why Obama has been traveling around the world apologizing? Is he trying to head off an attack on the dollar?

Kong Sez:

    Good question, folks. What Mr. Maybury says is that China is a lot cleverer than we "smart" Americans would like to think. They may well have already unloaded all their dollar holdings just as Maybury speculates, by buying up land and other assets in foreign countries. So now, what have they got to lose by badmouthing the dollar?

    If he turns out to be right, and China has already secretly dumped the dollar, look out below. This discovery will probably trigger a huge run for the exits in terms of U.S. treasuries and debt held by other countries. The dollar will suddenly become a lot more worthless in a lot less time, and that's assuming the Fed doesn't beat them to the punch by triggering runaway inflation.

    Folks, do you have your wraps? Do you have your food storage, your gold and silver, and your means of self-protection? If you have any dollars left over, now is the time to buy things like toilet paper and tools, things that you will need and use; things that will shortly skyrocket in price, and that's if you can find any to buy!

    Get some chickens, folks! You will have fresh meat; but Mr. "B" does not reccomend the chickens for meat...for the eggs! And that brings us to the next video soon. We will show you how to make fresh, safe, homemade mayonaise.

Kong Again!

[Learn & Apply This Motto!]

Use It Up !
Wear It Out ! Make It Do !
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The Second Ammendment!

Learn This...Memorize This...Let It Become a Part of You! Bring It Back When The Terrible Chaos Is Over...If There Is Something To Come Back To.

[Running For Your Life]

In The Meantime

Run For Your Life

From now on, Folks, it's gonna get pretty rough! In fact, downright cussed.
Mr. Ugly Will Show Before Long.

But For Now...

[Running For Your Life]

Keep Running

Keep Your Purse and Scrip With You—Luke 22:36

And Now

Get Two Guns—Luke 22:36–38

Before The New Dude Won't Let You Have Them

Times in America will change rather abruptly.
Your WebMasters suggest you check your
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We Feel This Is Going To Be A Long, Hard Siege
Get Prepared...Time Is Short Now...
Other WebPages of Interest:

Purifying Water ¦ When The Hell Breaks ¦ Gun Page

Galactic Plane

Soon..The Rocks Will Fall...See The Galactic Plane

[When The Rocks Fall]
The Impact and Its Consequences

Ronking & Gronking In Distress
Press Play To Start
Mass Extinctions Occur Around This Time Of Passing Through The Galactic Plane
The Earth Is Also Coming To The End Of An Age, As The Precession Ends

The Rocks Are Coming

[The Rocks Are Coming]

A City Being Stoned

[A City Being Stoned]

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