Here's an excerpt from by blog on this subject -
Hold onto your hats and tie down your dog - there's a hurricane blowing through town!
China, Russia and everyone else who isn't part of the dollar dependent 'Western-Bloc' are 'loving the smell of napalm in the morning' as they
stoke the fire under the U.S. financial system.
The Chinese are leading the way at changing the pecking order in terms of global financial power. In typical far-eastern style, they have copied
something the west invented, and made it far more effective. Being attentive students of the American financial machine, the Chinese government and
financial sector have learnt how to play the U.S. at its' own game. By buying up enough of the U.S Dollar, they have effectively seized control of
the U.S. money supply.
The Chinese now have $2 Trillion liquid USD sitting in their foreign currency reserve. This essentially means that they have direct control over the
liquidity of the Dollar, and can manipulate it according to their whim. If they want to lower the value of the Dollar, they release some of the
reserve. To raise it, they buy more for their reserve. To quote an annoying Meerkat - "Simples".
This begs the question - Why can the US banks and central bank not fight back?
The Chinese have timed this perfectly. The massive defaults and 'writing-off' of huge debts has meant that there is very little 'good' money
floating around in the U.S. financial system. The corrupt Federal Reserve has had to 'print' more Dollars to shore-up the shortfall that was created
when the bubble burst.
The Chinese reserve, 'liquid' in it's nature was untainted by the huge debt spiral created by the credit crunch. Therefore, the Chinese and other
countries with large Dollar reserves found themselves in a position of power over the U.S. economic machine - they had lots of safe, disposable cash -
the Americans didn't. This is a vast generalisation, but in a nutshell - the model works. The Federal Reserve is still playing catch-up, and it will
be sometime before the equilibrium between reserves held overseas, and internal reserves returns - if at all.
That last point makes things interesting. What happens if the Dollar DOESN'T recover? What currency would be adopted as the 'world currency' then?
What does this mean for the U.S?
My prediction is this. The USD is NOT going to recover. The Chinese, Russians and others have spotted the opportunity to finally remove the Americans
from their seat of economic power. There have been a raft of recent media reports about the new 'Eastern-Bloc' looking to divest themselves of the
USD. Due to 'confidence' issues. This is true and makes sense of course, but it also means the USD will remain consistently low in value, as no-one
wants to buy a currency that is only going to de-value. The Federal Reserve, the issuing authority behind the Dollar, and a PRIVATE BANK, cannot stop
this, for the first time in a long time, they have been out-maneuvred.
(At this point, we have to bear in mind - it is not the governments who are in ultimate control, it is the people who control the banks and central
banks. The bankers, can quite literally, buy and sell people and nations. Keep this in mind when thinking about handing over control of a world
currency to bankers.)
The biggest and best weapons in the Federal Reserves' arsenal, the IMF and the World Bank, are both underwritten by the Federal Reserve and the
Dollar. How do the Chinese and Russians etc plan to remove U.S. control from these global (American made and imposed) institutions? Easy - play the
Americans at their own game again. Invent a new currency and impose it on everyone, and keep control of it.