China Sells Off Record Amount of Dollar Assets

China Sells Off Record Amount of Dollar Assets
Paul Craig Roberts

As I pointed out on May 16 — — when foreign central banks redeem their US dollar denominated reserves such as US Treasuries, they are paid in dollars. They sell the Treasuries because they are getting out of dollar reserves. As they don’t want the Treasuries, they don’t want the dollars in cash or any other form, so they sell the dollars for other currencies or use them to buy gold.

China has about 800 billion dollars of US Treasuries left to sell. As China sells and as countries use other means of settling trade balances than the US dollar, the demand for US Treasuries and dollar-denominated financial instruments will decline. The Federal Reserve can stabilize the price of Treasuries by creating money with which to buy the bonds, but the Fed can’t create foreign currencies with which to purchase the dollars. The problem becomes a dollar problem.

As the world demand for dollars diminishes, so does the dollar’s value. As US manufactured goods are produced offshore and as the US imports food, US inflation will be a consequence of dollar decline. Tariffs also restrict supply, raise prices, and further reduce the dollar’s purchasing power. The tariffs being imposed on goods imported from China are thus counterproductive.

Inflation and dollar decline mean no lowering of interest rates. Instead, US interest rates will rise. The morons ruling us are destroying their own power base and the living standards of the US population. There is not a single person in “our” government with enough sense to be there.

The pending US financial crisis described in The Great Taking is indeed pending. We are perfectly set up for it.

The globalism the US championed as an instrument for Washington’s hegemony is now destroying its instigator.

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