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Re: None

Thursday, 08/20/2009 7:09:35 AM

Thursday, August 20, 2009 7:09:35 AM

Post# of 111729
RR:
At some point, so much fiat “junk” money is created that people no longer trust it. That’s the situation China is in now, with its $1.7 trillion hoard of US dollar-denominated securities. So what does China do? It decides to swap its US dollars for anything intrinsic. And that means that China is buying commodities, land, mines, corporations, rare earths, gold, anything of intrinsic value with fiat money that it earned from the US. China is very smart. It doesn’t just dump its US securities, which would wreck the market. Instead, it uses its dollars to buy something of intrinsic value. In this way, China solves two problems. It gets rid of dollars, and it buys assets at bargain prices. Assets that it knows it will need in the future