Do not be deceived! Recent Chinese market maladies bear the hallmarks of U.S. cyber-attacks carried out in retaliation for the leading role that China has been playing in global de-dollarization. The methods the Chinese have been using to bypass the crippled Federal Reserve Note are manifold – the Asian Infrastructure Investment Bank, the BRICS alliance, the Petro-Yuan, the construction of the New Silk Road, the creation of islands in the South China Sea – all of these efforts are intended to achieve one outcome; to quarantine the toxic asset that is the U.S. Dollar. Ignore the West’s media spin with its hysterical claims that China’s stock market is at dangerous levels. Tune out the frantic cries that the collapse of the Chinese market is “THE BIG ONE!!!” The foolish talking heads who wear the West’s rose colored glasses struggle to exaggerate the speck that is China’s market woes while they ignore the two-by-four that is jutting from the skull of the U.S. market.
There is no doubting the severity of the onslaught that China’s markets face from enemies both domestic and abroad. For example, the revelation by top sources that Chinese markets have been the victim of U.S. led hack-attacks illustrate that range of problems. These problems, however, are nowhere near as serious as the challenges that the U.S. finds itself facing – not even close.
The Guerrilla finds it remarkable that the Western media has overlooked what the Chinese have done to shore up their markets. They’ve launched a Plunge Protection Team called the China Securities Regulatory Commission. They’ve created a second organization that functions quite like the German regulator BAFIN to sniff out evidence of manipulation and market rigging. They’ve rolled close to 500 Billion Yuan in medium term loans to banks to guarantee the liquidity that shell-shocked markets crave. All of these things the Chinese have done and not a single pundit in the West has recognized them! Or do they choose not to see the reality?
Ignorance is bliss in what Pepe Escobar has aptly termed the “Empire of Chaos.” The Economic Silver Back finds it shocking and sobering to see that in the midst of the West’s dizzying collapse into economic desolation there is vibrancy and growth in the East. He thinks it even more amazing to see the hard reality that nations outside of the Dollar and Euro currency blocs are not only surviving, they are thriving!
The fact remains that both the Euro and the Dollar are deadly instruments of financial destruction. The Euro system prevents its members from defaulting, making it impossible for Eurozone nations to utilize any policy other than the economic chemotherapy of austerity to address their woes. This is terrible for the people of the Eurozone, who find their economies in shambles and their democracies hollowed out.
But wait! Surely the U.S. Dollar cannot be as bad. Ah, my friends, understand this. The annihilative characteristics of the Eurozone pale in comparison to the destructive potential of the U.S. Dollar. The Dollar is by far the most toxic asset in the world. It is the one to which every form of derivative is pegged. It is the asset in perpetual devaluation through corrosive QE. Its centrality to global trade is a trip wire waiting to set off explosions around the world. It is the Sword of Damocles in respect to oil pricing. The faster the world is rid of these two currencies the better off it will be. The IMF’s SDR= A Trash Basket of Currencies
The Economic Silver Back made a call months and months ago, well before anyone else had even thought of it in their chart loving, vacuum-tube forecasting minds. The Guerrilla stated that China would be playing political theater and that they will not be allowed into the IMF’s trash basket of currencies. Twenty-three hours ago, as of this writing, it was announced in an initial IMF report that the Yuan’s inclusion in the SDR is “no go.”
As The Financial Great Ape stated, China knew this would happen all along. It required only a formal justification to go all in with the AIIB, CIPS, New Silk Road, and the NDB. In other words, the rejection of the Yuan being oh so smugly reported by the Western press is the kiss of death for the U.S. Dollar.
Does the rest of the functioning, prospering world care what the unfunded, white elephant, empty office called the IMF does? Of course NOT!!! The 32 nations that have set up Yuan swap facilities have no concern for the IMF’s decision as the financial benefits of doing business with China are more important than what a has-been U.S. proxy agency thinks. Neither are the 56 members of the AIIB concerned about the IMF and its trash basket of currencies.
Certain talking heads in the alternative media have been spinning that China is accumulating gold to get into the SDR. Nothing could be further from the truth! China has in fact been anticipating that it would NOT be included in the SDR. This is one of the reasons why it announced absurdly low gold holdings of only 1650MT! This level of tonnage is too low to be included in the SDR. After all, compared to the U.S.’ 8000+MT (a fictitious number, by the way), what is a measly 1650MT?
Well played, China. The Guerrilla commends you. Now you have the justification to go your own way and when the Dollar-based Western world goes POP you can say you tried to fix the situation, but the imperialist U.S. and its stooge, the IMF, would not allow you to join its trash basket of currencies.
The Chinese are NOT stupid. The economic/financial spearhead of the Sino-Russian Nexus operates on multiple levels toward multiple strategic goals simultaneously. China’s next moves will be to continue dumping UST, followed by the full implementation of the Chinese Gold Price Fix. It is the Force Majeure of gold price revaluation that will sink the Dollar.
Commodity prices have been beaten down, signaling the end of the road for current valuations and Dollar pegs. A major systemic uptick is about to occur. Gold revaluation IS THE LIQUIDITY HOSE FOR AN INSOLVENT AND ILLIQUID WORLD.
China and the BRICS know this, hence the creation of the infrastructure to bring forth this change. Gold Price Revaluation (GPR) will guarantee that even nations with much smaller economies will fare well if they have a strong gold stash. This is why central banks in emerging economies have been accumulating gold since 2008. Gold revaluation will unfreeze credit markets. It will rebalance trade, end fraud, revitalize stagnant economies, and create reinvestment opportunities that boost money velocity – creating among those who hold bullion millions of new millionaires and billionaires.
Think, my readers, for the path ahead is clear to see. Why have the Chinese encouraged their citizens to buy gold? Why have they built vast, modern metropolises that the morons in the Western media call “ghost” cities? Who will soon have the capital to buy homes and invest in real estate in those cities? Ordinary Chinese citizens, that’s who! Gold Price Revaluation will create a vast new middle class in China. This new middle class will fuel a consumption boom with gold-based discretionary income. They will work jobs tied to the New Silk Road. They will reap the benefits of trade with the BRICS nations. They will heat their homes and light their streets with cheap Russian oil and natural gas. They will be first generation to live in what will become known as the Chinese Century!
And where will the West be in all of this? It will be nowhere, mired in a dung heap of economic decay and debt. GPR combined with the New Silk Road will transform the Yuan into a true internationalized currency. It will enable the five key components of a vibrant economy: trade, infrastructure, investment, capital, and the movement of people. It will create a supra-national community of shared interests, destinies, and responsibilities.
What China proposes to do is create a new global economic structure that is the exact opposite of what the fascists in the U.S.-led West want. The Chinese hope to diversify exports, contribute to Eurasian development, increase access to food and energy, improve representation of developing nations on the global stage, and, most of all, to reduce dependence on the Dollar. Quarantine the U.S. Dollar and you guarantee the rise of emerging economies. It is a true WIN-WIN scenario for the sane world.
The current Western system offers no such possibility and no hope, just a slow and painful death. Take for example the staggering level of criminal fraud in the gold and silver markets. As stated in my last report (hyperlink to it), the paper positions taken by JPM and Citigroup in the silver market alone are more than 8x larger than the physical positions taken by the Hunt brothers in the 1980s when they attempted to corner that market. Then there is the absolute dislocation of gold’s price from its fundamental VALUE, resulting in the biggest fraud in any asset market at any time in history PERIOD!!!
No, my friends, the rise of the BRICS and emerging economies is unstoppable. The reality of gold returning to global preeminence is guaranteed. One day soon, poor, deluded America, led by her idiot politicians, neo-fascists, and Wall Street cronies, will wake up isolated and alone. This is assured.