Brandon Smith, Contributor
Activist Post
Back in 2008, at the onset of the derivatives and credit collapse, I wrote several economic editorials discussing what I saw as the single most vital trend in the global fiscal system, and how it would cause a disastrous upheaval that would leave the U.S. and the dollar financially sunk.
This trend, which seemed to take serious root in 2005, was the massive shift by China from an export dependent source of cheap manufacturing and labor, into a moderate exporter, consumer hub, and currency powerhouse. In my view at the time, the evidence suggested that China was positioning itself to decouple from its dependence on U.S. markets and the dollar. I was, of course, attacked as a “doom monger” and “conspiracy theorist”. Five years later, the critics have changed their tune…
For the past decade, China has been slowly but surely issuing Yuan-denominated bonds and securities around the globe, while simultaneously forming bilateral trade agreements with multiple nations and cutting out the U.S. dollar as the world reserve currency. This process has gone mostly ignored by the mainstream financial media. However, I and many other independent analysts could not overlook the red flags.
I tried to summarize as much of the situation and facts as I could in my article ‘How The U.S. Dollar Will Be Replaced’, which was published in May of last year:
http://www.alt-market.com/articles/784-how-the-us-dollar-will-be-replaced
The biggest question for me was, if China is one of the largest holders of Forex reserves on the planet, and had the largest savings of any nation, WHY did they feel the need or desire in 2005 to begin issuing Yuan-denominated debt? Why begin borrowing capital from foreign creditors? They certainly didn’t need the money. Why were they moving away from export dependency and building a consumer base? And why attempt to proliferate their currency? Wouldn’t the pursuit of global Yuan circulation lead to an eventual increase in valuation? Didn’t the Chinese want their currency cheap so that they could maintain export superiority? What did the Chinese know in 2005 that we didn’t? MORE
Activist Post
Back in 2008, at the onset of the derivatives and credit collapse, I wrote several economic editorials discussing what I saw as the single most vital trend in the global fiscal system, and how it would cause a disastrous upheaval that would leave the U.S. and the dollar financially sunk.
This trend, which seemed to take serious root in 2005, was the massive shift by China from an export dependent source of cheap manufacturing and labor, into a moderate exporter, consumer hub, and currency powerhouse. In my view at the time, the evidence suggested that China was positioning itself to decouple from its dependence on U.S. markets and the dollar. I was, of course, attacked as a “doom monger” and “conspiracy theorist”. Five years later, the critics have changed their tune…
For the past decade, China has been slowly but surely issuing Yuan-denominated bonds and securities around the globe, while simultaneously forming bilateral trade agreements with multiple nations and cutting out the U.S. dollar as the world reserve currency. This process has gone mostly ignored by the mainstream financial media. However, I and many other independent analysts could not overlook the red flags.
I tried to summarize as much of the situation and facts as I could in my article ‘How The U.S. Dollar Will Be Replaced’, which was published in May of last year:
http://www.alt-market.com/articles/784-how-the-us-dollar-will-be-replaced
The biggest question for me was, if China is one of the largest holders of Forex reserves on the planet, and had the largest savings of any nation, WHY did they feel the need or desire in 2005 to begin issuing Yuan-denominated debt? Why begin borrowing capital from foreign creditors? They certainly didn’t need the money. Why were they moving away from export dependency and building a consumer base? And why attempt to proliferate their currency? Wouldn’t the pursuit of global Yuan circulation lead to an eventual increase in valuation? Didn’t the Chinese want their currency cheap so that they could maintain export superiority? What did the Chinese know in 2005 that we didn’t? MORE
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