**EDUCATE YOURSELF ABOUT WHATS REALLY GOING ON** Ill leave this up for a bit - read it *************************************** Americas Last Great Export is about to Go Bust Everybody knows the U.S. is heavily in debt to China. And the U.S. trade deficit with China keeps growing, up to $558 billion in 2011, and The Daily Caller reports its now the largest nation-on-nation trade deficit in the history of the world. But what most Americans dont know is — because of this huge trade deficit — each year the Chinese Central Bank collects billions of excess dollar reserves they have no idea what to do with. For years China simply piled these dollars into U.S. treasuries. Now, Washington loves this arrangement because it helps them run trillion-dollar deficits ... But the Chinese arent stupid. With Washington cranking up the printing presses and the record low interest rates, China understands staying in Treasuries for the long term is a losing proposition. After all, the results speak for themselves ... According to Beijing officials, China lost $271billion between 2003 and 2010 by holding U.S. Treasuries. And in June of 2011, Chinas National Development and Reform Commission announced it could lose another $578 billion if it continues to hold these huge U.S. debts. So the Chinese government is now taking drastic measures to protect their wealth. Two high officials — Zhou Xiaochuan, the head of the Chinese central bank and Xia Bin, a member of the monetary policy committee of the central bank — recently made it clear that they are ready to take action. But China isnt simply planning to pull all their money out of Treasuries. China isnt in this game for the short-run, and theyre willing to sacrifice some short-term losses for long-term gains. Which is why it was no surprise when an overlooked article in the International Business Times revealed a shocking announcement ... one that the mainstream media has refused to acknowledge ... It stated that in a secret alliance with Russia, China launched the ultimate attack on U.S supremacy. By attacking the United States’ last great export machine ... and its ultimate source of global domination for the last 40 years ... the petrodollar. I firmly believe this is the shot across the bow for an economic war between the U.S. and China ... one that will bring about the end of the 30-year bull market in U.S. bonds. As Ill show you in a moment, America has gone to great lengths to prevent this very crisis from occurring. Its the reason america took down Saddam Hussein, Muammar Gaddafi and why now imposing sanctions on Iran. But with weakened military and our bloated national debt, China has the perfect opportunity to take the u.s. down ... And unfortunately for the u.s., their $3.5 trillion in U.S. foreign currency helped them launch their first wave of assaults on September 6, 2012. So, while I hope for our sake they dont succeed, theres still time to prepare for the coming crisis. Because I can assure you, right now China holds the economic future of America squarely in its hands. And while you may be thinking that these currency wars wont affect you or your family, mark my words: the fall of the petrodollar will devastate everyone who lives, works and invests in America. Let me show you what I mean ... The Biggest Financial Con in History The year was 1944 ... and all the 44 Allied nations gathered in Bretton Woods, New Hampshire. Their mission was to create a set of agreements to manage international trade after the war. Their brainchild, The Bretton Woods agreement, established the dollar as the worlds reserve currency. This international game-changer gave the United States a distinct economic advantage, but with one caveat ... every dollar the Fed printed would be redeemable for gold at a standard rate of $35/oz. This was put in place to ensure the Fed didnt print dollars with reckless abandon. But of course, the Fed printed more dollars than it had in gold to exchange, and with massive expenditures on the Vietnam War, the rest of the world became suspicious of Americas ability to pay. So nations began to demand the gold they were promised. Then in 1971, President Nixon recognized he would not be able to meet the obligations and closed the gold _ It was the first American default and it set off a rapid decline in the value of the dollar. Oil prices soared. Inflation soared to 15% and higher. At the same time, GDP fell 3.2% and unemployment hit 9%. P/E ratios crashed down from 16 to 8 and stocks had the worst 15 year period in history ... even worse than the Great Depression. The government imposed wage and price controls which caused gas shortages around the country. But in 1973, then-Secretary of State Henry Kissinger hatched a brilliant plan. America had great military might and Saudi Arabia needed protection for its vast oil empire. So, in a stroke of genius, Kissinger exchanged Americas military might for Saudi Arabias promise to sell oil exclusively in U.S. dollars. Meaning, any country that wanted to purchase oil from OPEC was forced to use U.S. dollars. So anytime another country wanted to buy oil from the Middle East, they had to first convert their currency into U.S. dollars. And since oil is required in modern economies — and the Saudis are a main player in the oil trade — this put the U.S. in a unique situation. Countries around the world would have to export goods and services to get the dollars they’d need to buy oil. America on the other hand could simply print the dollars it needed to buy oil. Which means the U.S. could run massive trade deficits because we exported the most valuable commodity in the world ... the U.S. dollar. Up until the early 1970s America was the worlds largest creditor. But by the early 1980s we had begun to run our first trade deficits. And since the 1990s our trade deficits have grown to trillions of dollars. In order to get the dollars they needed to buy oil, countries flooded the U.S. market with cheap cars, cheap T.V.s, cheap clothes ... and the u.s. simply flooded the world with cheap currency in return. But heres the cherry on top ... The OPEC countries were required to invest their profits in US treasuries, feeding the demand for government debt ... allowing the government to borrow with reckless abandon ... and creating the greatest bond bull market the world has ever seen. But it wasnt just the government that borrowed. Consumers borrowed $14 trillion, add in $11 trillion in corporate debt, $17 trillion in financial debt and up to $90 trillion in unfunded liabilities like Social Security and Medicare — it all adds up to $140 trillion in total debt ... thats around 10 times greater than our whole domestic production. Its truly staggering. And the whole house of cards is maintained by this simple agreement made in 1973. Do you see why its so important the U.S. maintains the petrodollar? Do you see why the u.s. is willing to go to war with anyone who challenges the petrodollar? And do you see why this is the biggest opportunity that China has to end the golden age of America and usher in an age of Chinese dominance? 2008 gave us a prime example of what happens when the national credit card is shredded. From the late 1990s until early 2007, housing prices grew three times faster than income as the Fed pushed down rates to 1% and banks gave mortgages to anyone with a pulse. But the fact is, this rapid rise in house prices was unsustainable. And eventually the market ran out of credit-worthy buyers. And at this point the housing bubble simply popped. And heres the even scarier part — even though growth only decreased 2% over the next few months, the entire economy almost collapsed. The Government spent trillions on bailouts and stimulus to get the economy moving again because they understood an important truth ... The same dynamic is happening right now, but on a much, much larger scale, in the bond markets. Simply put, China is plotting to take away the biggest source for a seemingly inexhaustible demand for Treasuries ... And right now China has the u.s. right where they wants. Because while Americans are stuck in the past ... burdened by the promises and entitlements made years ago ... China is preparing for the future. And their goal is an all out assault on American supremacy and the petrodollar. Now remember, China doesnt want to broadcast its intentions to agitate the United States., which is why you wont find widespread media reaction to this landmark media event. But if you take a close look at the actions of the Chinese government, the evidence is overwhelming ... Chinas Quest for Global Dominance You see, China implemented a very simple plan to ensure global domination. First, theyre taking steps to monopolize the gold supply around the world. Second, theyre looking to build global alliances to help with their plan. And finally, theyre working to eliminate the dollar from the international oil trade. First, lets take a quick look at how China has been hoarding gold supplies around the globe ... China is smart. They know that they will soon have the economic power to take over the role as the worlds reserve currency, but ... They also know the Chinese currency — the Yuan — will never beat the U.S. dollar if its nothing more than another fiat currency ... that is, a currency backed with nothing but empty promises. So instead, the last few years China has been secretly stockpiling gold with the intent of creating something thats been missing from the global economy for 30 years ... a gold-backed reserve currency. According to a recent Forbes article, China is preparing for a world beyond the inconvertible paper dollar, a world in which the renminbi, buttressed by gold, becomes the dominant reserve currency. Now you may think Im exaggerating ... but high level government officials are clearly worried about this possibility. Because we know for a fact, that China has been purchasing massive amounts of gold for the past few years. If you didnt already know, China is the worlds largest gold producer, producing more than 350 tons of gold a year — almost 20% more than the worlds second largest producer. And yet, according to major bullion dealers, China isnt exporting a single ounce of gold. Instead theyve been importing huge amounts of gold. In fact, in 2012 China imported roughly 500 tons of gold ... thats more than the entire holdings of the European Central Bank. Even more importantly, this year will mark the first time in history that China has imported twice as much gold as it has purchased in U.S. treasuries. But this still isnt enough to satisfy the growing demand because its not just the central bank thats hoarding gold anymore. Gold ownership was outlawed for many years in China, but in 2002 China finally allowed its citizens to legally own gold. You can now buy gold bars in retail banks all across China ... and the government has set up retail stores that sell decorated gold bars like the 2012 Lunar Gold Bars. In fact, its now so commonplace that gold is sold in stores similar to the Chinese version of our 7-11 ... Which may be why Song Xin, chief executive of China Gold International, one of the countrys biggest gold producers recently revealed: The shortage in supply has been deepening very fast; from 48 tonnes in 2007 to 400 tonnes in 2011. And heres the thing ... China is importing so much gold that they cant purchase any more on the open market for fear of bidding up the prices. But that hasnt stopped them for a second. Theyve even found a new way to add to their reserves ... buying gold mines across the globe. Let me give you some examples: In August of 2010, China Gold International put in a $742 million bid to buy Skyland mining ... In November of 2011, Zijin Mining Group put in a $227 million bid to buy Gold Eagle mining ... In August 2011, Stone Resources put in a bid to take control of Crescent Gold, an Australian gold miner. In November 2011, Baiyin Group bid on the South African miner, Gold One International. And in April 2012, Sovereign Gold partnered with Jiangsu Geology & Engineering to buy two gold mines in Australia. This is just a sampling of the moves that have been uncovered that Chinese national gold miners have engaged in. In total, its been revealed that over $5.8 billion worth of takeover bids in just a few years. But heres the thing. We dont even know the true extent of Chinas rush to acquire gold. Because China hasnt revealed the amount of its gold reserves since 2009. But in 2009 China Youth Daily quoted State Council advisor Ji Xiaonan as saying, We suggested that Chinas gold reserves should reach 6,000 tons in the next 3-5 years and perhaps 10,000 tons in 8-10 years. That would make Chinas central bank the largest gold holder in the world, ahead of the U.S.’s approximate 8,000 tons of gold reserves. Putting them in perfect position to take over the role of an international economic leader that the U.S. gained through Bretton Woods. And with our bloated entitlements, out-of-control spending, and gridlocked Congress ... there appears to be nothing we can do to stop them. But this is just the first step in Chinas quest for global domination. Because China knows it cant do this alone. Just like the U.S. 60 years earlier, they need to build global support for their initiative. And theyve concocted a brilliant plan that benefits them three ways while moving them one step closer to their goal. Heres the second thing they are doing ... China’s Building Global Alliances Its no secret that energy, commodities and other resources are keys to economic growth. Its estimated that in the next 5 years, 1.5 billion consumers are going to join the ranks of the middle class ... all of them demanding TVs, cell phones, dishwashers and cars. Not only that, countries like China will need to build the infrastructure to house, transport and deliver them the energy to sustain a Western way of life. Which means that they will require huge amounts of energy and resources to meet these demands. This fact has not been lost on the Chinese which is why theyve been using their $3 trillion in dollar reserves to position themselves for the future. China for instance has already started to invest heavily in securing oil supplies from Africa ... investing $6 billion to secure oil rights in Nigeria and $7 billion in oil and mining infrastructure in Guinea. And theyve also been making aggressive moves in Canada, Americas leading oil supplier. China recently invested over $6 billion in securing rights to various Canadian tar sands projects. And in Brazil, they loaned the state oil company Petrobras $10 billion in a deal that will more than triple the oil they export to China. In Peru they paid $3 billion for the rights to mine a mother lode of copper underneath Mount Toromocho. A state-owned company Chinalco paid $13 billion for rights to Australias aluminum sector. And recently Sinopec paid $7.2 billion for Addax Petroleum, which has sizeable assets in Iraq and Nigeria. But Chinas doing more than just purchasing resources on the open market. Its also supplying aid and investments in resource-rich countries. This supplies China with three immediate benefits ... First, they obtain the resources they need to sustain a rapidly growing economy ... Second, they rid themselves of the huge war chest of rapidly devaluing dollars ... And third, they gain powerful allies across the globe in their quest for world domination ... China has been handing out billions through its China Export-Import Bank. And President Jiang Zemin argues: Regions like Africa, the Middle East, Central Asia, and South America with large developing countries [have] very big markets and abundant resources; we should take advantage of the opportunity to get in. And China has been taking advantage of this opportunity in a big way. For instance, in the last 7 years China has invested as much as $75 billion in Latin American countries ... more than the World Bank, Inter-American Development Bank and the United States Export-Import Bank combined. And theyve directed a lot of those resources to countries that the West has ignored, like Ecuador Venezuela and Argentina ... countries right in our back yard that were off limits during the cold war. China pledged to lay down $12 billion in railway lines in Argentina, gave $1.6 billion for a hydroelectric dam in Ecuador, and $20 billion for infrastructure construction in Venezuela. But its not just Latin America ... China recently agreed to grant Russia $6 billion loan for infrastructure in exchange for the Russian coal supplies over the next quarter century. And they recently struck a deal to expand the capacity of the Greek port of Piraeus up to 250% in exchange for easier access to European shipping lanes. Theyve recently pledged $20 billion in investment across Africa ... which will go to build roads, railways, schools, hospitals ... agriculture and manufacturing projects ... and small and medium-sized business development. You see, its clear that the Chinese are on a mission to not only secure resources around the globe but goodwill as well. Thats exactly what China has been doing for the past decade: Using their massive war chest of dollar reserves to buy allegiance across the globe. Because they understand theyll need a strong global backing to secure the final step in their plan to take down America ... If history has taught us anything, its that no empire lasts forever ... And right now, Americas reign of economic dominance is teetering on the brink because of this: How China will Shakedown America in 2013 Right now the Chinese government is blazing a new trail in the international energy trade ... and a recent agreement with Russia and Iran may be the final dagger in the heart for the U.S. dollar. Simply put, China is plotting to end the reign of the petrodollar ... and they are leading the assault with the help of the new axis of evil including Russia, Iran, Venezuala, Nigeria and others. Maybe you think Im exaggerating but take a look at a recent article in The Examiner: Just a few days ago, China made the official announcement ... as of that day, Thursday, Sept. 6, [2012] any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do so using the Chinese currency, not the American dollar. And theyve already begun making deals with big oil exporters to ensure this outcome. For example: Major African oil producer Nigeria has agreed to swap a major portion of its dollar reserves for Yuan reserves. Standard Bank researcher Simon Freemantle says, We, rather conservatively, anticipate that around 40 percent of [Chinese]-African trade would be settled in [Yuan] by 2015. China and Brazil have signed a currency swap worth $30 billion, in a deal which, according to the Wall Street Journal is said to encourage Chinese investment in Brazil’s oil sector. Iran has signed major deals to drop the dollar from oil deals with China, Russia and India. China signed a $5 billion deal to buy oil from the United Arab Emirates in Yuan. And Russia recently announced it will supply China with all the crude it needs or wants and they wont transact using the U.S. dollar. And China state-run oil company Sinopec recently completed an $8.5 billion deal in Saudi Arabia to help build out oil infrastructure. The writing is on the wall ... If Saudi Arabia walks away from the petrodollar America is doomed. And why wouldnt they? Commodity producing countries around the world suffer the same fate as any American investor. If you stuff your dollars in the bank, your savings will get ravaged by inflation. You could leave it in the stock market, and suffer violent booms and busts from the Feds mismanagement of the economy. Or you can park your money in government bonds and treasuries and pray for the best. Thats exactly what most investors have been doing. More than $400 billion in hot money has abandoned the stock markets and moved into bonds. And for the last 30 years most of these countries have been pouring their excess dollars into government bonds and Treasuries. Its created the greatest 30 year run for government bonds in history. Its allowed the u.s. to run up unprecedented Federal deficits ... live way beyond our means ... and consume trillions more than we produce as a country. But the u.s. also created an enormous bubble, 4-times the size of the internet bubble and the real estate bubble combined. And when countries decide to say no mas to the petrodollar this mega-bull market will see its final day of reckoning. And when that happens it will make the stock market collapse of 2008 look like a cake walk. Countries like Greece and Spain have already shown us the devastation that can happen when the national credit card runs out ... According to the New York Times Greeces economy shrunk almost 12% between 2009 and 2011 and will plummet another 6% this year. In the past few years, Greece has seen 25% unemployment , massive strikes and even violence erupt throughout the country. People are now even worried about the resurgence of the neo-Nazi party there.
Posted on: Sun, 05 Oct 2014 03:50:05 +0000
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