China Maneuvers To Take Away US' Dominant Reserve Currency Status Submitted by ilene on 07/22/2013 15:57 -0400
CHINA MANEUVERS TO TAKE AWAY US’ DOMINANT RESERVE CURRENCY STATUS by RUSS WINTER
“All warfare is based on deception.” – Sun Tzu, “The Art of War” (500 B.C.)
“The message of this initiative is for China to consider whether or not China would open up its banking system and allow the strongest currency in the world, which is the Chinese yuan, to be the rightful and anointed convertible currency of the world.” – Thailand Deputy Prime Minister Olarn Chaipravat in an interview with Bloomberg
“An international monetary system dominated by a single sovereign sovereign currency has intensified the concentration of risk and the spread of the crisis.” — People’s Bank of China (2009)
It should go without saying that China and Russia have designs to end the U.S. Dollar hegemony free ride.
This is fundamental to understand and will be a game changer.
The impacts on the standard of living of these players will be profound and especially negative for the U.S.
How and in what manner this plays out is the question. I strongly believe that the answer lies in two parts: letting the U.S. put a noose around its own neck and then at the appropriate time, kicking the chair out from under it.
The first part of the operation is now advanced and is described below. The second part involves China and Russia preparing its relative currencies to be accepted in lieu of dollars. It means making the yuan and ruble at least equal to, if not superior to, American dollars in world trade. As you can imagine, the U.S. — a country with a debt-to-GDP ratio approaching 110% — can ill afford this sort of challenge to its status as a reserve currency.
China has already advanced the Yuan as a principal exchange currency by incorporating a series of deal with other countries. Such arrangements are hardly mentioned by U.S. financial media, but they are going on constantly. So far, the People’s Bank of China (PBOC) has signed nearly 2 trillion yuan worth of currency-swap deals with 20 countries and regions, including Hong Kong. Here’s a breakdown of happenings:
• Earlier this month, the European Central Bank announced a large currency swap arrangement with China.
•An Asian ”renminbi bloc” has been formed involving seven countries.
•Russia, Iran, Angola, Sudan and Venezuela have converted oil sales to China into the Chinese Yuan. Worldwide, we see more than 5 million barrels per day traded in Yuan rather than U.S. dollars.
•Thechinamoneyreport.com on June 16 reported RMB-yen trade is growing strongly a year after launch.
•BBC News, April 9: “China and Australia in Currency Pact“
•BBC News, Feb. 22: “UK and China Poised for Currency Swap Deal“
•BBC News, March 26: “China and Brazil Sign $30bn Currency Swap Arrangement“
•Thechinamoneyreport.com on June 4 reports that Singapore has launched a Yuan clearing service.
•Although ignored in the U.S., there has been increased chatter among foreign media about the RMB (aka Yuan) reaching safe- haven, reserve currency status, as Asia Today reported on July 22. I suggest that the kicking the chair out from USD hegemony involves at least partially backing the Yuan, and Ruble for that matter, with gold. China’s reserve assets were 30.2% of the world total at the end of last year. How much of this is already in gold?
China is secretive about the number, I think it’s because it had some catching up to do and it’s incorporating Sun Tzu-style principles, namely deception. The last time China revealed its gold reserve levels was in 2009 at 1,054 tonnes, which caught the market by surprise.
Another reference point is that China’s foreign exchange reserve increased from $2.2 trillion in 2009 to $3.4 trillion today.
During that period, U.S. dollar reserves held by China fell from 69% to 54%.
If only 10% of that $1.2 trillion increase went to gold, then let’s see … At an average price of $1,200, that would be nearly 3,000 tonnes, bringing China’s total gold holdings up to 4000 tonnes. Conventional wisdom would point to between 3,000 and 4,000 tonnes.
The U.S. supposedly has 8,133 tonnes in its reserves? ? ? ? ? ?
Russia has doubled its gold reserve in four years.
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What Gold Nationalization Really Means Tyler Durden's pictureSubmitted by Tyler Durden on 07/25/2013 19:40 -0400
Federal Reserve Nationalization New York Times
Submitted by Simon Black via Sovereign Man blog,
Gold owners are almost universally familiar with the story of Franklin Roosevelt criminalizing the ownership of gold back in 1933.
Executive Order 6102 was signed on April 5, 1933, and it forbade the “Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States.”
Roosevelt further ordered that citizens in the Land of the Free surrender their gold to the Federal Reserve in exchange for $20.67 per troy ounce in Federal Reserve notes.
The term gold ‘nationalization’ is often thrown around. But remember, with nationalization, it’s the state that takes control of an asset.
Executive Order 6012 took assets from private individuals, and then gave those assets to a private company – the Federal Reserve. This isn’t nationalization. It’s just theft.
You’d think that the entire nation would have been in an uproar. But surprisingly, this wasn’t the case.
In fact, the Executive Order didn’t even make the front page of the New York Times, whose main headline the day after was “BEER LEGAL AT MIDNIGHT”.
NYT front page What gold nationalization really means
It just so happened that prohibition was starting to be repealed right when Roosevelt’s order was going into effect. So people were too distracted with their pent-up, alcohol- induced euphoria to really notice. Very clever timing.
Of course, Roosevelt was not the first, nor the last, to confiscate citizens’ gold. One of my favorite stories involves Charles I of England, who commandeered 200,000 pounds of gold in 1638 as the English Civil War was approaching.
This gold belonged to private citizens, not to Charles. The rightful owners trusted their king and were storing their gold at the national mint for safe keeping.
This trust proved to be misplaced. And Charles seized the gold, calling it a ‘loan’ (upon which the English government subsequently defaulted).
This theme is consistent across history– governments have a notorious, unblemished track record of fleecing their citizens, particularly in times of desperation.
History shows that the likelihood of a government pillaging its citizens’ wealth is directly proportional to that government’s fiscal health.
Looking back, it seems so obvious. I’m sure the day after the bank account freeze in Cyprus earlier this year, people were probably thinking, “Wow, I can’t believe I didn’t see that coming…”
Nearly the rest of the West is in the same position, or worse off, than Cyprus– overextended banking systems, interminable deficits, unsustainable debts, and strong precedents of setting the law aside to violate people’s freedom.
All the warning signs are there. And just as in Cyprus, or in 17th century England, it’s going to be so obvious looking back.
This is one of the reasons why it’s so important to be proactive now and move a portion of your assets abroad where they can’t grab it.
As an example, there’s a fantastic private, secure storage facility here in Vienna called Das Safe that I’ve been writing about for a long time.
Das Safe has been around for three decades. And because they’re not connected to any bank or government, it’s possible to anonymously rent a safety deposit box where you can store gold.
Under current US law, this is not reportable… so you can truly hold your savings privately, outside the banking system.
Of course, gold is just one asset to think about. There’s another asset that I’m even more concerned about governments stealing: retirement accounts. More on that another time.
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