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Shock Report: China Dumps Half a Trillion Dollars: “Something is Very, Very Wrong… They Are Being Aggressively Sold”

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We’ve recently reported that China is preparing for something very big in currency markets this October. We then learned that economic models from two very well known financial forecasters are predicting that governments around the world will run into serious problems starting around October 2nd of this year. Those forecasts come on the heels of a warning issued by economic analyst Michael Snyder who says that a financial collapse is imminent within the next six months.

A wide body of evidence suggests that something is in the works as economic numbers around the world are revealed to be nothing short of pure conjecture. Yet, despite the clearly disastrous direction in which the world is trending, politicians and media pundits maintain that whatever contagion existed has now been contained.

But a shocking report from Zero Hedge suggests otherwise. According to one of the world’s leading financial web sites, major banking institutions like JP Morgan Chase and Goldman Sachs have been left speechless after the release of new data coming out of China. The news isn’t necessarily that China just reported a massive increase in its gold holdings of some 600 tons, but rather, that they have actively dumped hundreds of billions of dollars worth of U.S. Treasuries over the last 15 months, with some $224 billion having been offloaded in just the last 90 days.

This has led many to speculate that the end for the world’s reserve currency is nigh.

On Friday, alongside China’s announcement that it had bought over 600 tons of gold in “one month”, the PBOC released another very important data point: its total foreign exchange reserves, which declined by $17.3 billion to $3,694 billion.

We then put China’s change in FX reserves alongside the total Treasury holdings of China and its “anonymous” offshore Treasury dealer Euroclear (aka “Belgium”) as released by TIC, and found that the dramatic relationship which we first discovered back in May, has persisted – namely virtually the entire delta in Chinese FX reserves come via China’s US Treasury holdings. As in they are being aggressively sold, to the tune of $107 billion in Treasury sales so far in 2015.

JP Morgan Chase conclusion is actually quite stunning:

This brings the cumulative capital outflow over the past five quarters to $520bn. Again, we approximate capital flow from the change in FX reserves minus the current account balance for each previous quarter to arrive at this estimate (Figure 2).

Incidentally, $520 billion is roughly triple what implied Treasury sales would suggest as China’s capital outflow, meaning that China is also liquidating some other USD-denominated asset(s) at a feverish pace. So far we do not know which, but the chart above and the magnitude of the Chinese capital outflow is certainly the biggest story surrounding the world’s most populous nation: what is happening in its stock market is just a diversion.

Net capital outflows might conceivably have run around -$200bn, an acceleration from Q1 and beyond anything seen historically.

Granted, this is smaller than JPM’s $520 billion number but this also captures a far shorter time period. Annualizing a $224 billion outflow in one quarter would lead to an unprecedented $1 trillion capital outflow out of China for the year. Needless to say, a capital exodus of that pace and magnitude would suggest that something is very, very wrong with not only China’s economy, but its capital markets, and last but not least, its capital controls, which prohibit any substantial outbound capital flight (at least for ordinary people, the Politburo is clearly exempt from the regulations for the “common folk”).

Full report with charts, extended data and analysis

Forget about what stock markets are doing because, as noted, that is just a diversion. Focus instead on the bond markets, which are massive in comparison to stocks.

As we can see, China is actively and rapidly dumping U.S. dollars, with the last three months accounting for nearly half of that sell-off.

This is not a sign of a stabilized global marketplace and we may well be witnessing the beginning of a massive worldwide collapse of the current economic, financial and monetary paradigm. We certainly don’t expect this to happen overnight, but as we’ve noted previously, we are on the cusp of an unprecedented event in world history.

According to analyst Greg Mannarino it was all this excess debt that made “infinite” economic growth possible. But when that debt bubble finally does burst – and we may be seeing the beginnings of it with the Chinese sell-off of U.S. dollar denominated assets – we’ll also see a bursting of the population bubble:

It’s created a population boom… a population boom has risen in tandem with the debt. It’s incredible.

So, when the debt bubble bursts we’re going to get a correction in population. It’s a mathematical certainty.

Millions upon millions of people are going to die on a world-wide scale when the debt bubble bursts. And I’m saying when not if…

When resources become more and more scarce we’re going to see countries at war with each other. People will be scrambling… in a worst case scenario… doing everything that they can to survive… to provide for their family and for themselves.

There’s no way out of it.

Source: Millions Upon Millions Will Die…

The real possibility of this event coming to pass is what is driving not just the government to prepare for widespread economic collapse scenarios and the civil unrest that will follow, but has also sent the world’s elite scrambling to hideaways and bunkers in an effort to avoid the inevitable violence that erupts when resource shortages become the norm.

For those who have yet to take steps to prepare for disaster, we point your attention to Greece, where a similar event has happened on a smaller scale. Things have gotten so bad that Greeks are dumpster diving for food and standing in hours-long lines just to get a government-approved $75 withdrawal out of their ATM.

Most people – about 99% at last count – have failed to prepare for even minor disruptions such as those in Greece. As The Prepper’s Blueprint author Tess Pennington notes, it won’t take much to upend society and just like Greece, if the debt bubble does burst it will have a direct and immediate impact on the normal flow of commerce:

Collectively speaking, most Americans take for granted the system in place to deliver essential supplies to their area. “The system,” an underlying infrastructure that keeps goods, services and commerce in America flowing creates a sense of normalcy and order. Food, water, gasoline and medications are just a few of the items restocked weekly in order for our dependent society to maintain a steady flow. What many fail to grasp is just how fragile the system is and just how quickly it can collapse.

The report goes on to explain that consumer fear and panic will exacerbate shortages. News of a truck stoppage—whether on the local level, state or regional level, or nationwide—will spur hoarding and drastic increases in consumer purchases of essential goods. Shortages will materialize quickly and could lead to civil unrest.

Source: When the Trucks Stop Deliver The System Will Collapse

Transportation systems are just one part of a critical chain dependent specifically on the availability of credit. Should that credit be disrupted because of currency upheaval or economic collapse, we could well face Greece on a massive scale across America, complete with all the violence that results when people have been driven to the breaking point.

The takeaway from the latest revelations coming out of China?

It’s simple. Prepare for the imminent collapse of our current paradigm. Failure to do so will leave you and those you love literally fighting over garbage scraps.

Also Read:

This Picture and Video Explain Exactly Why Doomsday Preppers Are Getting Ready For An Imminent Collapse

When the Trucks Stop Delivering, ‘The System’ Will Collapse

Consequences of Collapse: Access to Critical Medicines Is Disappearing in Greece

The Prepper’s Blueprint: Step-By-Step Guide To Prepare For Any Disaster

Government Is “Simulating the Collapse of Our Financial System, the Collapse of Our Society and the Potential for Widespread Violence”

This article has been contributed by SHTF Plan. Visit for alternative news, commentary and preparedness info.


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    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    Total 15 comments
    • Warren

      It may be no more than “buy low, sell high”. The U.S. dollar is arguably over-valued right now. Gold is arguably under-valued. What is a smart trader to do?

    • Jawbones

      Good read! Thanks

    • jeff

      Things are not bad in Greece yet. Just watched a news report on Chinese CCTV News station two days ago, showing two girls in Athens went in the bank to apply for a debit card and it took them only 10 minutes with all the proper IDs. they were able to withdraw their limits from the ATM right after. No line-ups. Nothing happening on the street.

    • Ideas Time

      If you think about it , what the Chinese are smart on this one. They know they can dump it all, buy gold and the Fed has to cover it up up up or go down.

      They could dump the whole 1.3 trillion tomorrow and get paid. I know it is fake money but they can still spend it for now and masses are clueless so they can be first in line to cash in. Part of the plan? Likely.

    • Ridd10

      Right now China is hurting for cash, they just nationalized 6 trillion in stock market losses, the need liquidity to cover they asses atm.

    • NWO for Dummies.

      3 weeks food reserve in your cupboards wont break the bank for most people. sensible. I don’t believe in hoarding. If disruptions last longer than 3-4 weeks we’re in serious trouble but everyone wants to get back to work and production as soon as possible and thats why things will correct themselves quickly.

    • Anonymous

      The official figure, for the national debt, and without so many derivatives, is approx $18 trillion.

      “an unprecedented $1 trillion capital outflow out of China for the year.”

      To where is it flowing. Did someone purchase the debt, or accept dollars as payment?

      I have seen some counterintuitive things in dreams, fwiw.

      For instance, preoccupied people do not always fight over what is vital, and might just as soon abandon it, wherever they are standing.

      Prov 28 says the wicked flee when no man pursues them. They are always under condemnation, in the back of their mind, or come to consciously accept it, as by predestination.

      While these people go off, in search of absolution, you might just be left all by yourself, neither an aggressor nor a victim.

    • Klemens

      “We’ve recently reported that China is preparing for something very big in currency markets this October.”

      If you have something to sell, which is more than enough on the market, you have to sell it faster and without a big noise.

    • ruffsoft

      Much ado?
      ..” the PBOC released another very important data point: its total foreign exchange reserves, which declined by $17.3 billion to $3,694 billion”
      That is less than 1/2 of 1 %.

      “China’s US Treasury holdings…. are being aggressively sold, to the tune of $107 billion in Treasury sales so far in 2015.”
      That’s 3.4% in half a year.

      These are significant transactions but must be seen in scale.

      • Anonymous

        What percentage do you expect to earn, as an individual, from your interest-bearing savings account, or how much interest would you have accumulated, on a home loan, within a year’s time.

        Maybe, the figures given in this story are flawless.

        Maybe, they are given in good faith.

        Maybe, this has no meaning, at all, besides what we have inferred.

    • ConfuciousSay

      OK, you aren’t watching your business news at night like you should be are you Mr. Writer of this lunacy?

      They are dumping bonds to pay for the losses in their stock market and nothing is going to collapse. When they run out of money they just hedge against some asset (real or imagined) and print more paper money.

    • Shaun

      China is dumping fake worthless U.S. promise-sorry notes for real Gold! That is really wtf is happening!

    • Lastnerve

      This makes one wonder who is helping China by keeping metals low.

    • _2Lolo

      Gold will soon take off after the Chinese are done dumping. The American Government, or NWO, those who forced China to eat their worthless paper, having been keeping metals artificially low, and then will hike up gold, silver and other metals. China is only following very specific orders. As one commodity drops, another is primed to accelerate upward. The Americans guided the Saudi Kingdom as such with oil, bonds and gold.

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