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China Dumping American Dollars

By Michael Webster

China spends nearly $8 million an hour... or almost $200 million a day... snapping up US Treasury notes and our dollars. Mainland china’s top leaders are at this moment are now holding the U.S. hostage to over $150 billion in U.S. Dollars and other American treasuries!

What that means is that U.S. interest rates have nowhere to go but up... and means the U.S. dollar has nowhere to go but down... and it is becoming more and more obvious that Washington right now is literally spending America into oblivion... The Iraq war is topping a trillion dollars and is expected to cost American’s trillions more before it is over and no one is sure when that will actually be. Some estimates contemplate fifty years or more.

Why does the Chinese government put so much faith in U.S. treasuries?

It's no longer anything America can control.  Beijing has cleverly backed America into a financial corner!  

As far back as Feb. 5, 2004 the Wall Street Journal reported that other Asian countries -- who altogether with China and Japan included -- hold an eye-popping $ 2 TRILLION in U.S. foreign reserves and are starting to dump U.S. Dollars and debt.

Korea and Thailand tried dumping in the 80’s and felled. It’s one thing for Korea and Thailand but when a massive holder like China stops buying U.S. debt and starts dumping, it's a much, more serious deal.  Pressures on U.S. bond yields have skyrocketed.  A massive number of foreign investors are now running from dollar-priced securities in a panic.  Long interest-rates have jumped. U.S. consumers, businesses, and investors are getting crushed in the mean time and will get worse.

To finance all its foreign debt, the United States has to spend a breathtaking $60 million per hour... or over $5 billion per day...  just to keep enough liquidity in the system to cover overseas interest-payment obligations alone.

Past Presidents including Bush treats the Federal Reserve like a money machine: Crank up the printing presses, and like magic out comes the green backs Federal Reserve Notes (FRNS).

The problem with that action is the more dollars they the so called Federal Reserve create, the less our American dollars are worth. The easier it is to cover those interest obligations without wincing. And remember the US dollar is backed by nothing except pure perception.

US-China Security Review Commission Reported "America's growing reliance on high quality, low-price Chinese imports eventually might undermine the U.S. defense industrial base."

Trouble is no government -- not even one as large as America's -- can keep up with that kind of cost. Particularly when America is already overextended on the war cost. Not to mention our regular spending budget is half a trillion dollars!

So just by holding U.S. Dollars and other Treasures, Beijing already has us over a barrel.

China is buying more and more of ever-cheaper U.S .dollars.  They've now got an estimated $350 billion in U.S .dollar reserves!  

U.S. dollars are only backed by the overextended US Federal Government actions those actions give China a huge advantage over the U.S... Due to China’s dumping other major governments worldwide are now dumping and switching their reserves to gold, silver and euros. As that continues gold, silver and euros will raise in value. That is because many governments around the world feel like America's money isn't worth the paper it's printed on.

Chinese currency the yuan since 1995 had been pegged to the U.S Dollar at the weak exchange rate of 8.28 to the dollar.  No matter how low or high the dollar goes, the yuan goes with it.

So no matter how low the dollar goes it's virtually impossible to close any currency-related trading gap we've got with China!  

Part of China’s strategy is whoever can withstand having a cheap currency the longest wins.  But so far, judging just by the trading deficit, it looks like China is winning.  And the U.S. is running out of options.

Can a stronger dollar help the U.S.? And get us out of this mass? Yes it could but the prospect of the dollar going up enough to do that any time soon is unlikely.  In order to make that happen the U.S. would need to re-do the terms and conditions that we allowed China to join the WTO in the first place. We need to do away with NATA or at the very least re-write NATA and other important international treaties we have around the world so America would be playing on a more even and fair field.

The damaging China yuan strategy is working. China's trading advantage will not anytime soon disappear it has already contributed to America’s popping our own real estate bubble. We are already cutting trade with Europe, and that action is doing irrefutable harm to U.S. stocks and bonds.

Meanwhile, China still has $310 billion in dollar reserves. Therefore as I said China is now trading for Gold, silver and euros, and is using that to throw the dollar into a final death spiral.

As Beijing and other Asia countries start dumping, I believe it will be a very bad thing for the U.S. Dollar and will be followed by the worst American economy than anything since Nixon broke with Bretton Woods in the 1970s.

I advocate in order for Americans to protect themselves against this inevitable dollar collapse they need to start buying 999.9 silver dollars… American or Canadian silver dollars at this time because they are best and safest. Buy them now silver is like the poor mans gold. Silver at this writing is still a good buy you can buy a lot of silver for a relatively cheap price. As I have written way back when silver was just $2.75 per Oz I said. “Buy all the silver you can as silver will go up and up.” I hate to till you I told you so. But I told you so. I’m still telling you so. The U.S. has run out of silver and there is more silver being used than is being mined and a whole litany of other good reasons to get into silver. But be sure and buy silver coins and take delivery yourself and keep them in a safe and readily available place and don’t buy silver paper or let someone hold the silver coins you buy from them.

If you’re still wondering how or why all of this is a planned economic attack... rather than just an accident of free-market capitalism take a good look around and I bet you’ll see the hand writing on the preverbal wall. This is not a coincidence. Good luck. 

Sources:

Wall Street Journal

US-China Security Review Commission

U.S State Dept.

U.S. Treasury

U.S. Commerce

Circling God’s Wagons by Michael Webster

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