News & Analysis
China's Dollar Optimism Signifies Larger Economic Shift?
China loves the US dollar again as America roars back ... China's central bank has radically revised its view of US economic and strategic power, predicting that the dollar will remain the world's paramount reserve currency for decades to come. Dr Jin said the world was moving to a '1+4' system, with the greenback serving as the anchor of global payments ... Jin Zhongxia, head of the central bank's research institute, said America's energy revolution and export revival had shaken up the global landscape and would lead to a stronger dollar over time. "The dollar's global dominance will continue," he said. – UK Telegraph
Dominant Social Theme: The US economy is fine shape.
Free-Market Analysis: China's central bankers have decided that the US economy is in fine shape, according to the UK Telegraph. This doesn't make much sense, given the US's generalized economic and socio-political difficulties but we wouldn't expect China's central planners to figure this out.
Apparently, Dr. Jin and other Chinese bankers believe the world is moving "to a '1+4' system, with the greenback serving as the anchor of global payments, supplemented by 'four smaller reserve currencies' – the euro, sterling, yen and yuan."
This is a neat dominant social theme of sorts that begins to present us with the shape of a currency-to-come. What looms in the near-term anyway is not a gold-backed yuan or even an IMF SDR currency basket. What we are being led to believe is that a new system will be one where the dollar is slightly less dominant. Here's more from the article:
"Compared with the euro area, the dollar zone has much greater resilience to shocks. The debt crisis in the euro area has demonstrated the structural weakness of this currency," he wrote in a paper for the February bulletin of the Official Monetary and Financial Institutions Forum.
The comments suggest a profound shift in thinking about the US since the financial crisis five years ago, when premier Wen Jiabao questioned if Chinese holdings of US Treasuries were "safe", and the central bank issued a paper calling for a "global currency" run by the International Monetary Fund.
The prevailing view in Beijing was that America had been toppled as a great power and was crippled by debt.
China has since begun to face its own problems as it grapples with the hangover of $14 trillion (£9 trillion) of credit growth since 2009 and surging wage costs.
The advantage is shifting back to the US. A so-called "manufacturing renaissance" is under way as US companies bring home plants to exploit cheap shale gas and lower transport costs.
We've written a good deal about the demise of Peak Oil and the resurgence of the US as an energy power. But anyone who believes this is merely an evolution of modern technology does not fully understand what has taken place, in our view.
This energy extraction technology has been around for decades in one form or another and its current rollout is a kind of directed history, so far as we're concerned.
The Chinese statements are perhaps more of the same. Money Power is globalizing the world and central banking is both an expansive and reductionist force. As it centralizes economies, the elites that wield it come under attack, especially in the 21st century as a result of what we call the Internet Reformation.
Too much centralizing, too much chaos and the apparent rush toward globalization is jeopardized. It's always a balancing act and in the past five years, as a result of the current economic crisis, that balance has been pushed out of kilter.
There is too much pushback, and those who want greater centralization and a more robust and formalized world government are probably concerned that the world – and its damaged economies – are moving too far and too fast.
The US would seem to be scheduled for resurgence, then, at least rhetorically. In reality, the tectonic fiscal and monetary plates continue to grind inexorably toward international centralization. Nothing has changed, in other words, in terms of the larger pattern.
A report by Citigroup said the explosive growth of US oil and gas output over the past year had exceeded the "wildest dreams of energy analysts". The US has halved its oil imports since 2005 and is moving "rapidly towards self-sufficiency", turning global geo-politics on its head.
Citigroup said lower energy imports and the revival of chemical industries would cut the US current account deficit by three quarters, eliminating a key cause of dollar weakness.
The US remains a keystone to globalization and too much chaos and disaffection there spells difficulties for the larger project. The real issue is whether those who we see as economic controllers are contemplating a resurgence of the US economy as an expanding rather than contracting world power.
The idea on a macro level, from what we can tell, has been to level the proverbial playing field by bringing down the West economically while uplifting the developing world, especially the BRICs. This has been the animating narrative of the past several decades.
If a reversal is contemplated because events are seen to be spinning out of control, it would have a significant impact on various economic and business interests – and investing as well.
Time will tell whether a new direction has been chosen but these developments are to be closely scrutinized. The questions are at least threefold. First, have we seen a shift in direction? Second, can it be adequately sustained? And third, are the underlying reasons the ones we have identified?
Given the amount of debt the US is carrying and the difficulties in sustaining economic viability given the volume of money that has already been printed, we are at least somewhat skeptical that the US can reverse the trends that seem to be pushing it into decline.
Conclusion: As usual, there are great forces at work and we are on the outside, looking in. At least let us appreciate the forces in their fullness and make our plans – and draw our conclusions – accordingly.
Posted by bob on 02/21/13 12:36 PM
"Jin Zhongxia, head of the central bank's research institute, said America's energy revolution and export revival had shaken up the global landscape and would lead to a stronger dollar over time". WOW!
Just few observations:
- Recently, Bloomberg has mentioned that in 2012 The US Department of Energy has reduced the US shale oil reserves estimates by more than 40% from its earlier 2011 estimates
- Even being an energy rich country is not a guaranty that the country economy is healthy and prosperous (Algiers, Iran, Azerbaijan, Russia, to mention few are good examples)
- Almost 1 in 6 Americans are living on food-stamps
- Speaking about China, one should not forget about the Mao Zedong Communist Party Great Leap Forward industrial campaign that ended in a terrible catastrophe for China and its people. The same Communist Party is running China now. Yes, China present leaders are much more educated, flexible, and much less dogmatic but, at the same time, they are much more corrupt. As for the Jin Zhongxia's statement, I do not trust politicians and their economic promises and 'projections'…
Finally, today China is standing on the very important junction: either they reform themselves and remove China Communist Party from running economy or they will follow the Soviets footsteps to another great China catastrophe.
Posted by amanfromMars on 02/21/13 06:18 AM
[blockquote]"Unfortunately for the shadows, such control is ultimately an illusion, though their delusion is understandable as the consequences are many millenia removed from the action... " …. Posted by Melyanna on 02/21/13 03:55 AM[/blockquote]
That opinion on the shadows is really the only thing that I would wholeheartedly disagree with you on, Melyanna, preferring instead to advise that you are seriously misunderestimating that which can now so easily be done in the fields of control which power elite games/programs/projects/New World Orders in New Orderly Worlds.
The last sentence in this shared email would most probably explain the Daily Bell's actions and inactions in response to, or lack of response to individual's contributions to hosted debates/guest articles? And the mail also sheds some light on the sort of works programs in the shadows too, methinks.
[blockquote] Cryptome does do not yet plant APT poison pills in its files and would appreciate not planting them on Cryptome. …… Click to view link
Not yet, maybe, but you can be sure that some of the files you host most certainly do, in the clear and clandestine hope and full expectation that they be phished. Such is the nature of the phantom beasts in ... ... well, Great Virtual Espionage Games Play is what IT is all about these days in CyberIntelAIgent Command and Remote Anonymous and Autonomous Control Centres, methinks. And it is something to get used to, for it is a pioneering, exploding industry/extremely lucrative business for those at the top of their game/height of their fabulous fabless powers. But quite understandably, also quite an exclusive club/cabal/network, given the irregular and unconventional skills and/or mindset required to succeed in extremis.
cc … UNICOM
descr: China United Network Communications Corporation Limited
descr: No.21 Financial Street,Xicheng District, Beijing 100140 ,Click to view linkina
person: Xiaomin Zhou
address: No.21 Financial Street,Xicheng District, Beijing 100140 ,Click to view linkina
e-mail: zhouxm at chinaunicom dot cn [/blockquote]
And that is the state of the world in which we are living today, DB, although it could very well be argued that it is the world in which a few are living, and everyone else is having a torrid time responding to.
Posted by Melyanna on 02/21/13 03:55 AM
Hello there manfromMars, or Warman, Warchild, Wrathschild...
I agree that the Daily Bell allows disenting opinion in comment, but find it interesting that they do not respond to facts which contradict their belief system and at bottom promote the same ultimate meme at the very elite they purport to criticize, namely 'don't worry or take any real corrective action, the [insert savior here] will save us.' In their case it is The Internet. Cue distracting criticism and misleading reparte...
Who knows what a democracy would be capable of? A democracy requires an educated citizenship and as the benign enlightened dictatorship always and everywhere fears such an outcome it uses its shadowy power to prevent if from arising.
For myself, Chimerica is a proton and antiproton collision steered from the shadows to anihilate both and leave those in the shadows with yet more control of the visible. Unfortunately for the shadows, such control is ultimately an illusion, though their delusion is understandable as the consequences are many millenia removed from the action...
Posted by amanfromMars on 02/21/13 02:35 AM
nithsdale ….. and Melyanna, Hi,
Despite what we may or may not perceive as faults/vulnerabilities/dogged implacabilities in the Daily Bell, one cannot, as far as I know, fault them for failing to allow others to share a contrary and/or entirely novel take on such matters as are centre stage in control for power elitist systems …..
for even though democracy gets heralded as the great saviour of humanity to be introduced in foreign lands with selfish and/or overly repressive and harmful administrations, is it always the reality that a benign enlightened dictatorship rules ideally better anywhere, and therefore everywhere, with its invisible hands/greater hearts and smarter minds, from the comfort of a relative anonymity afforded by the darkness in the company of shadows.
And I be also a current fan of the Chinese, who also are a force which Uncle Sam recognises are not to be trifled with, given the virtual skills which they exercise in the espionage domain which gathers information for intelligence and intelligent analysis, as according to the gospel of Michael Hayden, whom one would expect to know, and who spills a whole lot of open secrets here in an informative interview …… Click to view link
The bottom line in the new Great Games being played for leadership contenders in New Orderly World and/or New World Order Programs and Projects is … Control of CyberSpace delivers Absolute Sovereign Powers which trumps anything that simple control and convoluted manipulation of money supply and stock trading can do, and failure to recognise and accept that such new kids on the block, and I Kid U Not, are masters of the future and Great IT GamesPlay, will see those in old power control positions and in denial of the virtual change in digital controllers, lose everything …… and that may even be inclusive of their heads to the mobs, as they learn of the means and memes which have been used to enslave and abuse them.
Get used the Change ... . for IT is active right now and grows immeasurably stronger day after day, and things aint ever going back to the way that they once were.
Posted by nithsdale on 02/21/13 12:52 AM
The Chinese had a civilization even before Greece. The renaissance in Europe came because of the discovery of China, what it had to offer. Remember Marco Polo?
We Westerners have a habit of deliberately puttinmg aside facts when they do not suit us. Chinese innovations, inventions are forgotten as we absorb them and make them part of our culture. This is how we think spaghetti is Italian, steel is German and steam engines were developed in England. We have to credit China with gun powder and explosives because they still make the best foreworks in the world!
The facts are that Europe was in the Dark Ages before the Polos came back to the Venetian Doges with their marvelous tales of the wonderland of China. The Europeans, who were eating off wood and leaves, learned that there was something better, ceramics that were not just baked clay and mud. They also began to learn that health was not disturbed by witches and goblins but there were things in the body that could be offset with herbs and even surgery, and a host of other remedies we take for granted today.
I stand by my statement that the Chinese are smarter than me or you or our confreres. they beat us in our own studies continually and the Indians from India are not far behind them.
You are the racist, not me! It is always a lousy retort when you resort to such a tactic. I did expect better from you!
Posted by Chasvoice on 02/20/13 11:42 PM
What is the monetary muscle the banksters have used to prevent China from unloading their US$ hoard? Did the bank cartel strongarm Japan to sop up dollars with their yen dump?
Eric de Carbonnel makes a good point that the repatriation of US$s must be prevented at all costs! The ESF is their hammer.
Watch here: Click to view link
Posted by voluntaryist on 02/20/13 09:07 PM
At first I was concerned that the Chinese were supporting the dollar. Then I remembered that talk is cheap, i.e., not worth wasting time on. Secondly, there is no monolithic mindset in their gov't. Thirdly, who cares what the socialist elite in China say? Look at what they do. They hoard gold. And rare earths.
The future of the dollar/U.S. economy is doomed. Out of the ashes will rise a new economy. Will it be freer? Or will the U.S. follow the pattern of Nazi Germany? We have the net, e.g., Click to view link. That is where hope lies. Exciting times and opportunities await.
Posted by Melyanna on 02/20/13 07:44 PM
Lol. Thought so.
Reply from The Daily Bell
Gee, as thoughtful as your initial post ... Only brevity recommends it.
Posted by nithsdale on 02/20/13 07:10 PM
The dollar will reign and the Chinese in China and all over the world know it. Only you Austrian econs don't!
Take a trip and see the dollar in action in every little hamlet in the world. Most traders will take those papers, even when they look strange, because they are the symbol of value... .they can be passed along for all kinds of trades. They have been fueling international trade and sales for the better part of a century now worldwide and people who handle them just love the convenience. And the credit ledgers, those unique dollar signs supported there, are the passport to better banking associations for even the smallest of businesses. Get more passing through your hands and the next step on the ladder can be reached!
The change in how money can be extended, which began with the explosion of US Military Script in Europe after WWII, has produced a miracle. You don't need chests of metals and jewels to buy anywhere in the world, you just need dollar denominated cards and many banks to clear them, and you are on your way! It is used everywhere, even in places just emerging from the Stone Age, even where stones are accepted better than gold, etc.
The old economics is over and anyone betting on its coming back is a neanderthal.
The Chinese are the most intelligent of all our races. The United States and Europe have lost a thinking public, if it was ever there. The rest of the world will have a field day as its new understanding rolls over the old and the so called elites will do as they always do, facilitate trade and communication and earn ever greater fees for doing so.
The New World is here. It is what the USA was established to do and it has been done!
The purists among you should cut up your credit cards, eliminate your electronic banking and get back to person to person contact in making trade negotiations and then subsequent payouts. That way you can prove your assertions that a Free Market is what you are all about, that is if you can keep any market at all!
Reply from The Daily Bell
"The Chinese are the most intelligent of all our races."
Good Lord, Nithsdale, you're not only facile, you're racist.
Posted by Melyanna on 02/20/13 06:21 PM
I find it a bit disheartening that The Daily Bell, who purport to be a better source of information that the main stream media would uncritically reprint data from Citibank, an empire institution if ever there was one, without assessing it for accuracy or bias.
You quote Citibank as saying: "A report by Citigroup said the explosive growth of US oil and gas output over the past year had exceeded the "wildest dreams of energy analysts". The US has halved its oil imports since 2005 and is moving "rapidly towards self-sufficiency", turning global geo-politics on its head."
The actual data shows that this is just more of the naked emperor trying to convice people he has some clothes.
Here are the actual production statistics for oil production in the United States from 2005 to 2011. (Statistics from 2012 not yet available.)
Figures in Millions
Year 2005 2006 2007 2008 2009 2010 2011
Total Oil Production** 6895 6841 6847 6734 7270 7555 7841
Total Oil Consumption** 20802 20687 20680 19498 18771 19180 18835
Total Imports 13907 13846 13833 12764 11501 11625 10994
Natural Gas Plant Liquids* 1717 1739 1783 1784 1910 2074 2216
Total OIL production 5178 5102 5064 4950 5361 5481 5625
As can easily be seen from the above figures, the supposed fall in imports:
1. Is no where near 50%
2. Is mostly due to the fall in consumption, from 20,802 millions of barrels in 2005 to 18835 millions of barrels in 2011. To anyone who hqasn't drunk the cool aid, this is obviously due to the collapsing economy. If you want to see the real economic numbers for the collapsing US, go to Click to view link and do some reading.
3. 50% of the increase in US oil production is due to the inclusion of Natural Gas Plant Liquids, a dubious statistical trick as most of these products are Benzene and Pentane, neither of which can be burned in any vehicle.
4. This 50% increase in these NGPL's are due to a mind numbingly bad investment in natural gas fracking. Far from being an exciting new technology, this industry has consumed 600 Billion in capital during this time and lost every penny, with no hope of any profit anywhere on the horizon.
5. The other half of the increase is due to tight oil production, often mistakenly called shale oil, which appears to be peaking right now, and which in the case of the often sited Bakken formation, requires 20% more wells per year, and therefore a massive increase in capital every year, just to keep the production level flat.
In fact, only this financially ridiculous and suicidal deployment of an old and ridiculous technology is disguising the fact that US production continues to fall.
It is also funny that Citibank states that; "oil and gas output over the past year had exceeded the "wildest dreams of energy analysts".
Far from exceeding the wildest dreams of energy analysts, the current bump in production was forcast years ago by the peak oil movement. This is an example of what is called the maximum effort peak. Both the US after its peak in the early 70's and the Former Soviet Union both experienced a similar small and insignificant maximum effort peak. The current peak in the US is just America's contribution to the Global Maximum Effort Peak which we are in the middle of right now.
Many observers have wondered if the Daily Bell is not just a cleverly disguised disinformation outlet for the empire. I would take it as a positve sign that you are not if you would post a longer analysis of today's real energy situation based on real facts, not silly Citybank studies published in media owned by the empire.
* Data from the Energy Information Administration:
Click to view link
**Data from the BP Statistical Review of World Energy:
Click to view link
Reply from The Daily Bell
We're not going to apologize for our success, Melyanna, or our viewpoints. We tell the truth as best we can and that's why people come here.
Find one example of a staff report (we're not responsible for editorial views) that is "cleverly disguised misinformation." You can't. True, we've been attacked by people like you because we're free-market oriented and the bought-and-paid for socialist alternative (false flag) press wants to shut us down almost as much as the elite establishment. But we continue ...
Peak Oil is likely a lie no matter who propounds it. If the world were to be running out of oil, which it likely is not, some substitute will be found. That's how the market works, absent government interference. The economic term is "human action" as explained by the great economist Ludwig von Mises. Look him up.
We could not care less where Peak Oil or fracking studies come from. Market economics shows us that if and when one resource declines another resource will be found to sustain society. What's happened in our view is that a power elite trying to deconstruct the West has succeeded too well and are panicking now and trying to pull back. Enter fracking, which has been around for decades. That's what we believe is going on. That is what we wrote. Maybe fracking is a hoax; we doubt it, but we shall see. We'll revise our conclusions as warranted, but it won't be because of mainstream fracking studies or despite them. We follow elite memes and our analysis is developed via aggregate media messages that we follow across the Internet.
We've been correct about the war on terror, global warming, monopoly central banking, the bought-and-paid-for OWS crowd, intel penetrated WikiLeaks and much more. We've relentlessly called out the anti-usury, Neo-Nazi crowd that wants to re-establish "private" central banking in a "public" context. The elites are probably behind that movement as well because they need central banking in any guise, and it doesn't matter how it's perpetuated.
Maybe these stances don't please the Soros crowd that you are probably part of, but when you chat with your small circle of elite-funded friends ("many observers," as you put it) you can tell them that you lobbed your disinformation in our direction and we responded.
Posted by Hugo_de_Groot on 02/20/13 05:19 PM
I have to say I think this is a start of a series of offers from the ROW (rest of the world) not to continue currency wars the USA declared to prevent world war. Jim Rickards, an insider (from the financial and military/intelligence part) has given a great interview about themes like currency wars, gold, SDR, rift between treasury/goverment and national security complex, previous currency wars and lots more to think about Click to view link .
My que (in this interview) that he is an insider and promoting memes in this interview is that his son is in a partnership with IBM. 'They are creating the worlds first global water costs index, they will be the case shiller of water... ... .. Once u have and index you can create derivatives, futures and options from fresh water from this index, this does not exist today' (from around 34.00 in the interview). In other interviews and his book he shows he is an insider (trying to rise in the ranks?).
That he strongly suggests buying physical gold is amazing. Stating that the triffin dilemma must be solved (by using gold) even more so. Dont be mistaken, the Triffen dilemma destroys reserve currencies since Portugal since around the year 1400 period. Click to view link
What is a EUro? If you look well u see they mark their gold to market and stopped selling physical for the most part. Russia stated in the MSM that they liked the model. Asia is also thinking about getting a common currency and importing big amounts of gold. The UAE is also talking about a common curreny. I dont need to tell you how important gold is to them. Then the BIS, what was is their rumoured goal again? To destroy the USSR and the dollar... .
There is a big time movement globally going to make physical gold the ultimate wealth assest. Gold prices the dollar and the dollar prices the rest now. Isnt this proposal from the Chinese that the rest of the wold is moving and getting towards 4 mini reserve currencies (backed by gold at a floating rate and the dollar as the biggest backed by oil (but we all should know Petrol likes gold?) To me the SDR is loosing ground big time. Time to meet reality and thats not a paper promis! From many currencies to a few, nice consolidation.
It amezed me but in the EU gold has a very free role (freegold meme). If you buy gold, 0% tax rate as far as I know, 'only' a wealth tax. Seems Orwell with his 'We've always been at war with Eastasia' fits right in...
So far these 2 cents...
Posted by 1776 on 02/20/13 04:37 PM
February 18, 2013 The Obama Bankruptcy Curse Strikes Again! Jeannie DeAngelis
Click to view link
Posted by fine2opine on 02/20/13 04:27 PM
If, as it is posited, the IBC is indeed an Internationlo Banking Cartel, then perhaps this move on the part of China is at the behest of the IBC, in an effort to create an air of solidity for the masses, both investing and otherwise. As mentioned in the comments here, I believe the IBC has extended it's directives by helping to quell the beast of dissension, via govt. issued proclamations.
Posted by victorbarney on 02/20/13 03:39 PM
Caution: We(America) will not have a "brother" to save u.s. as England had in 1943 after their endeavor into marxism throughout the 1900's failed them. No folks, the soon coming "cashless society" will not last longer than 3 1/2 years. Watch! p.s. Welcome to Adam's world & hell is coming to dinner... just saying...
Posted by JustAnotherGuy on 02/20/13 03:36 PM
Seems that the International Banking Cartel isn't quite ready for the full fledged WWIII (i.e., China/Russia rattling sabers over Iran and US/NATO kicking China out of Africa are somewhat on hold). After all, the IBC's ultimate solution for this economic mess is another World War.
Now, in the past the DB has posited that China has it's own branch of the International Banking Cartel. If true, it would make sense for China to throw the U.S. a rope until WW III can be "launched" at the proper time.
Posted by pragmatico on 02/20/13 02:36 PM
I tend to second jdwheeler42's sentiments. The public messages of politicians can seldom if ever be taken at face value. The least hint that the dollar may be getting stronger (and I'm saying hint, not fact) is an ideal opportunity for China to continually divest itself of temporarily stronger dollars to acquire additional gold and silver now at currently discounted rates. Why not give the dollar more verbal support? Sounds like a good strategy to me. I'm just sayin'. And, yeah, I won't hold my breath waiting for China to boost their dollar reserves.
And by the way, that higher-dollar-for-weak-metals exchange doesn't sound like such a bad idea for a bunch of us who have little faith in the dollars we hold.
Posted by 1776 on 02/20/13 01:22 PM
Markets Will React Big When Reality Sets In
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Posted by jdwheeler42 on 02/20/13 12:56 PM
Of course Chinese politicians would NEVER lie to us to make us complacent while they're backing out of the dollar as fast as possible... .
I'll believe it when I see the Chinese actually increasing their dollar reserves... .
Posted by CelticFire69 on 02/20/13 12:41 PM
What happened to your "share" button? Typically tweet your stories.
Posted by 1776 on 02/20/13 12:36 PM
Chinese Professor Returns
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