China Wants Dollar Tied To Inflation - Bet Washington and Fed are NOT Happy with that

China is taking a firm stance these days. They want the dollar tied to Inflation now, since they are the U.S. largest T-bill holder of debt. I would bet Washington D.C. and the Fed. do not like this stance.

As we all know, our money printing machines have been going none stop since last Sept. We have still not yet seen or felt the full impact from all the printing of trillions of dollars for the bank bailouts and wars.

It has been written about many times over, how the Fed and U.S. govt. actually wants the hyperinflation before we go into a "global" new money system.

Why? Because it has been hinted at, and I have read many times over from economist the last few months. It is the game plan of the U.S. govt. and Fed to get the dollar inflated tremendously at some point, so the debts of trillions will be paid off easily, because the dollar will be inflated.

Think of Zimbabwe and it costing 50 billion for 3 eggs now, massive amount of money on the market, makes paying off debt easier.

But, it looks like China, knows what the game is, and won't let that happen.

They want to tie the dollar to inflation.... So, what that means is, as the dollar loses value and things begin to inflate, well............ they want the debt to inflate along with everything else.

Looks like Washington, might be in a little bit of trouble now, the whole game plan going down the drain?

link to article:
www.bloomberg.com...

April 11 (Bloomberg) -- China’s government should push ahead with its plan to make the yuan fully convertible, so that it can one day stand with the U.S. dollar and euro as one of the world’s three most-used currencies, a top researcher said.

“In the ideal world, the yuan fulfills all the conditions as one of the world’s three most influential currencies, except it’s currently not convertible,” said the Chinese government’s central policy research deputy director Zheng Xinli, at a financial conference today in Beijing. “That’s why we need to push ahead with our currency reforms and broaden the currency’s usage and acceptance internationally.”

The global financial crisis is an “opportunity for the yuan to elevate itself to the next level,” said Hou Yunchun, deputy director of the State Council’s research office, at the same forum today. “We should push ahead with reforms to overtake” other currencies, he said.

China, the world’s largest holder of U.S. debt, wants to urge global holders of Treasuries to demand the U.S. government to tie their purchases to inflation, Zheng said.

“Those governments that have foreign reserves, especially those holding Treasuries, should demand that the U.S. links the purchases of Treasuries with inflation,” he said. “If the dollar depreciates and there’s inflation, the U.S. should pay more according to inflation. I think that’s reasonable.”

The world financial system should explore the use of the special drawing rights under the International Monetary Fund as an alternative to the dollar as the global reserve currency, he said, reiterating an idea proposed last month by Chinese central bank governor Zhou Xiaochuan.

Besides wanting the dollar tied to inflation, it looks like they also want the Yuan to be the main world currency.

Funny, I thought at the G20 meeting there was talk of a new "global money system", I don't remember hearing anything about the Yuan, becoming that "global money".

Bet Washington is sweating it out now with hearing what China wants.


[edit on 13-4-2009 by questioningall]

Star and flag......although few will pay attention, much less understand the catastrophic implications to Main Street if this comes to pass. Life in the USA will never be the same....

Faucets leaking, looking around for that wrench, All I got is a phillips. Sh99

That's probably how they feel.

I'm sure their gungho about this, whatever it is that will ruin us, they haven't got enough band wagons to get on.

TPTB will do away with all currencies including gold and silver shortly. It is the only real answer to the sinking global ship.

This is one more reason why any reserve currency will eventually doom everyone who had faith in it. Now in a truly global world, it is fast becoming the Achilles heel of the whole financial system.

[edit on 13-4-2009 by TH3ON3]

Id almost take a global currency over this scenario. This will not end well if they really push on this. These are the kinds of things that lead to war.

I have to be honest here, I cant really blame china for doing this. Do I want them to, yes, and no. yes because then our idiots in government wont be able to keep screwing everyone, and no because it will affect our way of life badly.

It really doesn't matter what China wants, no matter how populated they are, they cannot control OUR currency, they just wish they could.

They would like to change the USD pegging RIGHT NOW because it would make them MORE dollars when they called in the Treasuries they hold.

Since China is also playing the stimulus game, we are "all in the same boat"

They would LIKE to have the Yuan as the world reserve currency, but it won't happen as every country knows that China is the most notorious for currency manipulation.

Nice try, Survey says *ting* thanks for playing

Originally posted by jzbrown
I have to be honest here, I cant really blame china for doing this. Do I want them to, yes, and no. yes because then our idiots in government wont be able to keep screwing everyone, and no because it will affect our way of life badly.

I'm with you 100%. But more than that, China's position (which is 100% understandable) might serve as the death knell for the dark masters' plans. In the long run, that can only be a good thing economically speaking. Yes, it will affect our way of life very badly but quite honestly it is gonna get a whole lot worse if China does not stand firm on this.

I'm with China on this one! And no, I'm not Chinese.

[edit on 13-4-2009 by Albertarocks]

reply to post by redhatty


Actually we are not all in the same boat, We don't hold billions/trillions of Chinese debt. It is the opposite.

Also, they are not having their printing presses run 24/7, like ours are. They are not in multiple wars either. Other countries get along with China right now, better than they get along with the U.S.

China and Russia have already been in the same boat, talking about trading with Yuan and dropping the dollar. China has been negotiating with other countries and have struck deals of trading with the Yuan. South America is one area (awfully close to the U.S. - not just Asia anymore).

So, China has been working on getting their Yuan as a trading currency, now that they have feet in the door of many countries, and holding our debt, they can start telling us what to do.

Just takes a few threats ie: no more buying debt etc. So, to hold the U.S. dollar to inflation, it is too late for the U.S. to veer off the course they have set on. They I seriously believe figured around the mid to the end of summer is when hyperinflation would start to seriously hit us. They could pay off the debt by all the excess dollars created.

One thing with this, I want to say..... this is my plan too....

I am waiting for the dollar to hyperinflate and already have the plans then to payoff my mortgage - debt etc in full - at a huge decrease of cost than in paying it off now. Understand what I am saying?? I have already done the research on it, there will most probably be a very limited amount of time to do it, before some laws are passed that increases the mortgages with the inflation or dollar deflation also.



[edit on 13-4-2009 by questioningall]

[edit on 13-4-2009 by questioningall]

reply to post by questioningall


He is a good article on why the Chinese wont stop buying the dollar and really has no other investment options.

Why does it continue to buy them? The simple reason is that is has to, because of its exchange rate policy. In order to keep the value of the Chinese yuan from appreciating versus the dollar, China’s central bank must buy U.S. dollars in massive quantities. And rather than just sitting on the physical currency - which pays zero interest - it buys foreign securities...

Would China start dumping U.S. Treasuries? Not a Chance.

■China central bankers might as well all strap on six-shooters and begin firing them at their feet. It would reduce the value of the Yuan, something China can’t afford..

Why China Cant Sell US Treasuries

Also there are ways the fed can combat inflation and will do so when the time comes. They will never be hyperinflation in the US. Unfortunatly some of the steps the fed needs to take to combat inflation might very well put us back into the recession when we are finally climbing out of it.

[edit on 13-4-2009 by tide88]

reply to post by questioningall


Sweetheart the Asain markets have been going at this for decades on end. They have just started to be more publicly vocal about it since the worldwide crisis hit. The only problem China is facing is that most of the countries it is now "down talking" are the same ones that SUPPORT it!
These same countries along with the USA are the one's that BUY all the chinese EXPORTS.Those exports are what has kept China aflaot in this crisis, do not be fooled by all of their PR pieces.
They are in just as bad of shape as everyone else. The only difference between them and the USA, Eu etc. is that right now they have been buying up natural reserves because they have NONE! See if you can get ahold of some articles that tell the truth about just how much their export markets have crashed and how much their fincial markets have lost over the last 52 week period. They are hurting just as bad, only difference is they have a strangle hold on their media and can put out what ever garbage they want. Here is a few tid bits of the Asian markets...

^HSI 14,656.16 - 14,987.41 10,676.30 - 26,387.40 (High and low of 52 week period)
-11,485.99 (52 week LOSS)

^N225 8,888.10 - 9,024.45 6,994.90 - 14,601.30 (high and low of 52 week period)
- 5,676.87 (52 week LOSS)

One thing that doesn't lie is the numbers. They can manipulate it to an extent ,but the truth hurts. Most of the current gains in their markets are the same as ours they are from stimulus pack's. The Asian markets as a whole are in crappy shape right along with everyone else.

Not much you can do with a bunch of cheap exports and gas no one wants because you have alienated the hands that feed you.

Honestly, that might seem "fair" to increase the debt level of the USA as inflation increases. But really, that isn't fair for the American people. 1. We, I at least, never did anything to prompt our crazy government to continue it's massive spending. and 2. We never "signed on" to this new idea. It might sound unfair, but when making decisions, you need to have everything agreed upon before the ball gets rolling. You don't rack up someone else's debt and then say "By the way, you can't inflate your way out".

Also, inflation is going to hurt Americans as well, not just China.

[edit on 13-4-2009 by ghaleon12]

reply to post by questioningall


Nice thesis, but I think you are wrong.

There's this concept, we're scroomed, but they are scroomed worse.

China mulls new stimulus

You see, they ARE in the same boat.

All news you hear out of China is "approved" by their "Ministry of Propaganda"

We are NOT running printing presses 24/7, there is no surge in the physical supply of money, you HAVE seen 1's and 0's added to the coffers of big banks, but that is not physical, and it is sitting still, it has no velocity, it is NOT in the system.

They have been threatening for 2 years now to not buy more T's and yet, they keep buying them.

You thought of waiting for hyperinflation are probably in vain. Don't Bet on Hyperinflation is one argument against your thesis. Here's another: Hyperinflation is impossible: Part 1

Of course, you are free to disagree, but I'd recommend having a "Plan B" in place too :-)

How incredibly fascinating it is the watch the pieces being moved on the chess board.

The one thing no one seems to be considering here, is what is the true motive behind China and Russia. They both have a central bank owned by the same jerk-offs that we have.

While at face value I applaud the Chinese for doing this, because truly the ball is in their court and I would like to think it might make our spoiled children on capital hill think twice about maxing out another credit card, I do not believe that is the end of this play. I still see the fall out of the dollar and WW3 as the end game.

reply to post by questioningall


I have to admit, their request sounds entirely reasonable.. If your going to inflate the money supply with trillions of dollars, you should be paying more then 2% on a long term Tbill.

Fair amount of "No IDEA" going on in this thread - how about we clear a few things up.

Firstly China has a trade surplus - it doesn't simply have US treasury bonds - it has a surplus as well - SAVINGS !!!

It has been using this to purchase US treasuries, yes, in order to finance American consumerism. (Along with the Iraq war).

The massive collapse in commodity prices have allowed the Chinese to stock pile resources, which they have done VERY effectively, all ports and storage are at maximum capacity - this means that as the down turn sets in the Chinese are no longer one of the few remaining importers of raw materials but the ONLY importers, now with their stockpiles they are able to negotiate at the annual price setting meetings with Australia a MASSIVE reduction in contractual rates.

The Chinese are not looking to re-stimulate the failing American economy, an economy which has destroyed itself by gouging out its own middle class, rather China is looking to create its own - and this has been done. So instead of resurrecting the American consumer - they have simply lifted their own rural and peripheral citizens to consumer status and are generating an internal market.

The Chinese were expected to drop to 6.8% growth, yet they have maintained 8% - the rest of the world is in negative growth. Further the Chinese are now turning to their second round of internal stimulus from their private corporate savings - a greater pool than the sovereign wealth fund but less easily controlled.

The Americans may not choose to peg their rapidly devaluing currency to inflation - but China could simply un-hinge the Yuan - dump ALL their US dollars and leave America with a bananna currency.

If the Yuan was to be opened up alongside massive internal and regional Chinese demand AND growth with massive stockpiles of resources while their currency value soared causing it to vastly outstrip the dollar then the US is finished - India and other countries simply WILL NOT be able to compete due to resource prices driven ever upwards by internal Chinese demand and a powerful Yuan.

China is at the point now where it can walk away from the reliance on American consumerism - as has been REPEATEDLY made glaringly obvious - and this is the greatest threat to America.

reply to post by questioningall


The owners of the Fed work in tandem with China and many other 'host' nations toward an NWO.

Fools following the fooled can only End with Foolishness and self destruction in the End. Their 'subjects', fodder for their Fire.

We have always had a Choice.

May each Individual choose Wisely.

Get the Hell away from all Chinese capital. Obama may not have enough time in office (eight years) to bring back manufacturing within America.
Decoy

reply to post by questioningall


Why is the Dictator of Zimbabwe still alive?

Mugabe has destroyed more lives than most are aware.

This is Proof of the Cowardice of Humanity.

We have always had a choice.

What's yours?

Well here goes my chance to pay of my house in one go if we ever get hyperinflation


But if it happened in Zimbabwe why not here?