by Chris Black
According to a report on Wednesday, Chinese officials are contemplating the possibility of either slowing or completely halting the purchase of US treasuries, thus making bond investors (among others) jittery, as this may be the end of a thirty year old bull market and, why not, on long-term, the end of the US dollar as world reserve currency. To put things into perspective, China is the world’s largest holder of foreign exchange reserves, holding 3.1 trillion dollars, but considering that China is the West’s (and especially US’) industrial park, that comes as no surprise, really. Also, historically speaking (for at least 2 decades), China is the largest foreign buyer of US Treasuries. The number one buyer of US Treasuries is the Federal Reserve, which is basically a private central bank, but that’s another story.
Due to the fact that China is a big player when it comes to buying US Treasuries, a slowdown or a complete halt would wreak havoc in the world’s biggest bond market. The situation goes something like this: since almost every product is now made in China, and Americans are used to buying cheap stuff they don’t need with money they don’t have (goes to credit card debt/borrowing etc.), there’s a huge commercial deficit between the US and China. Basically, China is swimming in US dollars, and up until 2018, they used to buy US Treasuries with those piles of cash. Back in 2016, China sold a great deal of US government bonds, in order to stabilize its currency, but they resumed buying US Treasuries in 2017.
As Gerald Celente keeps saying: first it’s trade wars, after that currency wars, and then world wars. If China pulls the plug on buying US Treasuries, the war drums will ratchet up like we’ve never seen before. Be prepared if this happens. This announcement on China’s part may very well be another sign the global elites are preparing to collapse the US dollar as the world’s reserve currency and replace it with something else, like the SDR (2018 is the year predicted by the Economist, which is owned by Rothschild,when the new global currency will be put into place).
The “silent” war is already going on. The emphasis is now on the currency war. An increasing number of countries are dropping our worthless fraud federal reserve note Debt currency, and China has been accumulating record tonnage of gold for years now. They don’t need the dollar nor want to use it anymore.
However, China’s holdings for US debt have become a rather small portion of the 20+ trillion total. The combination of unsold bonds at the Federal Reserve and those held by the Social Security Trust fund dwarf whatever China typically holds or buys. Likely that European investors would snap them up if China started to unload them at bargain rates.
Also, if US Treasuries get dumped, then interest rates will skyrocket, causing people to pull out of the Stock Market. And that’s when the fun begins and the house of cards gets blown away. And guess who’ll be blamed for the crisis. Despite all the possible catastrophic scenarios, markets yawned at today’s news, i.e. they were down early and now back to positive territory. Maybe it was all just a rumor spread by the chicoms to drive down prices on certain auctions, who knows. It’s worth mentioning that China is in a domestic financial crisis. Several large financial institutions are about to or already have failed. The Chinese government is preparing massive amounts of liquidity to prop up their economy.
by Chris Black