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Is China About to Demand the US Dollar Lose Reserve Currency Status?

by Graham Summers, Gold Seek:

The biggest issue in the financial system… the issue that CNBC is completely avoiding… and 99% of professionals are ignoring is the US DOLLAR.

The US Dollar has ripped to 103.

This is a truly MASSIVE problem.

The Chinese Yuan is linked to the US Dollar. With the US Dollar at these levels China has rapidly entered a financial crisis.

In the last month, China has:

1) Burned through over $70 billion defending the Yuan.
2) Had to halt trading in its multi-TRILLION dollar bond market.
3) Had to issue emergency lending to financial firms to keep them afloat.

ALL of these are linked to the US Dollar’s rise. And it’s lead the world to a very nasty situation.

China has a couple different options, NONE of them are pretty for the financial system.

Indeed, China is already doing this. But stocks continue to be in “la la land” driven by the media’s nonsensical obsession with Dow 20,000.

Alternatively China could go for the “nuclear” option and demand that the US be removed as reserve currency of the world.

This is not some crazed notion. China is the second largest economy in the world. And the Yuan is now part of the IMF’s SDR currency basket along with the Yen, British Pound and the Euro.

I’m not saying the US Dollar would necessarily LOSE reserve currency status, but if China were to publicly call for this, the consequences would be severe.

The most obvious one would be a LARGE Yuan devaluation similar to the one that CRASHED stocks in August 2015 or January 2016.

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4 comments to Is China About to Demand the US Dollar Lose Reserve Currency Status?

  • Craig Escaped Detroit

    I can imagine a situation where China’s falling currency, may seek to strengthen it by attacking the US Dollar. And that’s not the only reason for the US losing “reserve currency status”.

    There ain’t no “black swans” out there. Take a closer look. Those are BLACK Pineapple Suppositories (with WINGS).

    The sheeple are gonna be in for some painful awakening when those Winged-black-pineapple-suppositories come home to ‘roost in the boost’.
    (cheeky jokes,eh?)

  • jj

    China does not peg the yuan to the dollar but uses a basket of currencies mostly Asian trade partners which the dollar was included in the basket but the PBOC announced recently it was pulling the dollar out. It announced also that it has not changed it outlook on the dollar and treasuries and will still purchase these. China is a huge importer of US commodities and a strong dollar makes these too expensive with demand falling and then price. A strong dollar is not good for the US, China nor the foreign entities who have borrowed over $9 trillion in dollar denominated loans.

    • Eric

      Nah but it’s good for Washington elitists and Goldman Sachs.

    • Craig Escaped Detroit

      @jj, You make it sound as if I mentioned “currency pegs”, (I did not). In fact I never mentioned any currency pegs or baskets, I was exactly addressing the USA reserve currency status and how China’s situation & actions could influence or derail the USA reserve currency status.

      You mentioned that China is a “huge importer of US commodities”? Such as?
      Cars? (nope)
      TV’s? (nope)
      Clothing? (nope)
      GMO corn? GMO soybeans? Computers? Smart Phones? Airplanes? Tanks? Guns? Pork products? (nope)

      And you also mentioned “China announced it will still purchase Treasuries.” (I’d say that “actions” speak louder than words.) China has been a net “seller” of US securities (they sell more than they buy.) So yes, if China’s “outlook” has not changed, then it would mean they will continue to be “net sellers” of US Treasuries.

      I have to be honest, in saying that I am not swayed by your statements.

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