China About to Nuke the Dollar

http://news.goldseek.com/GoldenJackass/1238169622.php

Go to the site to see the charts

A
crisis of global confidence in the US Dollar is upon us. Foreigners
have begun to lose respect for USGovt approach to problem solving, for
US bank administration, and for USDollar custodial management.
Foreigner creditors have suffered deep losses from fraudulent bond
export, continue to sit atop mountains of US$-based debt securities,
and watch current events in horror. The heap of moldy paper includes
both USTreasury Bonds and USAgency Mortgage Bonds. Foreigner creditors
see the USDollar valuation propped up by liquidation forces rather than
USEconomic strength. Foreigner creditors see the USTBond yields forced
down by liquidation forces rather than USGovt debt integrity.
Foreigners are aghast at four new trends. They lose respect when the
financial market rules change periodically, obviously to favor the
insiders, elite, and connected. They lose respect when the approach
taken by the Obama Admin is marred by lack of consistency,
coordination, or even thorough research. They lose respect at the flow
of $trillion$ in rescues and redemptions for failed institutions, most
of which are responsible for the global crisis. They lose respect at
the prospect of $trillion$ in ongoing federal budget deficits as far as
the eye can see. They lose respect at the prospect of $trillion$ in
monetized US$-based bonds, with the prospect of repeated announcements.

View
Ben Bernanke, now turned commodity supplier. He is shoveling and
humping around confetti laced with mold reinforced by a massive flow of
swill, and does not even realize it! Forget the helicopter images. The
palettes of $100 bills stacked neatly vastly overshadow any volume
dropped from black unmarked choppers. His partner ‘TinyTim’ Geithner is
an outright rookie with a very questionable past record, whose errors
are too numerous to properly cite, starting with the ruinous decisions
he recommended for Indonesia with the IMF during the 1998 Asian
Meltdown. Details of harsh criticism, hardly reported by the US press
networks, were delivered by former Australian Prime Minister Keating.
The quotes, discussion, and analysis are included in recent Hat Trick
Letter reports.

The latest is a firm undercut against both
confidence and integrity in the USDollar, when $1.05 trillion in
monetized USTBonds and USAgency Bonds will be completed, using printed
money, undermining the USDollar further. My deep firm belief is that
another $1 trillion in monetized bonds will be required in summer, then
another possibly larger >$1 trillion in monetized bonds will be
required this autumn when the USEconomy deteriorates further, led by
supply shortages including food. Acceleration in flow of funds is
necessary to sustain a bubble, and a similar acceleration is necessary
to prevent a bubble collapse. These are characteristics of a Third
World nation’s management of a currency that has the unique advantage
of operating as the global reserve currency. Such a juxtaposition has
never in modern financial history been witnessed before. The perceived
abuse by the Untied States is incredible, as numerous syndicates
continue to operate under the protection of the system’s many
appendages. It is no wonder that foreign creditors are both aghast at
the situation in the Untied States, and mobilized to defend themselves.

My
theory is very simple for a complex global financial structure. The
longer foreign nations wait to establish a multi-polar global reserve
working alternative, employed broadly within their continental regions,
laced within banking and commerce, the greater their loss will be to
wealth funds and the greater the disruption will be to their entire
economies, their standard of living, and their internal political
stability. So let’s see what China is up to. Far more details are
provided in the Hat Trick Letter report on Gold & Currencies in the
March issue.

This message was just received by a trusted
colleague. This summer could be very bloody, in terms of global
retribution against the Untied States, its debt peddlers. The gloves
could finally come off. The person has global connections, decades of
gold and banker experience, connections with the Euro Central Bank,
numerous commercial contacts in Russia, China, and Arab world, and
lives with several feet in several ponds, fluent in a few key
languages. He is involved in many meetings of international importance,
and lately has had the advantage of being involved with both bilateral
barter arrangements created by Russia (with China, with Germany). He
has a strong reliability record, with advanced notice often provided in
a valuable manner. Here is a quote from this morning, which was in
response to some queries about continued USTreasury Bond support,
recently difficulty with UK Gilt bond auctions, and general monetary
debauchery by major nations like US, UK, and Switzerland.

He
wrote: “However, come the end of May/June/July 2009, the United States
will be put through the meat grinder once and for all. You have no idea
how pissed off the creditor nations are with the unmitigated arrogance
and delusional bulxxhit coming out of Washington DC / Wall Street. I
have never heard people be so furious and vocal on how the US needs to
be dealt with from here on forward, as demonstrated during an early
morning conference call we had with Europeans, including Russians and
Asians. All on the call are heavy-duty decision makers.” A time of
reckoning comes for the US, and my opinion is that what lies directly
ahead is a dark place with more economic hardship and far less liberty.
Be prepared with ownership of gold & silver bullion, bars, and
coins. If not, a likely outcome is more destruction of personal
finances, savings, and pension holdings, along with job cuts.


USDOLLAR & THIRD WORLD REFLECTION

As
prelude, examine the USDollar DX index. In my past analyses, a forecast
error was given in living color when my call was for the US$ to roll
over and turn down a couple months ago. The October high provided
surmountable after all. My biggest errors of forecasting are clearly
with the USTreasury Bond long-term yield and the USDollar DX index
lately. Of course they are subject to the greatest market intervention,
despite claims of free markets, despite claims of strong markets that
seek equilibrium and proper value through price discovery. Nothing
remotely is the case, not when the Plunge Protection Team goes to work,
not when the Caribbean bank centers realize a jump from $117 billion in
July 2008 to a hefty $204 billion in October 2008 in USTBond holdings.
Such numbers are consistent with enormous nations with huge economies,
vast banking systems, large indigenous credit markets, massive
industries, etc. No, in the US, where $2.2 trillion of additional
USTBonds were sold by JPMorgan, above and beyond the USGovt approved
issuance (call it counterfeit), combined with secretive Caribbean slush
operations and phony front agencies doing the USFed’s bidding and doing
the USTreasury’s bidding, it is easy to make wrong forecasts with the
USTreasury Bond long-term yield in the USDollar DX index. One can be
proud to make errors where the concentration is precisely where the US
corruption is most deeply engrained. It is a badge of honor to wear.
Call them PaulVE moments, the intelligent, personable, eloquent but
analyst with consistently wrong forecasts. By the way, how much of the
counterfeit JPMorgan USTBond sales went to cover credit derivative
losses and gold futures contracts to suppress the gold price all the
way from $300 per ounce in 2002 to $1000 this year??? Recall that
JPMorgan is protected by national security exceptions.

The DX
index faces an increasing challenge. The October 2008 high was
rebuffed, but then supported at the 8-month moving average, only to be
surpassed with further European and British distress of intense
variety. An old reliable rule of thumb in technical analysis says to
turn to a longer term chart to gain more clarity and direction in
forecast for price movement. So turn to the monthly chart. The October
and March highs now look like a failed double top with respect to the
autumn 2005 highs registered in the 92 level. Two big red candles look
ominous indeed but not fatal. The monthly stochastix appears elevated
and stretched. The DX index did well in even approaching the 90 level
at all. Dead men cannot usually walk, let alone climb a staircase. Just
as the 2005 rebound in the US$ bear market enjoyed a run, the 2008
rebound has enjoyed a different kind of run. Its strength is derived
from US bank insolvency, bank ruin, and major corporate ruin, all of
which require staggering liquidation funds and insurance payout funds.
It is akin to claiming that Acme Hardware has strong stock value
because it has a destroyed business, a destroyed franchise name, is
enduring the shame of endless liquidation distress sales, is axing a
large proportion of its workforce, has supply chain strangulation. But
the Acme stock is strong, since its discontinued wares are in demand!!!
This is lunacy, as is almost everything about the US financial system,
its structure, its administration, and its criminals left still in
charge. The reflection on the USDollar is inevitable.

IN MY
VIEW, A LOWER VALUATION COMES FOR THE USDollar ONLY WHEN ALTERNATIVES
ARE PRESENTED, INSTALLED, AND USED BROADLY ON INTERCONTINENTAL BASIS.
Weak US fundamentals clearly are not enough. Extreme distress,
dislocation, and disruption in foreign lands act as the bull whip
urging those foreign creditor nations into action toward alternatives.
The lead is China, without question. They do not feel the political and
military pressure that Saudi Arabia has endured for decades. A band of
corrupt royals in Riyadh compares badly to a billion throng of upstart
industrialists in the famed Middle Kingdom who harbor a bad taste for a
century toward Westerners generally, and an even worse bad taste toward
fraud king Wall Street jet setters who blame the Chinese for many of
their own problems. The trade war with China was forecasted in my
analysis long ago, like four years ago. The sequence is simple, from
offshore manufacturer to trade partner to global adversary to large
scale credit provider to angry creditor to credit master, and maybe to
receivership committee governor.

PROLOGUE TO THIRD WORLD

As
a quick preface, bear in mind firmly that when foreign creditors own
more than half the US debt securities, they slowly take control of the
nation with hidden strings, hidden deals, as subtle changes occur in
priorities held by US leaders. Worse, foreign creditors begin either to
control the selection of key position appointments, or else to go into
revolt. With the continuation of the Wall Street control from vividly
clear criminal syndicate monoliths, the foreigners have begun to react
with firm established detailed blueprint plans for new financial
foundation structures. The US press does not cover much at all of these
important developments, likely because their outcomes are so dreaded to
the US financial way of life. The foreign developments are like turns
in the road, where the new pathways are directed to the Third World.
The clear signposts scream out of capital shortage and supply shortage.

By
the way, Mexico should be correctly be identified as a failed state to
the South, as drug warlords have essentially taken full control of many
parts of the nation. Worse, Mexico and the Untied States find
themselves now embroiled in a trade war, centered upon truckers. The
majority (estimated at 95%) of powerful weapons used by the drug lords
South of the Border are imported from the Untied States. CNN covers the
regular murders of border town police officials like in Juarez across
from El Paso Texas. My view is more encompassing. Ever since the Afghan
War began, much of US foreign policy (both in the East Asia &
Middle East) and domestic policy (airports, borders, banks, war funds),
has been directed by the US drug lords who operate the $400 billion
narco wars out of Congress, WashDC lobby groups, Halliburton HQ, and
the Pentagon. The banking and logistics require cooperation from Wall
Street firms, along with certain big European banks. If you have not
recognized that syndicates have strangled the US, you are basically
blind. Not only is war funding profitable above board, but hugely
profitable when basic pilferage enters the picture. The exact sum
missing remains unclear, but the US Special Inspector General for Iraq
Reconstruction (SIGIR) suggests it may exceed $50 billion, a figure
that eclipses the Madoff Ponzi scheme. This is more than basic grand
larceny, a specialty of the last Administration (see the Hurricane
Katrina Relief effort).

Continued below:

The other main traits of Third World pertain to puppet government
leaders, broken banks, masses of jobless, tent cities for the
disenfranchised, ruined savings accounts, deep debauchery of the
currency, control of government funds for the benefit of the Elite,
preferential treatment of criminal behavior by the Elite, hostility
toward civil liberties, steady stream of propaganda in the news media,
a national infrastructure neglected in tatters, and a general
militaristic stance toward enemy and ally alike. If you cannot detect
the degradation toward this miserable situation, with these stated
characteristics, you are basically blind.

CONFLICT RISES WITH CHINESE CREDITOR

The
war of words, the high-level conflict, between the Untied States and
China continues to escalate. This is an significant titanic conflict
since China is a principal creditor. The other important creditor
nation is Saudi Arabia. Two weeks ago, an unprecedented warning was
given by Premier Wen Jiabao, complete with a finger wagging gesture.
The implied message was crystal clear: Do not devalue the USDollar
through reckless spending. China already is the biggest foreign
creditor to the USGovt, with an estimated $1 trillion in USTreasury
debt. Wen wants to avert massive additional losses from a currency
collapse. At issue is an vast stream of stimulus packages, escalated
federal deficits, endless rescues, to push down the value of the
USDollar, and thus the held value of the Chinese hoard of savings. The
international conflict has reached the Bloomberg, Reuters, and Wall
Street Journal news. Of course, they leave out major important points.
But the WSJ article entitled “China Takes Aim at Dollar” (CLICK HERE)
certainly should act like a cold splash of water to readers, unless
myopia is a chronic problem, or unless the reader wears flag draped
skivvies every day out of the house.

Chinese leaders are openly
critical, expressing deep anxiety. Debate is rampant inside China about
the wisdom of continued support to purchase USTreasurys. These are
preliminary tectonic shifts to be identified before important new
financial structures come to fore. They will disturb the USDollar
system at its global foundation, with much inherent hegemony. The shock
waves will come region by region, in a succession. By attracting a lot
of attention to this issue, China has decided to attempt to gain
influence at the G-20 meeting.

An important issue being watched
is the Chinese Govt decision to expand its 4 trillion yuan (=US$586B)
stimulus, if needed. The Untied States prints money, undercuts its
currency and debt integrity, and adds dangerously to its financial
weakness with the parade of rescues and stimulus that seem designed to
ignore the people on Main Street. The Chinese have a war chest, and are
using it. The Chinese are confident about emerging from the financial
crisis and demonstrating vitality again. The Chinese Economy is indeed
under stress. Many analysts wrongly conclude that the US is in much
better shape. Not true! The USEconomy is undergoing a dangerous
disintegration process. The Chinese are actively trying to spur
domestic consumption, a difficult task when millions of job losses have
occurred. A great migration has begun back to the rural areas, away
from the cities. The seeds of Chinese social turmoil have been sown, to
be sure.

CONCESSIONS MADE TO CREDITORS

An extremely
dangerous and controversial agreement might have been struck between
the USGovt and Chinese Govt during a visit to Beijing by Secy State
Hillary Rodham Clinton. Some call this news pure rumor, while others
claim it is suppressed fact. Time will tell. The Chinese had been
demanding greater assurances for continued USTreasury Bond purchase.
The public is not privy to actual discussions, as US leaders continue
to betray the US public with a string of secret deals dating back to
IPO offering by Wall Street for giant Chinese banks. Ever since Goldman
Sachs took control of the Dept Treasury in 1992, the nation has
suffering a skein of betrayals on gold treasury management, suppressed
USTBond yields (that skewer savers), insider trading schemes that would
read like out of crime novel, and lately channeled TARP funds for Wall
Street elite sequestered usage. Details and quotes appear in the Hat
Trick Letter, in particular the Gold & Currency report for March
out last weekend. The US Embassy in Beijing confirmed the deal to the
source. Hillary closed the deal. A quid-pro-quo agreement was struck,
continued USTBond purchases in return for Eminent Domain option to
exercise by China for property seizure, “to physically take, inside the
USA, land, buildings, factories, perhaps even entire cities.” The
concepts of colonization and carpet-bagging should come to mind!

In
order to maintain credit flow for the deeply insolvent USGovt, the
federal authorities might have mortgaged the physical land and property
of citizens and businesses in the Untied States to a foreign power.
What makes the betrayal all the worse if its apparent secrecy. In my
analysis last autumn, mention has been made that a great risk grows for
China to embark on a COLONIZATION movement. Huge tracts of USTBonds
have been accumulated by China since September. The USTBond hoard held
by China would be converted into mortgage bonds, and then into actual
hard asset property, including commercial buildings. Sadly, the Secy
State post under Hillary has morphed into an emissary post to plead
with creditors. This is NOT so much about forcible confiscation, but
rather conversion to property like during any other ordinary
liquidation, ordered within receivership. China has embarked on early
stages in preparation to convert debt securities into hard assets like
property. They are crafty and deliberate. What few seem to acknowledge
is the path from mortgage bond ownership to property purchase (for a
very low price) upon foreclosure is a very short path. Imagine a throng
of Chinese businessmen and bankers dressed in Western suits attending
foreclosure auctions holding property titles in their hands!!! A
bizarre obstacle might thwart some Chinese efforts, if they discover
that mortgage bonds continue imperfect or missing property titles, or
worse, are forged Fannie Mae counterfeit bonds.

CHINESE BANKS TO REPLACE US DOLLAR

In
a bold plan, the Chinese Govt has announced the yuan currency will soon
replace the USDollar as the new Asian regional reserve currency. The
stage is set for Asia to install the Chinese yuan for broad usage
across Asia, with possible massive dump of USTreasury Bonds. Look for
other new global reserve currency to spring up in the next year,
especially after the Chinese run interference on the financial,
geopolitical, and diplomatic fronts. The impact alone from the Chinese
plans presents a dire prospect for the Untied States, with dangerous
economic and credit impacts. The Asia News is full of excellent
analytic editorials, some full of valuable data.

Due to USDollar
instability and unreliability, Beijing is introducing a serious
currency experiment, in order to aid in the stability of the Asian
economy. The Chinese intention seems clearly to decouple both China and
Asia from the USDollar and to introduce the yuan as the regional
reserve currency. The yuan will be infused throughout their banking
system. Other Asian governments will surely follow suit and discharge
reserve USTBonds in favor of the yuan currency. The full impact will be
felt when Asian nations who participate in this new reserve currency
begin to purchase raw materials and commodities like grains, energy,
and metals in Asia, using yuan currency in hand. The giant blow taken
by the Untied States will result in further isolation. That will
severely weaken US$ demand in an important continent.

This is a
very clever economic as well as political plan by China. The plan is a
pathway for regional economic stability for Asia, centered finally in
China in a monetary sense. China will proceed under the legitimate
political cover of their own financial reform toward stabilization.
Chinese bank leaders like Zhou Xiaochuan have begun to state publicly
some nontrivial arguments about how continuation of the current
US$-based global unipolar financial system bears costs and risks that
far exceed the benefits. If the USEconomy wishes to import Chinese
finished products, then the American consumer will indirectly
contribute toward financing any new Chinese debt. The Chinese are
considering a new debt security, which will compete for Asian surplus
funds and thus displace the USTreasury Bond. If successful, the Chinese
will turn the tables completely, and wear the big currency boot.
Chinese sentiment has changed, as has their patience. Geithner’s
initial comments directed against the Chinese were disastrous, and
meant the ‘kiss of death’ for the USDollar and USTBond. My firm belief
is that a new Asian regional community fund, designed to ward off
currency attack, might be vastly expanded to become the precursor of an
Asian Credit Market denominated in Chinese yuan, and using newly
created Chinese debt securities. The distrust of the IMF is acute these
days. They actively seek alternatives. They are collectively wealthy
enough to create new support structures, all of which in turn undermine
the USDollar and USTreasury Bond.


The graphic on FOREX
reserves firmly proves the point that the balance of power has shifted
to developing nations. Wealth accumulation leads to shifts in bank
power. If the existing structures do not incorporate and accommodate
the new reality, then new structures will come into form and take root.
The US and UK have given nothing but lipservice to Chinese, Arab, and
Russian demands, their creditors. The time for revolt is here.
Americans seem last to notice.

The biggest beneficiary
is sure to be gold & silver, as the USDollar and USTreasury Bond
are weakened. They are the competitors to gold. For practicality
reasons, the USTBond will be preserved at all costs. The USEconomy
desperately requires that mortgage rates remain low, and that long-term
interest rates remain low for commercial loans. Avoidance of further
damage from housing decline is urgent. Avoidance of further credit
derivative accidents and heavy losses is also urgent. So the more
vulnerable of the pair is the USDollar. The Gold-US$ connection is soon
to return in powerful force. A decline in the USDollar will send the
gold price well above the $1000 level. The only obstacle to the gold
runup is continued JPMorgan gold futures contract short positions, like
1.2 million ounces in total put to work in the two days following the
USFed $trillion$ monetization announcement. Corruption continues.

This has gotten out of control. I don't think people realize what it going on!