Why China Is Dumping The Dollar? And Why You Should Read Up on The Weimar Republic!
- China has begun dumping US treasuries and USD. It will only get worse for the USD as countries the world over abandon it as an international trade settlement currency. A great deal of USD will return to American shores and this will stoke inflation. The FedRes will monetize even more US treasuries. Not only do they have to monetize the US$1.4T of deficit spending. They have to buy up all the treasuries China, Russia and others dump!
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Why China Is Dumping The Dollar – And Why You Should Read Up on the Weimar Republic!
by CrownThomas, http://www.zerohedge.com/
As ZH posted today, China is systematically dumping the dollar (and beginning to set up other agreements). CNBC assures everyone, however, that things are fine. Don’t read those anonymous financial blogs.
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China has a long way to go in turning itself into more of a consumption based economy, so the dumping of USD has to be rather gradual (as to not rock the boat too much, the U.S. still needs to be supplied the funds to purchase Chinese goods, and also most trades are settled in USD for now), but it is happening.
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One major reason for this action by China is due to the fact that the United States Government has loaded up on so much debt that it’s not possibly sustainable – and the Federal Reserve knows that unless they want to see the house of cards the Keynesians have built come crashing down, they have no choice but to completely monetize the debt. As the dollar continues to be devalued (more in a second), the more yuan China has to print in order to buy dollars to keep their fx target. So not only is China on the hook to pay higher commodity prices (priced in dollars), they’re stuck with creating more domestic inflation as well – which is something they don’t have time to deal with at the moment, as their housing market is on the verge of collapsing.
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Today ZH also pointed out that Greece has 107 Billion Euro in hidden liabilities that oops, they forgot to disclose to anyone. Which made me think, hey, how about the unfunded & if not hidden, largely swept under the rug liabilities the United States has.
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Alas, the Treasury doesn’t use GAAP accounting when they put out their debt figures, they use cash accounting. This means that all of the social programs we have in place (medicare, pensions, social security, etc) are left out of the debt calculation. China is not stupid, they realize that not only are we going to be 100% of GDP soon on our reported debt, we’re going to be well over 100% of GDP on total debt if we are being honest & including our unfunded liabilities. Over $80 Trillion in debt, or over 500% of GDP, according to Shadow Stats John Williams.
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Here is a chart showing our Gross Debt to GDP, along with Total Debt to GDP if we were being honest (via John Williams, Shadow Stats)
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… for more click here!
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The problem will just keep growing I am afraid to say with the political and economic mindsets that we have. Unfortunately again there appears to be no change on the horizon. The only way that the USA and the West can get out of this terrible and really frightening debt nightmare is over several decades and where we have to start thinking out of the box and address the problem full on with the innovative might that the USA and the West commands. In reality the force of Innovation and technological invention is the only way that we can get out of the horrible mess created by bankers and inept political leaders, decade upon decade.
With China always knocking on the door we simply have to change our fixed thinking that has brought us to this incredible decline.
For the USA and the West to regain its economic freedom we have to get our heads around what history has told us and what has made us economically pre-eminent in the past?
For the West’s future it has to stop putting forward the unfounded theory that only highly intelligent people can deliver economic success. For this is a misdemeanour of the first order and where it is vital that we understand this figment of our imagination for our good.
For present thinking is wrong as we are looking at the wrong way to create a meaningful future in the West. It depends ultimately for a nation if higher intelligence or higher innovative thinking is the driving force of Humanity.
There is a great misconception in the minds of many business and education Gurus, through lack of understanding what innovation really is, that innovation is somehow linked to higher intelligence. This misdemeanor is thrown at all and sundry. Unfortunately intelligence in itself does not lead to major global breakthroughs as the history of S&T shows. Indeed some people may be highly intelligent in solving problems but can never come up with an idea that revolutionizes the future. For solving existing problems is not the same as creating a totally new concept or idea. This thinking comes from people who in the main were not excellent scholastic students but were different in their thinking and had the ability to link things together to produce something new and really outstanding.
What we have not learnt in the West yet is that it is not the so-called highly intelligent people that we have to find but the creative individuals who are the primary asset in creating the successful tools of the future, whether they be better education systems or revolutionary technologies. The two are very different indeed. That is why the World Innovation Foundation has been saying for the past decade and a half to western governments that the West has to create the ORE-STEM complex so that these special individuals can have a place to flourish and work. In this respect it is estimated that there are between 500,000 and 1million of these ‘special’ average-intelligent people in the West who have the capacity to change ‘Our’ economic fortunes.
But, no-one is listening and especially in western governments where the intelligent people reign there supreme also. The reason of course is because these people are perceived as being highly intelligent also, but where they lack the main ingredient to why a country will be economically dynamic in the future; that little known seed in the certain individuals that transforms nations through totally new revolutionary thinking. Not to bore people but Newton and Einstein are clear examples of poor to medium quality scholastic students. In fact in the case of Newton his contemporaries stated at the time that nothing would ever come of Newton after he lost his ‘grouts’ and was awarded the lowest BA degree at Cambridge. No, it is those illusive individuals that we have to concentrate on in finding within our western society, who are not seen as highly intelligent people, but engage and provide vast wealth through their innovative thinking, not highly intelligent thinking. The two are totally different animals. For this is the ‘golden’ secret of creating a future dynamic environment for the West and where through such thinking, the West would recapture its pre-eminence in wealth creation.
Unfortunately western politicians have lost their way because they are possibly too intelligent and therefore we look in part at the decline that we now see. For an example here, bankers are supposed to be one of the most intelligent species within humanity and where they usually come with the highest degrees passes possible and top-of-the-class honours from such establishments as Harvard, Berkeley, MIT, Cambridge and Oxford et al. Therefore the question has to be asked, how did they and their highly intelligent government counterparts get is so horribly wrong globally and locally? The reason is that intelligence does not guarantee for a better world and where the opposite has been the case with the West reeling from trillions of accumulated debt that the people in the west now owe.
We have therefore to stop concentrating on the misconception that high intelligence is the best driver of humanity but where others have the real answers to our dire problems. Therefore the sooner we get such vast concepts as the ORE-STEM under way, the sooner the West will stop the inevitable decline of our nations and its people. For in another 30>40 years if we do not start thinking differently, the West will be totally reeling from a state of our economic affairs which will mirror many of the dire problems associated with some of the emerging economies now. This future situation to counter-balance the economic forces building in the East will not emerge from high intelligence as history has shown us, but from special and unique individuals who are not seen as highly intelligent at all. But what they possess is of far, far more important that just mere high intelligence, for they hold the golden key of our economic redemption!
Dr David Hill
Chief Executive
World Innovation Foundation