Russia and China dumped the US - Petro dollar and Dow Drops

a reply to: WCmutant

Empires fall, they always do eventually.

Someone has to come out on top.

So how will this change anything as far as the way people live their lives.

Just because there is no more pegged USD, does not mean that the world is going to start heralding China as a beacon of light.

China is a dirty country with a horrible standard of living for a billion people. Why would any nation or it's people look to China for inspiration.

The Netherlands need to step up their game. If any people are living a way worth following it is them. Letting China have ANY control over the future of human civilization would be a huge a step back.

Besides. If this is going to happen it can only happen with the banking cartels support. If the cartels support this you can bet your bottom dollar this is not in the interest of a better quality of life.

Shame on Russia. They better have a long game here...

originally posted by: GAOTU789
a reply to: 13th Zodiac

The BRICS have been working for about 5 years now openly to try and unseat the US$ as the worlds reserve currency, with China leading the charge. They have agreed to set up their own version of the IMF, to trade more in their own currencies and conduct business with each other in other currencies beside the dollar.

Except for the obvious, that there is no free global market in Yuan bonds. The Chinese capital account is closed and regulated, and it can't be a reserve currency until China stops that, and that means giving up control over their exchange rate, which they don't want to do.

What does it mean, in practice, to be a reserve currency?

When you get paid in a currency you can put the proceeds in effectively unlimited amount of almost riskless government bonds. In practice, this means US Treausries and German/Dutch/ECB bonds. And you can do this no matter who you are in the world.

When you can put in an order for 10 billion in Chinese yuan bonds in Mexico City for trade with Czech Republic then you would have a reserve currency. When JP Morgan is allowed to become a Primary Dealer for the weekly renmibi bond auction, along with Chinese and European banks, then the yuan will be a reserve currency. This is pretty far off. These days even with a retail FX brokerage you can trade 20 million USD for EUR with a click with a tiny spread. If you want a billion, you can call a bank and arrange over the phone in a few minutes. That's a reserve currency. When will this happen with renmibi? (Yes, there are *non-deliverable* renmibi forwards, but these are just side bets, you can't actually get the money).

Obviously the Russian Ruble has no chance of being a reserve currency but at some point the yuan/renmibi will be.

If they continue the push, it may very well happen. But I don't think it'll happen quietly. Having the worlds reserve currency is a huge chip in the US basket. They'll fight it tooth and nail, figuratively and maybe literally, to stop the BRICS from making that goal a reality.

Really? The US has taken all sorts of actions over the last 15 years. As far as fighting 'reserve currency' status, what actual action has been taken? As far as I can see, none at all. This is a very common paranoid fantasy, without any basis in fact.

In fact, USA has persistently pushed China to liberalize its currency exchange rate and capital account.

If you think of reserve currencies as a zero-sum (not true), then the biggest threat was the creation of the euro, not anything Russia is doing. The euro is now a second reserve currency. Did the USA fight this in any way? No.

Reserve currency status is bestowed by private investors over decades based on economic and financial fundamentals, government policy generally only has 'negative' results on this matter. Nobody can make a reserve currency.

What are the Chinese getting out of this deal with Russia? What rational Chinese businessman would prefer to get rubles instead of yuan or dollars? None, unless somebody's forcing him for political reasons.

a reply to: MALBOSIA

China is successful precisely because it is dirty with a poor standard of living.

Cheap labor, cheap energy, no massive government regulations, restrictions, no EPA..

It makes them impossible to compete with, especially for the USA. Is it any wonder why so many US companies, manufacturers, corporation etc have relocated part or all to China?

Well if the Dollar really is about to tank then this might be the perfect time to start using Bitcoin. It's unregulated but I'm not sure if it has any international appeal.

a reply to: mbkennel

I actually agree with most of what you have said. Here's where I possibly see things differently.

China has been investing very heavily in OPEC nations the last half decade, which coincides almost exactly with this overt push for a move away from the US$. They have signed agreements and have started building in the oil infrastructure of many of the largest oil producers, including Saudi Arabia, Iran and Canada.

This isn't an overnight transition, as nothing of this magnitude is. At some point, many of these countries are going to see, if they aren't already, their exports to China of oil and gas surpass their exports to the US. Now the US has plenty of internal supplies and deposits for it not to affect their own oil supplies drastically, but it will start nations questioning whether there oil petroleum transactions should be made in Yuan instead of US$. Some of them already are trading in other currencies along with the dollar. What happens to the value of the dollar then? It isn't going to stay stable, that much would be certain.

The United States status as the premier economy comes under threat at that point, if it hasn't been supplanted by China or Japan by then. Add in the scale of the BRICS potential trading power and if China is the leader, the Yuan becomes much more viable than the dollar.

I agree, any of this requires China to loosen the reigns on the Yuan and how it's valued. At this point, they don't have to do that but at some point, when the Chinese feel it is most advantageous to them and their allies, they will do it, I have no doubt about that.

If the United States loses the dollar as the currency used to trade oil in, the status as the worlds reserve currency won't be far behind.

The thing is, the Chinese see things in the long term. They are an ancient country and culture and waiting decades for a plan to come to fruition isn't out of their scope of patience. This type of economic warfare takes decades imo and the Chinese have the patience to wait it out, again imo.

Of the BRICS nations, they occupy four of the top ten places as the worlds largest oil consumers and as emerging economies, I doubt that pace is going to slow. the US occupies the top spot, by a long shot, but those other four nations equal that consumption. The major insulator for the US, as I mentioned, is its own deposits.

a reply to: Vortiki

Don't be ridiculous. We in the US have everything we need to survive just fine on our own if need be. There are few if any natural resources we lack, and we possess the creativity, engineering experience, factory capacity, infrastructure, transportation network and communications systems necessary to operate in a complete vacuum if that's what it comes to.

On top of that, we have over 200 million heavily armed citizens, spread across a geographical area so large it can never be invaded conventionally.

It might be a little early to sign up for a Mandarin or Russian language course, unless you want to for your own reasons. There certainly is no will or ability in either China or Russia to project force onto the North American continent, so it is unlikely any of us will ever "need" to.

So I am guessing that when you say
"So how will this change anything as far as the way people live their lives"
You actually mean
"How will this change my life"

It will change your life simply because Russian/Chinese business wont use US currency any more in trade.
That means more US currency in the marketplace, that means that there will be an over surplus of US currency and the US currency will devalue, then more nations will drop it and it will devalue till it becomes akin to Zimbabwe dollars.
Talking of Zimbabwe dollars, Zim will probably stop using US currency as its main currency (lots of Chinese investment in Zim now) as will many other countrys.
Domino effect, the first has fallen


China maybe a dirty country with a horrible standard of living for a billion people, but it is rising not falling.
Oh and who pays $100 for shoes in the US that are made in China for $4, with child labour.
I am thinking you...and me of course
The better quality of life will not be for you and me, it will be for the Chinese

Did I say domino effect, this is the start of the end of the US as a world power.

Russia has a long term plan, they have been one step ahead of Obama since he stepped on to his platform

I believe this is all engineered. China would never turn on the US because we gave them our manufacturing on purpose.

This means that this is a globalists coordinated effort to destroy the dollar to bring in a new currency.

originally posted by: 0zzymand0s
a reply to: Vortiki

Don't be ridiculous. We in the US have everything we need to survive just fine on our own if need be. There are few if any natural resources we lack, and we possess the creativity, engineering experience, factory capacity, infrastructure, transportation network and communications systems necessary to operate in a complete vacuum if that's what it comes to.

On top of that, we have over 200 million heavily armed citizens, spread across a geographical area so large it can never be invaded conventionally.

It might be a little early to sign up for a Mandarin or Russian language course, unless you want to for your own reasons. There certainly is no will or ability in either China or Russia to project force onto the North American continent, so it is unlikely any of us will ever "need" to.

Everything you need except the capital to pay off the debt that you owe to the Chinese.
That means the Chinese own what you think is yours.
Title and deed

Reminded me of this.

a reply to: borntowatch

That means the Chinese own what you think is yours. Title and deed

No. I borrowed nothing from the Chinese.

China is investing in US companies. Investors are good for business. Investors provide capital for growth.

Do you think that Chinese investors are going to "foreclose" on the business in which they have invested?

originally posted by: Phage
a reply to: borntowatch

That means the Chinese own what you think is yours. Title and deed

No. I borrowed nothing from the Chinese.

Maybe not personally but,
national debt,
default on debt,
the international law courts,
bankruptcy, maybe, not quite,
state hands over industry to investors.

China legally takes US industry.
simple

China bought your countrys debt and will collect on it, legally

a reply to: borntowatch
See my edit.

China is doing very good business in the US. Harming that business is not good...business.

It makes no sense.

a reply to: Phage

I'm curious as to what growth you see Phage.

We've been spiraling for quite some time.

a reply to: Mizzijr

Are you sure?
www.tradingeconomics.com...

After watching this, it would appear that we could very well be on the road to WW3 over this.
This is just some guys theory, but he makes some really good points in regards to the U.S dollar.
And if there's any validity to this, were in for a rough time.
Just adding for another perspective.

a reply to: Phage

Awwww. Come on Phage, I just started learning Chinese since everyone here assures me that they are taking over....

I already learned how to order Cheese Wonton in Chinese, see?

Wǒ yǒu chòu jiǎo

.......uhm wait.....I think I may have just said "I have stinky feet".........

Okay, hope you're right, 'cause I suck at learning other languages....

originally posted by: Phage

Do you think that Chinese investors are going to "foreclose" on the business in which they have invested?

No I dont think they will foreclose, that would be silly, obviously

The Chinese will legally acquire the industry due to unpaid debt, power plants, water supply's, farms, minerals et all.

China invests, calls for repayment of debt, force the bankers to foreclose on the insolvent US (Government) partners and then get US (and Chinese) workers in at a pittance to work them. All the profits will go back to China.
Pure capitalism, its perfect

Look this is an assumption, a guess. I dont have a crystal ball, am no prophet.
To me this is how wars are waged today, business, a corporate take over.

Will it lead to a real war?