Listen Carefully to What the Chinese Yuan is Telling Us!

• Listen Carefully to What the Chinese Yuan is Telling Us! 
  by http://www.jsmineset.com/ 
  Recently, emerging market currencies have been crashing. The Thai Baht has fallen 14% in the past several months, while the Russian Ruble has fallen 18% since 2013. The Turkish Lira has fared even worse plummeting an astonishing 30% since 2013 and the Argentinian Peso is literally in free fall, plunging by 60% in purchasing power since the start of 2013.
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  Former US Assistant Treasury Secretary Paul Craig Roberts offered a compelling theory this past week that the US Federal Reserve is deliberately attacking emerging currencies through their global monetary policies in an effort to force people to fall back to the US dollar to prevent the US dollar from crashing to its intrinsic value of zero.  In fact, Mr. Roberts has speculated that US bankers are rejoicing in collapsing the currencies of two of the US’s perceived enemies – Russia and Venezuela. However, even if this is the US bankers’ nefarious plan, I have a feeling that it will backfire on them and only usher in the death of the USD more quickly. Why? Two of the pillars slowing down the inevitable collapse of the USD is the petrodollar and its use as a de facto currency in international trade. Every country from Iraq to India to Russia to Iran to China to Australia to Japan to Brazil has already stated their intention to completely cut out the USD from use in bllateral trade agreements as well as oil purchases, and many countries that had tied their currency’s fate to the USD in past years have long severed ties to the USD as well. But let’s look to Zimbabwe, yes that infamous beacon of hyperinflation, as to why the US Federal Reserve’s plan to force emerging markets to adopt the USD may just backfire on them.
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  We all remember when the Reserve Bank of Zimbabwe’s Gideon Gono praised Ben Bernanke for the similarities between his QE monetary policy and Ben’s QE policy of the US Federal Reserve. Recall that Albert Einstein said that doing the same thing over and over again and expecting a different outcome is the definition of insanity if you want to predict the outcome of the USD.  In hindsight, Mr. Gono acknowledges that while things looked better in the short-term in Zimbabwe for a while, that his QE policies in the end turned out to be brutally disastrous, causing in his country the following ills that his country still has not recovered from 5 years later: frequent power outages, a shortage of skilled labor, a persistent liquidity problem in their banking system, a rapid rise in production costs which killed their manufacturing sector, endemic greed-induced and exploitative renter’s markets, and much more.
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  So what does it say now that the brains behind a 79,600,000,000% monthly inflation rate in the Zimbabwe dollar (a rate that caused a USD $40 meal to cost $Z 100 billion! ) is now dumping USDs from their economy? Is the US headed for a fate of printing USD $100 billion notes too? While that scenario is far fetched at this point, people fleeing out of emerging market currencies into the Chinese yuan, and NOT the USD as the Feds are trying to engineer, is not.  Just last week, Gideon Gono announced that his country will now be accepting Chinese Yuan, Japanese Yen, Indian Rupees and the Australian dollar in an effort to lessen their country’s dependency on the USD.  Of course, the smartest people would consider dumping the USD in Zimbabwe (one of two currencies now accepted in addition to the S. African rand) for the Chinese Yuan. Given that the worst offender of hyperinflation does not even want the USD now, I think the Federal Reserve may succeed not in forcing people out of emerging currencies into the USD, but into Chinese Yuan. Emerging markets businessmen conducting import/export business already increasingly need Yuan to conduct business so why would they not convert more of their domestic currencies into Yuan instead of USD? And this is what I think will happen, so in the end the US Federal Reserves’ plan may just backfire and induce a flight into Chinese Yuan.
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  Consequently when the architect of the worst fiat currency disaster in modern history wants to trade in USD for Chinese Yuan, we should listen very carefully to what the Yuan is telling us.  Already, in just one month to start 2014, the Nikkei 225 has given up 9-full months of returns artificially spurred by Abenomics QE and has crashed 2,300+ points, with the Nikkei 225 shedding another -4.2% today in Asia. Other QE inflated stock market bubbles will pop at some point in 2014 as well. Yes, you’re probably being bombarded as I speak by messages from US stock market pushers not to worry about the setback in US stock markets to begin 2014 and that all will be okay, but I’m here to tell you that you better worry because risk is enormous and upside very constrained at this point. And when all these unsustainable bubbles built on the backs of irrational and foolish Central Bank QE policy around the world pop, that’s when the real money will flow into gold and silver.

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