"All warfare is based on deception." -- Sun Tzu, "The Art of War" (500 B.C.)
"An international monetary system dominated by a single sovereign currency has intensified the concentration of risk and the spread of the crisis." -- People's Bank of China (2009)
It
should go without saying that China and Russia have designs to end the U.S.
Dollar hegemony and debtism free ride. This is fundamental to understand and
will be a game changer. The impacts on the standard of living of these players
will be profound and especially negative for the U.S. How and in what manner
this plays out is the question. I strongly believe that the answer lies in two
parts: letting the U.S. put a noose around its own neck and then at the
appropriate time, kicking the chair out from under it.The first part of the operation is now advanced and is described below. The second part involves China and Russia preparing their relative currencies to be accepted in lieu of dollars. It means making the yuan and ruble at least equal to, if not superior to, American dollars in world trade. As you can imagine, the U.S. -- a country with a debt-to-GDP ratio approaching 110% -- can ill afford this sort of challenge to its status as a reserve currency.
China has already advanced the Yuan as a principal exchange currency by incorporating a series of deal with other countries. Such arrangements are hardly mentioned by U.S. financial media, but they are going on constantly. So far, the People's Bank of China (PBOC) has signed nearly 2 trillion yuan worth of currency-swap deals with 20 countries and regions, including Hong Kong. Here's a breakdown of happenings:
- Earlier this month, the European Central Bank announced a large currency swap arrangement with China.
- An Asian "renminbi bloc" has been formed involving seven countries.
- Russia, Iran, Angola, Sudan and Venezuela have converted oil sales to China into the Chinese Yuan. Worldwide, we see more than 5 million barrels per day traded in Yuan rather than U.S. dollars.
- Thechinamoneyreport.com on June 16 reported RMB-yen trade is growing strongly a year after launch.
- BBC News, April 9: "China and Australia in Currency Pact"
- BBC News, Feb. 22: "UK and China Poised for Currency Swap Deal"
- BBC News, March 26: "China and Brazil Sign $30bn Currency Swap Arrangement"
- Thechinamoneyreport.com on June 4 reports that Singapore has launched a Yuan clearing service.
- Although ignored in the U.S., there has been increased chatter among foreign media about the RMB (aka Yuan) reaching safe-haven, reserve currency status, as Asia Today reported on July 22.
http://seekingalpha.com/article/1578602-china-maneuvers-to-take-away-u-s-dominant-reserve-currency-status
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