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Started By
Message
re: China Dumping the dollar
Posted on 10/3/22 at 8:15 am to Lone Wolf McQuade
Posted on 10/3/22 at 8:15 am to Lone Wolf McQuade
quote:
Lone Wolf McQuade
I’ll never understand Money Talk alters.
0
Posted on 10/4/22 at 9:22 am to Dirtyboro
In the US, every 8 to 10 years we go through a major market correction.
In China, every 8 to 10 years they go through a major human purging event.
I’ll take ours.
In China, every 8 to 10 years they go through a major human purging event.
I’ll take ours.
Posted on 10/4/22 at 9:25 am to FinleyStreet
Reuters: China dumping dollar
This post was edited on 10/4/22 at 9:26 am
Posted on 10/4/22 at 9:33 am to FinleyStreet
See article above as it lays it out pretty clearly. The Yuan is tanking. China is desperate to keep it from falling below 2010 levels.
I don’t think it will work. Banks can clearly see what is happening to the Yuan and quite frankly, I’ve always had the impression that those who invest in currency are pretty cut throat because of the margins. I don’t think that China is going to get the exchange rate needed to keep the Yuan from going below those 2010 levels but I am by no means an expert on any of this stuff so it is very likely I could be wrong.
I don’t think it will work. Banks can clearly see what is happening to the Yuan and quite frankly, I’ve always had the impression that those who invest in currency are pretty cut throat because of the margins. I don’t think that China is going to get the exchange rate needed to keep the Yuan from going below those 2010 levels but I am by no means an expert on any of this stuff so it is very likely I could be wrong.
Posted on 10/4/22 at 11:21 am to AlaskaAg
The US 10-year Bond rate has been spiking because Japan (BoJ) has been scrambling to sell off its US Treasuries. This is what they mean by "dumping the Dollar." The last spike in the US10 Year was in 1980 ... I still have scar tissue from that recession.
Now, effective last Friday, China has jumped in .... they started dumping US Treasuries and buying Yuan .... a huge reversal.
It is important to remember that China announced it was starting its own Reserve Currency last year, and it began doing so in June of the current year. I've written about that several times on this forum. Some in the US claimed China would be unable to do this in the absence of having their own Bond market .... which is true, but not exclusively true.
China didn't need a Bond market .... because they instead began backing their currency with Gold, and now their BRIC partners and Belt & Road Partners trade directly with China on the Shanghai Exchange, with no need for a petrodollar or the US Swift system. This explains why Russia is able to sell Energy directly to China, without going through SWIFT.
In turn, the US no longer has the same leverage because they cannot threaten sanctions using Swift as a bludgeon, as we have done against many other nations for a very long time.
China and Russia have been buying massive quantities of Gold for nearly two decades. This plan has been in the works for a very long time. Now they're moving to establish their own currency as a Reserve Currency (not THE Reserve Currency) .... which will take several years, mebbe a decade.
In the meanwhile, this will stem the yuan's losses against the US dollar. Sovereign currencies have been failing against the Dollar because the Dollar has been on a tear. (20 year high)
The Fed basically declared they were raising rates because they were getting screwed, which in turn screwed the other sovereign currencies throughout the world. That's why Japan, and now China (and their BRIC partners), are dumping their US holdings .... and it WILL cause our yields to spike further out of control. This is absolutely NOT what the Fed wants. I know, it is shocking that other countries would attack our currency while we've been attacking theirs, right?
And it is going to send mortgage rates skyrocketing in the US .... and in turn, the escalating mortgage rates are going to diminish wealth as real estate values plummet. I suspect we will see RE values revert to 2015-16 levels before the RE market begins to stabilize. So, not a crash like 2008, but a meaningful pull back. We could actually see 8% mortgage rates before the mid-terms, if not higher .... and 10% rates by Q1 (definitely).
Think about it .... 401K values getting crushed, ... real estate values getting crushed, .... and the average Americans' wealth will be diminished ........ and the Fed with no recourse but to print Dollars that are rapidly declining in value. Reason to fear? ... no. Reason to prepare? .... absolutely, IMO.
IMO, now is a time to prepare .... get out of debt, all possible debt ..... build a healthy credit score ... and have some dry powder ready for when the real estate market gets reset in 2024-25.
Now, effective last Friday, China has jumped in .... they started dumping US Treasuries and buying Yuan .... a huge reversal.
It is important to remember that China announced it was starting its own Reserve Currency last year, and it began doing so in June of the current year. I've written about that several times on this forum. Some in the US claimed China would be unable to do this in the absence of having their own Bond market .... which is true, but not exclusively true.
China didn't need a Bond market .... because they instead began backing their currency with Gold, and now their BRIC partners and Belt & Road Partners trade directly with China on the Shanghai Exchange, with no need for a petrodollar or the US Swift system. This explains why Russia is able to sell Energy directly to China, without going through SWIFT.
In turn, the US no longer has the same leverage because they cannot threaten sanctions using Swift as a bludgeon, as we have done against many other nations for a very long time.
China and Russia have been buying massive quantities of Gold for nearly two decades. This plan has been in the works for a very long time. Now they're moving to establish their own currency as a Reserve Currency (not THE Reserve Currency) .... which will take several years, mebbe a decade.
In the meanwhile, this will stem the yuan's losses against the US dollar. Sovereign currencies have been failing against the Dollar because the Dollar has been on a tear. (20 year high)
The Fed basically declared they were raising rates because they were getting screwed, which in turn screwed the other sovereign currencies throughout the world. That's why Japan, and now China (and their BRIC partners), are dumping their US holdings .... and it WILL cause our yields to spike further out of control. This is absolutely NOT what the Fed wants. I know, it is shocking that other countries would attack our currency while we've been attacking theirs, right?
And it is going to send mortgage rates skyrocketing in the US .... and in turn, the escalating mortgage rates are going to diminish wealth as real estate values plummet. I suspect we will see RE values revert to 2015-16 levels before the RE market begins to stabilize. So, not a crash like 2008, but a meaningful pull back. We could actually see 8% mortgage rates before the mid-terms, if not higher .... and 10% rates by Q1 (definitely).
Think about it .... 401K values getting crushed, ... real estate values getting crushed, .... and the average Americans' wealth will be diminished ........ and the Fed with no recourse but to print Dollars that are rapidly declining in value. Reason to fear? ... no. Reason to prepare? .... absolutely, IMO.
IMO, now is a time to prepare .... get out of debt, all possible debt ..... build a healthy credit score ... and have some dry powder ready for when the real estate market gets reset in 2024-25.
This post was edited on 10/4/22 at 11:24 am
Posted on 10/4/22 at 12:16 pm to AlaskaAg
The body of the article essentially says they're shedding reserves. That isn't the same as "dumping the dollar" which suggests total abandonment. Headline is hyperbole, but that was probably their intent.
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