Hal Turner & Ariana Eunjung Cha / Washington Post & Jerome R. Corsi / Prisonplanet – 2006-12-20 08:53:29
http://www.washingtonpost.com/wp-dyn/content/article/2006/12/14/AR2006121400681.html
Report – China to Dump One Trillion in US Reserves
HalTurnerShow.com
BEIJING (December 15, 2006) — Sources with a US Delegation in Beijing have told The Hal Turner Show the Chinese government has informed visiting Bush Administration officials they intend to dump One TRILLION US Dollars from China’s Currency Reserves and convert those funds into Euros, gold and silver!
China was allegedly asked to withhold the announcement until Bullion Markets closed for the weekend to prevent an instant spike in gold and silver prices. This delay will give the world the weekend to consider appropriate actions rather than have a knee-jerk reaction which could see the US Dollar totally collapse in value Monday.
According to this Senior source, China told the US delegation they no longer have faith in US Currency for several reasons:
1) The Federal Reserve Bank ceased publishing “M3” data in March, making it nearly impossible for anyone to know how much cash is being printed. China said this act made it impossible to tell how much a Dollar is worth.
2) The US Dollar has lost upwards of thirty percent (30%) of its value against other foreign currencies in the recent past, meaning China has lost almost $300 Billion simply by holding US Dollars in its reserves.
3) The US has no plans whatsoever to reduce deficit spending or ability pay down any of its existing debt without printing money to pay it off.
For these reasons China has decided to implement an aggressive sell-off of US Dollars before the rest of the world does so. China reportedly told the US delegation; “we are the largest holder of US Currency and if the rest of the world unloads theirs before we unload ours, we will lose our shirts.”
Early this week, in an unusual move, the Bush administration sent virtually the entire economic “A-team” to visit China for a “strategic economic dialogue” in Beijing Dec. 14 and 15.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke lead the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation is Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and US Trade Representative Susan Schwab.
The Bush administration wanted to get China’s cooperation in preventing a dollar collapse. The Hal Turner Show has been told the effort failed.
According to the source, Fed Chairman Bernanke left the meeting “pale and in a cold sweat” as the implications of China’s decision seemed to sink in.
The implications are enormous: The US Dollar is likely to collapse in value against all other major currencies as early as Monday, December 18.
This would cause a worldwide sell-off of dollars, create almost immediate “hyper-inflation” in the US and also impact world markets at a level “worse than the Great Depression of 1929.”
Arabs to the Rescue?
In a strange twist of fate, Arabs and OPEC may come to the rescue of the US!
Senior officials in OPEC made clear that they too would be severely harmed if the US Dollar collapsed, and hinted they “would not be inclined to sell oil to any particular nation that intentionally caused such a collapse.”
This was a thinly veiled threat to China, which depends heavily on OPEC oil for its rapidly developing energy needs.
The OPEC officials even went so far as to say “Since China lacks the ability to project their military power, OPEC nations need not worry about any Chinese military response to an oil cut-off.”
Such brutally candid remarks will not sit well with China; and signal ominous things for the US .
Arabs and OPEC will want something in return for saving the US from economic collapse and it is already widely speculated what they want will be a complete change in US backing of Israel in the Middle East.
If such demands are made by the oil-rich Arabs, the US would be left with little choice but to virtually abandon the jewish state to preserve itself.
UPDATE: The Washington Post Confirms. . . .
‘US, China Clash On Currency’
WASHINGTON (December 16, 2006) — Additional sources, one in the US Commerce Department and another in the US Treasury have confirmed the initial report above and referred me to another, Third, source in the Pentagon.
Both the Commerce and Treasury Sources report that while China will not be able to simply trade their Dollars for other paper currencies, they will spend their US Cash on commodities such as gold, silver and Rhodoium as well as military hardware; ships and planes, placing large orders and paying for those orders with the one point one trillion in cash dollars they possess.
Extreme Military Concern
In speaking with the contact at the Pentagon, I am able to now report the Pentagon views this currency-killing as a cunning military aspect to Chinese plans:
The Pentagon says that while China has a 2-million-man army, they lack the logistics and heavy lift capability to move that army and supply it. They can, however, get that military to South Korea and to Japan.
The Chinese see that the US Military is over-stretched and almost exhausted by its globe trotting Commander-In-Chief. They feel that by intentionally destabilizing the dollar, the US economy will fail, putting tens of millions of Americans on the unemployment line and putting unbearable pressure on the US Government.
Then, with the US economy in shambles and its manufacturing base eroded by a steady stream of manufacturing plants moving out of the US., the American government will be too occupied with troubles at home to do much internationally. America will be in no position to challenge China, allowing the Chinese to act militarily elsewhere in the world;
Further, if the US attempted to intervene against any Chinese military action, the only plant in the world which can manufacture the specialized gyros needed for US Cruise Missile guidance systems, is now located in. . . China.
China could prevent that plant from shipping to the US, and once our arsenal of cruise missiles was depleted, it would take a long time to re-tool a plant to make more gyros and resupply cruise missiles for battle. The Chinese feel they could accomplish certain military goals before the US could re-tool.
They are also confident the US will never “go nuclear” as long as the US itself is not attacked.
The Pentagon source went so far as to say “Even if China was to lose the entire one trillion in cash to a collapse of the Dollar as a currency, they will have succeeded in taking the US off the world stage as any type of effective military or economic power — without firing a shot!” A ‘classic’ Sun Tzu paradigm of victory – the art of fighting, without fighting.
The crippling of the US is a highly desirable military benefit for China at a relatively cheap price since it will leave their human capital and infrastructure assets in place; assets they know they would lose if a hot war erupted with the US.
US, China Clash on Currency
Both Countries Assertive as Economic Talks Open in Beijing
Ariana Eunjung Cha / Washington Post Foreign Service
Friday, December 15, 2006; Page D01 http://http://www.washingtonpost.com/wp-dyn/content/article/2006/12/14/AR2006121400681.html
BEIJING, Dec. 14 — US and Chinese leaders clashed publicly on the opening day of strategic economic talks, with Treasury Secretary Henry M. Paulson Jr. pushing China to revalue its currency and Chinese Vice Premier Wu Yi saying Americans do not have a full understanding of the situation.
After standing by as US officials criticized her country’s economic policies in the media during the past week, Wu set the tone for the meeting with assertive introductory remarks that spanned 20 typed pages and 5,000 years of Chinese history.
“Some American friends are not only having limited knowledge of, but harboring much misunderstanding about, the reality in China,” Wu said, according to a copy of her remarks provided by the Ministry of Foreign Affairs. For example, Wu noted that China needed to create enough jobs to absorb an estimated 300 million rural workers — equal to the entire population of the United States — into its urban economy in the next two decades.
Paulson was equally aggressive in his follow-up speech, saying that the US government’s “strong view” is that China should allow its currency, the yuan, to be more flexible. Most countries allow the value of their currencies to be set in global markets, but China intervenes to keep its currency pegged to the dollar at an exchange rate that many Western economists regard as skewed in China’s favor.
The Chinese economy “would be more effective under a regime where currency values are determined in a competitive, open marketplace based upon economic fundamentals,” Paulson said. A revaluation of the yuan upward would make US goods cheaper in China and Chinese goods more expensive in the United States.
Throughout the day, US officials pushed on issues such as trying to resolve the huge trade imbalance between the two countries and making sure that China lives up to commitments it made five years ago when it joined the World Trade Organization. By the afternoon, they said they were optimistic.
“They were very much in a receiving mode,” Labor Secretary Elaine L. Chao said in an interview with reporters. “They were listening very carefully.”
Commerce Secretary Carlos M. Gutierrez said that the meeting “exceeded expectations” and that “it was a very candid . . . honest, solid dialogue.”
High-level US officials, interviewed after the close of meetings for the day, said the two sides agreed on many things in principle, such as the need to keep their economies open to other countries. But specific measures and a timetable were less clear, with the United States pushing for rapid change and China seeking to move cautiously.
Skepticism toward foreign trade, particularly with China, played a major role in the recent US elections, and proposals for punitive tariffs or other protectionist measures could gain support in Congress next year.
“I sense that they have an understanding of the stakes,” Gutierrez said. “And the stakes are very large. You are talking about a lot of business, a lot of jobs on both sides. We are their No. 1 customer.”
While most of the day was focused on US requests of Beijing, China also listed some priorities: fewer obstacles to the export of US technology and to Chinese investment in the United States. The complaint about US export controls, in particular, led to some tense exchanges, US delegates said,
“They would like no restrictions, and we have restrictions, so there are certain things that they would like that we can’t give on,” Guttierez said.
US Trade Representative Susan C. Schwab said in an interview that she told the Chinese that their country was “slowing if not backsliding” on economic reforms.
Paulson is a former Wall Street executive who has made dozens of trips to China. He has taken command of the Bush administration’s economic discussions with that country and took a high-level delegation of Cabinet members and others with him on this trip as he seeks to make progress toward resolving thorny disputes.
The format of the meeting included formal presentations and broad debate on issues such as China’s transport problems and the US culture of easy credit.
Perhaps the meeting’s most anticipated and sensitive talks — about whether China should allow the yuan to rise in value — were anchored by a statement from Federal Reserve Chairman Ben S. Bernanke, who accompanied Paulson on the trip.
Bernanke said an increase in the currency’s value would benefit China, according to US officials present at the talk.
“Other people piped in to say the US has a very interested stake in China’s economic well-being,” Chao said.
Dollar’s Collapse Would Result in the ‘Amero’
Some think deep recession likely
regardless of Fed’s actions
Jerome R. Corsi / Prisonplanet.com
http://rense.com/general74/dollar.htm
(December 15, 2006) — Two analysts who have reconstructed money supply data after the Fed stopped publishing it argue a coming dollar collapse will set the stage for creating the amero as a North American currency to replace the dollar.
The reconstructed M3 data — the broadest measure of money — published on econometrician Gary Kuever’s website, NowAndFutures.com, shows M3 increased at a rate of 11 percent in May, compared to 9 percent when the Federal Reserve quit publishing M3 data earlier this year.
Asked why the Fed decided to stop publishing M3 data, Kuever told WND, “The Fed probably wants to hide how much liquidity is being pumped into the market, and I expect the trend to keep pumping liquidity into the market will continue, especially since the economy is slowing down.”
Why is this important?
“The trend line in my M3-plus-debt chart is staggering,” Kuever said. “There has been a straight, long-term trend line of M3-plus-credit increasing since 2000. Long-term, we are creating inflation and the dollar has lost almost 98 percent of its value in the past 100 years.”
Kuever, a retired investor, is concerned that with growing budget and trade deficits “the dollar could collapse.”
“Especially if the Fed cannot increase rates, because we have already entered a recession,” he said.
Bob Chapman, who issued a reconstructed M3 estimate to the 100,000 subscribers to his newsletter, “The International Forecaster”, agrees.
“The world is awash in money and credit,” Chapman told WND. “My numbers show M3 increasing at about a 10-percent rate right now.”
Chapman believes the US economy entered a recession in February. In his newsletter of Dec. 9 he predicted the Fed would hold interest rates at 5.25 percent.
“The Fed is in a very tough spot here,” Chapman wrote, “If they raise rates, the real estate market will collapse, and if they lower rates, the dollar will collapse.”
Meeting yesterday, the Federal Reserve Open Market Committee voted, as Chapman had predicted, to hold the overnight lending rates between banks steady at 5.25 percent. This was the fourth straight meeting the Fed had voted not to change rates. In its rate announcement, the Fed affirmed the economy had slowed.
Almost immediately after the announcement of the Fed’s decision, the dollar weakened to a new 20-month low against the euro, with currency markets reportedly pricing in the expectation the Fed will be forced to lower rates next year to bolster the economy. Following the announcement by the Fed, the US Dollar Index, or USDX, also dropped, with the dollar going below 83.
A dollar collapse is imminent, Chapman declared.
“Technicians studying the USDX think there is a support level for the dollar at 75, but I don’t think so.”
How low could the dollar go?
“If the dollar breaks through 78.33 on the USDX,” Chapman answered, “my guess is the dollar will go through a 35-percent correction, which would put it at 55.”
“The key in how low the dollar goes is the interest rates,” Chapman told WND. “In January, the Fed is going to have to make a decision which way to go. If Fed rates go up, the dollar will hold in the 78.33 range, but the stock market and the economy will tank.
“If next year the Fed lowers rates to keep the economy from crashing, the bottom will fall out of the dollar, and I see it going as low as 55. Once the dollar hits bottom, it will take the stock market and the economy right with it anyway. The Fed is in a box they can’t get out of.”
As WND reported earlier this week, in an unusual move, the Bush administration is sending virtually the entire economic “A-team” to visit China for a “strategic economic dialogue” in Beijing Thursday and Friday. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are leading the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez.
Also in the delegation will be Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and US Trade Representative Susan Schwab.
But Chapman doubts the trip will help the Fed to engineer a slow dollar slide.
“The Chinese are going to do what the Chinese want to do, not what we want them to do,” he said. “I believe the Chinese are going to send Treasury Secretary Paulson and Fed Chairman Bernanke home packing, with little or nothing to show for the trip.”
How severe will the coming dollar collapse be?
“People in the US are going to be hit hard,” Chapman warned. “In the severe recession we are entering now, Bush will argue that we have to form a North American Union to compete with the Euro.”
“Creating the amero,” Chapman explained, “will be presented to the American public as the administration’s solution for dollar recovery. In the process of creating the amero, the Bush administration just abandons the dollar.”
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