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"China & Russia Are SELLING OFF This Asset To Collapse The US Economy" - Peter Schiff

Tuesday, September 26, 2023 17:13
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In the vast expanse of global financial landscapes, the intricate dance of currencies plays out, with each step echoing the balance of power and influence. The U.S. dollar, long revered as the world’s dominant currency, finds itself at a crossroads, its strength and stability questioned by the very mechanisms that once upheld it.
The foreign currency deposits in China, predominantly in U.S. dollars, have been a testament to the dollar’s might. However, recent shifts demand that Chinese banks hold more dollars in reserve, ostensibly to bolster dollar demand in China. But will this move truly fortify the dollar? Or is it merely a prelude to a more significant shift in global financial dynamics?
The dollar’s trajectory is not solely tied to the Yuan. Its fate is intertwined with multiple currencies worldwide. Yet, there’s an underlying sentiment that the dollar’s decline should be allowed, that market forces should dictate its course. The potential repercussions of such a decline are vast and varied. For instance, if Chinese banks, now mandated to hold more dollars, reduce the interest paid to depositors, it could further widen the disparity between returns on Yuan and dollar deposits. This could, in turn, prompt more individuals in China to convert their dollar holdings to Yuan, further accelerating the dollar’s decline.
Historically, the Chinese currency peg has been a topic of much debate. Some argue that without this peg, the Yuan would plummet. However, the reality paints a different picture. The dollar, not the Yuan, is at risk. China’s vast foreign exchange reserves have been accumulated primarily by purchasing dollars to maintain this peg, suppressing the Yuan’s value in the process.
As China’s domestic needs grow, the focus is shifting. The nation’s priorities are evolving from catering to the demands of the American population to addressing the needs of its own burgeoning populace. This shift is monumental, especially considering the U.S.’s increasing reliance on countries like China. Over the years, the U.S. has transitioned from a manufacturing powerhouse to a service-centric economy, heavily dependent on imports and foreign debt.
The classic definition of inflation, as posited by Milton Friedman, describes it as “too much money chasing too few goods.” The U.S. has witnessed an explosion of money printing, yet the dollar’s value, when compared to other currencies, has remained relatively stable. This stability can be attributed to the global marketplace. The U.S., rather than being self-reliant, has leaned on the production capabilities of other nations. The money printed by the Federal Reserve finds its way into the hands of Americans, who then use it to purchase goods from countries like China. This cycle has allowed the U.S. to maintain a semblance of stability, even as its trade deficits ballooned.
However, this delicate balance is not sustainable. The U.S.’s trade practices, characterized by importing goods and exporting dollars, have been tolerated by its trading partners primarily because of the dollar’s reserve currency status. But as global dynamics shift, this arrangement’s longevity is questionable. The world’s patience in exchanging tangible goods for printed paper may soon wane, especially as they grasp the impending devaluation of the dollar.
The U.S.’s fiscal policies have long been cushioned by foreign investments in U.S. treasuries, keeping interest rates artificially low. This has emboldened the U.S. government to accrue even more debt. But as foreign confidence wanes, the Federal Reserve might find itself in the unenviable position of having to buy these treasuries, leading to more money being printed and, consequently, inflation.
In conclusion, the dance of currencies is intricate and complex, with each move having far-reaching implications. The U.S. dollar, once the undisputed king of this dance, now finds itself navigating a floor filled with uncertainty. Only time will reveal the next steps in this ever-evolving ballet of power and influence.



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