The Phaserl


Washington DC just Lost Another Outpost in the Global Currency Fight

And there goes Zimbabwe…

from The Wealth Watchman:

Well, well! Just as the Christmas season approaches, it seems a rather big deal on the currency scene has just gone under the radar. For the US was just outmaneuvered in yet another currency deal that has major implications going forward.

This deal wasn’t a surprise to those who’ve been paying attention, but it wasn’t set in stone either, and a lot of planning went into it. Now finally, having hammered out the details, the announcement has been made, as this headline hit the wire just a few days ago.

“Zimbabwe says China to cancel $40 mln debt, increase yuan use”


Yes, Zimbabwe and China finally hammered out a deal to fast-track the Yuan for use in Zimbabwe’s general economy. This is important for China, but even more so for the troubled south-central African country.

For years, Zimbabwe has been an utter basketcase, plagued with human rights violations, fraud, hyperinflation, and economic maladies galore. It seems the sly, old dictator, Robert Mugabe, having completely train-wrecked his country, was truly desperate to salvage his decrepit legacy.  After all, unemployment in that country had recently reached an utterly mind-blowing 80% of their populace!

Can you imagine a populace even functioning with just 1 in 5 having gainful employment? They were literally barely surviving in many cases.

Something had to be done.  Thusly, several years back when Mugabe heard about China’s African strategy:involving the investment of over $40 billion in Chinese capital to create close working relationships, by building infrastructure(in exchange for trade and currency usage), Mugabe was keen to get involved.

The man personally made over 13 trips to visit the Chinese PM, and was able to secure a loan package worth $1 billion dollars, in order to build thermal power plants in Zimbabwe, and jumpstart Zimbabwe’s economy.  China’s leadership agreed to a tentative deal to fund the plant’s construction, but Beijing knew that the faltering country would need more alternatives, and special help going forward.

Beijing also knew the timeless life truth: that everyone who borrows becomes slave of the lender, and the lender(who has the capital and the leverage) will always end up making the rules.  This is especially true if the borrower comes upon hard times!

And that’s where the real value of the loan came in…

Yuan Foot in the Door

We’ve already looked at how the US/UK banking establishment’s power is a money power, which comes through having the premiere currency used in world trade(the US Dollar).  The Eastern Bloc, Eurasia, is now moving to counteract the Western bankers, in trying to unite a geopolitical/currency/trading regime between Asia and Europe. It is the most ambitious geopolitical project perhaps ever undertaken.

Many steps toward that ultimate goal have been made in the last few years alone, and this newest debt-forgiveness deal is very much a part of that process. Right now, Zimbabwe is using a basket of currencies to help its citizens trade and transact, in order to help avoid currency turbulence. They no longer really use their own former currency, the Zimbabwe Dollar(or “Zim Dollar”), as that currency was literally hyperinflated to a status about 3 notches below toilet paper.

Up until now, that currency basket included the US Dollar, the Great British Pound, and the South African Rand.  Now though, the African country will allow their citizens to take payment from Chinese tourists directly in Yuan. This is key, because China is the largest loan partner in the country now, and will only take a larger share of the trade going forward.

In this new deal, China will forgive about $40 million of the $1 billion owed them, in exchange for acceptance and facilitation of the Chinese Yuan in the Zimbabwe economy.  It also allows the Zimbabwe government to repay their Chinese loans using the Chinese Yuan that flow into its country.

That’s a good deal for Zimbabwe, who’s troubled economy could use the debt forgiveness, but it’s also a great deal for Beijing, since it secured this new huge foothold in central Africa, by giving up just 4% of its loans to Zimbabwe. Not too shabby.

Africa now does trade business with China in excess of $200 billion a year, a very sizeable chunk, and much of Africa is now looking to the East to hopefully step forward into the 21st century.

“Wait, Watchman, I don’t get it. Sure global currency share is important, but what could Zimbabwe possibly possess to make the Chinese want to secure trade/currency deals in the first place? What’s the real prize in all this?”

Ah, shield brother, I’m very glad you asked that, because as you’ve already guessed, the Yuan convertibility agreement is just icing on the cake.  The real prize for China in Zimbabwe is much more crucial than that…

In the last 10 years, Zimbabwe’s economy and hyperinflation became so bad, that many turned to an old tradition just to survive: gold panning. Much of the panning done was illegal as well. However, when people are literally starving, they’ll do anything to survive.  It is believed that the number of those who panned for gold last year, was between 100,000 and 300,000 souls.

Zim 2

That is true suffering.

The reason they could turn to gold panning though, is that Zimbabwe’s soil is rich in gold deposits, and enough gold could be found each day to keep each worker alive. It’s not just gold that the country has a rich reserve of.  They also have the motherload deposits of diamonds, platinum, coal, copper, nickel, tin etc.  For instance, Zimbabwe’s platinum deposits alone are the 2nd biggest in the entire world.

You name it, Zimbabwe’s got it.


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5 comments to Washington DC just Lost Another Outpost in the Global Currency Fight

  • wauhoo

    Washington makes war, China makes deals. Who do you think will win in the long run? Duh!

  • d

    Why would the first black president , even consider trade deals with his own home continet….when he can get a better deal and ‘tee’ time in Hawaii …every year…..gotta love the ‘ change’ we have gotten from this president….chump………imho

  • Christine

    “Robert Mugabe, having completely train-wrecked his country, was truly desperate to salvage his decrepit legacy. After all, unemployment in that country had recently reached an utterly mind-blowing 80% of their populace!”

    Migabe did not wreck his country. The Western World did.

    “At one point, Mugabe’s predilection for orthodox fiscal and monetary policy was a strong as Mandela’s. Yet after almost a decade-and-a-half of the Western media demonizing Mugabe as an autocratic thug, it’s difficult to remember that he, too, was once the toast of Western capitals.

    The West’s love affair with Mugabe came to an abrupt end when he rejected the Washington Consensus and embarked on a fast-track land reform program. Its disdain for him deepened when he launched an indigenization program to place majority control of the country’s mineral resources in the hands of black Zimbabweans.

    Mugabe’s transition from ‘good’ liberation hero to ‘bad’, from saint to demon, coincided with his transition from “reliable steward” of Zimbabwe’s economy (that is, reliable steward of foreign investor and white colonial settler interests) to promoter of indigenous black economic interests.”

    Why the West Loves Mandela (and Hates Mugabe) By Stephen Gowans

    Incidentally, what Mugabe accomplished is exactly why Patrice Lumumba (Congo, formerly Zaire) and Thomas Sankara in Burkina Fas0 (formely Upper Volta) tried desperately to achieve and were murdered for. Just like Chavez in Venezuela.

    • Ed_B

      Despite books pandering to this SOB, Mugabe was and is a thug. Zimbabwe used to be called Rhodesia. When it was run by the white minority, it was tremendously successful as a farming country. It exported food to much of Africa, earning a lot of money that could be used to build their farms, cities, and country. But that wasn’t good enough for Mugabe. No, he had to take over the country, kick out most of the whites (many of whom fled in fear for their lives), and gave the farmland to this thug lieutenants. Unfortunately for them and for Rhodesia, now Zimbabwe, none of those bozos knew diddly about farming, so the farms went to crap and Rhodesia was converted from a successful exporter of food to a terribly poor importer of food and other basic necessities. Wow… such a deal. 🙁

      So, now comes China, offering this collapsed country a handout via the renminbi and forgiveness of some of their debt. Of course they accepted this. Given the abysmal condition of their destroyed economy, who would not? Considering the hyper-inflated and destroyed Zimbabwe dollar, ANY currency that is worth something would look good to these people.

      Check out the videos on Youtube that show how people survived in this hell-hole of a country via panning and mining a few flakes of gold each day so that they could buy some food. The conditions under which many of them work to mine gold in the “illegal” mines are deplorable but necessary if they do not wish to starve to death.

      Interesting info can be found here:

      • Hugo

        Hi Ed,

        Agreed on your assesment on mr Mugabe and his regime. He was right in his assesment that the colonial powers in his country should have shared the wealth with the native population. But we all know what we need to know that he took things by force and not education and free trade and the rule of law. That makes him more of a scumbag then the colonialists. At least there was some resembelance of that there when they ruled. It pains me to say that btw since once it seemed mr. Nugabe ran a sane freedom movement. This video shows well what devestation his regime brought. Ofcourse foreign interests had their go at it but that is no excuse.

        Regards, Hugo

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