Re: How China is Dumping the Dollar

On Nov 29, 12:31 pm, "nemo_outis" <a...@xxxxxxx> wrote:
Most of you don't understand the currents that control your lives, not
least of which is economics. But for those of you who are not complete
mouthbreathers I will give a peek into the mechanisms that are used.

China does not have to do anything so brutal as dump the dollar overtly
to reduce its holdings. No, there are far better and more subtle ways.
Here's one of them.

China has been converting dollars to Euros (mostly in Europe) as follows:

The Chinese make large-scale Eurpean purchases of goods and services
(such as long-term infrastructure upgrades) financed by using US
Treasuries as collateral for the financed trade agreements. The trade
credit, while made in euros, is collateralized in dollars. The lenders
(usually consortia of large banks) won't ever call the note because it is
structured in such a way to both allow it to perform and hold illiquid
collateral (dollars) that no one wants. This essentially inflates euros.
A quiet, off-the-balance-*** dump of the dollar.

It doesn't, in and of itself, depreciate the dollar, however. It
merely creates demand for euros. That the USTs are accepted as
collateral proves their value.

Clever fellows, those Chinese :-)

Regards,

Not particularly, and neither are you.

PS The mechanism is also reminiscent of the trick that central banks
have done for decades in "loaning" their gold reserves while still
keeping them on the balance *** as assets. That trick has more than
halved the banks' real gold reserves and is partly responsible for the
recent runup in gold since banks are now getting very nervous that they
cannot play the game much longer.

Well the leased sales into the forward markets was a prime reason the
POG stayed depressed for so long. When the Wall St crooks who
participated in this sham have to de-lease, lord knows what will
happen. Barrick participated heavily in this for better than a
decade...it may end up that the bullion banks contractually own many
years worth of production.

The US Treasury did the same thing w/ the Knox gold. It is now
classified as "deep storage gold," which many observers believe means
"still in the fkin ground."

The US pioneered "junk assets" such as CDOs - the Chinese have now taken
it to the next level - using the "toxic waste" of the US dollar, the
asset that nobody wants any more, as the underlying vehicle! The irony
is delicious!

Your statements are imprecise and exaggerated. The dollar has value,
still. It is untrue that nobody wants them. As for the US pioneering
structured assets such as CDOs, yes...it is because we truly ARE
clever people.

The EU and the chinks bought up scads of this dog***, not because
they were too stupid to understand that the AAA+ ratings were a scam
or what underliers the instruments were marked to, but because it was
EASY money. Everyone participated in the ponzi racket that was a
GLOBAL bond bubble.

This was the aftermath of the so-called "Strong Dollar Policy." The
strong dollar was a ponzi racket built around dollar-denominated
bonds, on real estate, .coms, all kinds of dollar assets. That WHOLLY
European banks that do NO business here AT ALL were so exposed to this
market demonstrates the cupidity that has infected the western world.

Oh, and you still don't have my approval; you're going to have to do
far better than this offering.

Trav
.