China will cease to accumulate US dollars Bashny.Net

Michael Snyder, 21 November 2013.

China detonated a bomb, but the mainstream media in the US is almost completely ignored. Central Bank of China has decided that "the accumulation of foreign currency is no longer in the interest of China." In the third quarter of 2013, Chinese foreign exchange reserves accounted for about $ 3.66 trillion. And, of course, most of them consist of US dollars. For many years, China has been accumulating dollars and tried very hard to keep the high value of the dollar and the low value of the yuan. One of the goals it was cheaper Chinese goods in the world market. Now, however, China announced that it was time to stop accumulating US dollars. And if it is not actually the case, many American analysts suggest that China will soon stop buying US debt. Needless to say that all this is very bad for the United States.

For many years, China has systematically supported the value of the US dollar and kept the yuan at a much lower level. This led to a massive influx of super-cheap goods from the Pacific to the delight of American consumers. For example, if you ever go to the store, where all the goods are sold for one dollar, you thought about how someone manages to make a profit by producing the goods and selling them for just one dollar?

The truth is that if you turn these items, you will see that all of them are made outside the United States. In fact, if you - a typical American, the words "Made in China" probably written almost everything that is available in your home.





Thanks to our massively unbalanced trade with China, from our country left tens of thousands of businesses and millions of jobs and trillions of our dollars flowed out of the country and crossed into China.

And now China has apparently decided that because our economy has not much time to allow and napotroshish dollar sunsets. As I mentioned earlier, China announced that he was going to stop accumulating foreign exchange reserves ...

People's Bank of China said that the foreign currency assets not bring more benefits to his country, which is another sign that policymakers will manage the procurement dollars that restrain the appreciation of the yuan.

"Accumulate foreign exchange reserves is not in China's interest," - said yesterday, Yi Gang, deputy head of the Central Bank, at the forum China Economists 50 Forum at Tsinghua University. Monetary authorities "mainly" normal stop intervening in the currency market and enhance the RMB exchange rate corridor daily, wrote the director of the Central Bank Governor Zhou Xiaochuan in an article explaining adopted last week after the decision on the reform of the Congress of the Communist Party. Neither Gunn nor Xiaochuan did not specify the timing of these changes.

This does not happen in a day, but the value of the dollar goes down, all the cheap stuff that you used to buy in Wal-Mart stores, and prices will be much more expensive.

But necomnenno, this last step China has a much greater significance for US government debt. Most Americans have heard that we are very dependent on those of other countries, such as China, which enable us to borrow money. Currently, China has nearly 1.3 trillion dollars of our debt obligations. Unfortunately, as noted, CNBC, if China wants to stop to store our dollars, it is likely that our debt to accumulate, they also cease. Analysts see the move as a sign that the People's Bank of China hinted that it would allow its currency to fluctuate without intervention by the bank, thereby eliminating the need to keep large reserves in dollars. And ate the dollar is no longer needed, the bank may consider reducing purchases of assets denominated in US dollars such as US Treasury bonds (Treasurus).

"If they intend to reduce the purchase in the future, then yes, try to find someone who would be a marginal buyer" - said Richard McGuire, chief strategist at Rabobank in exchange rates, said in an interview with CNBC.

"The Federal Reserve is manipulating with purchases of bonds, and this addition could potentially lead to a bearish outlook for US Treasuries Treasurys. & Quot;

So who will buy all of our debt?

It is well, very good question.

If the Fed starts to manipulate acquisitions treasuries, while China will stop buying our debt, who will fill a void?

If the demand for government securities will fall, it will cause a significant rise in interest rates. And if they will rise significantly from its current level, it will lead to the beginning of the nightmare scenario that I keep saying.

In a previous article titled "How China can kill the dollar and the entire financial system of the United States» «How China Can Cause The Death Of The Dollar And The Entire US Financial System», I described how China alone can cause enormous damage to the US economy. < br />
The volume of Chinese trade - the largest in the world, and the Chinese have accumulated our debt more than any other country. If China starts to dump our dollars and our duty, most of the world to follow suit, and we have a lot of flour.

And just this week, sounded another important news is that China is preparing to take a major step against the US dollar. According to Reuters, crude oil futures on the Shanghai stock exchange futures contracts may soon begin to be evaluated in RMB ... Shanghai Futures Exchange (Shanghai Futures Exchange - SHFE) can begin to evaluate all of its contracts for crude oil in yuan and used as a reference to that of medium oil. He said on Thursday the president of the Exchange, and added that they have accelerated preparations to obtain the consent of regulatory authorities.

In September, China has overtaken the United States and has become the largest oil importer in the world, hopes that these contracts will be the standard in Asia and said that would allow foreigners to enter into contracts without establishing local branches.

If this really happens, it will be a landmark event.

China - a major consumer of oil in the world, and it was just a matter of time when they will challenge petrodollaru.

But even I did not think that something like this to happen so soon.

The world is changing, and most Americans have no idea what it would mean for them. When the demand for US dollars and bonds fall, products that we buy in the store will cost much more expensive, our standard of living will go down, and all of us (including the US government) will be much harder to borrow money.

Unfortunately, at the moment you can hardly do anything about it. When talking about the economy, China is playing a game of chess, and the US - checkers. And we are now beginning to reach the consequences of foolish decisions that were made over many decades.

The false prosperity, which now enjoys a majority of Americans will soon begin to fade, and most of them will not have a clue why this is happening.

The upcoming year will be very difficult, and I hope you are ready for it.
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