The Beginning Of The End
The Beginning Of The End By Michael T. Snyder - Kindle Version

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China And Russia Are Ruthlessly Cutting The Legs Out From Under The U.S. Dollar

The mainstream media in the United States is almost totally ignoring one of the most important trends in global economics.  This trend is going to cause the value of the U.S. dollar to fall dramatically and it is going to cause the cost of living in the United States to go way up.  Right now, the U.S. dollar is the primary reserve currency of the world.  Even though that status has been chipped away at in recent years, U.S. dollars still make up more than 60 percent of all foreign currency reserves in the world.  Most international trade (including the buying and selling of oil) is conducted in U.S. dollars, and this gives the United States a tremendous economic advantage.  Since so much trade is done in dollars, there is a constant demand for more dollars all over the globe from countries that need them for trading purposes.  So the Federal Reserve is able to flood our financial system with dollars without it causing a tremendous amount of inflation because the rest of the world ends up soaking up a lot of those dollars.  But now that is changing.  China and Russia have been spearheading a movement to shift away from using the U.S. dollar in international trade.  At the moment, the shift is happening gradually, but at some point a tipping point will come (for example if Saudi Arabia were to declare that it will no longer take U.S. dollars for oil) and the entire global financial system is going to change.  When that tipping point comes the global demand for U.S. dollars is going to absolutely plummet and nightmarish inflation will come to the United States.  If such a scenario sounds far out to you, then you have not been paying attention.  In fact, China and Russia have been working very hard to move us toward exactly such a scenario.

China and Russia are not the "buddies" of the United States.  The truth is that they are both ruthless competitors of the United States and leaders from both nations have been calling for a new global currency for years.

They don't like that the United States has a built-in advantage of having the reserve currency of the world, and over the past several years both countries have been busy making international agreements that seek to chip away at that advantage.

Just the other day, China and Germany agreed to start conducting an increasing amount of trade with each other in their own currencies.

You would think that a major currency agreement between the 2nd and 4th largest economies on the face of the planet would make headlines all over the United States.

Instead, the silence in the U.S. media was deafening.

At least there were some reports in the international media about this.  The following is from a Reuters article about this very important deal....

Germany and China plan to conduct an increasing amount of their trade in euros and yuan, the two nations said in a joint statement after talks between Chancellor Angela Merkel and Chinese Premier Wen Jiabao in Beijing on Thursday.

"Both sides intend to support financial institutions and companies of both countries in the use of the renminbi and euro in bilateral trade and investments," said the text of the statement.

By itself, this deal would not be that alarming.

However, the truth is that both Russia and China have been making deals like this all over the globe in recent years.  I detailed 11 more major agreements like the one that China and Germany just made in this article: "11 International Agreements That Are Nails In The Coffin Of The Petrodollar".

In that article I listed a few of the things that will likely happen when the petrodollar dies....

-Oil will cost a lot more.

-Everything will cost a lot more.

-There will be a lot less foreign demand for U.S. government debt.

-Interest rates on U.S. government debt will rise.

-Interest rates on just about everything in the U.S. economy will rise.

So enjoy going to "the dollar store" while you can.

It will turn into the "five and ten dollar store" soon enough.

Okay, so if you are China and Russia and you are working hard to undermine the dollar, how do you get prepared for the fiat currency crisis that your hard work will eventually create?

You guessed it.  You hoard gold and other precious metals.

And that is exactly what China and Russia has been doing.

A recent MarketWatch article detailed the massive hoarding of gold that Russia has been doing....

I can’t imagine it means anything cheerful that Vladimir Putin, the Russian czar, is stockpiling gold as fast as he can get his hands on it.

According to the World Gold Council, Russia has more than doubled its gold reserves in the past five years. Putin has taken advantage of the financial crisis to build the world’s fifth-biggest gold pile in a handful of years, and is buying about half a billion dollars’ worth every month.

Of course Russia is not alone in hoarding gold.  According to Zero Hedge, China has quietly been importing gigantic mountains of gold....

In July, Chinese gold imports from HK, after two months of declines, have picked up once more and hit a 3-month high of 75.8 tons. While it is notable that this number is double the 38.1 tons imported a year prior, and that year-to-date imports are now a record 458.6 tons, well over four times greater than the seven month total in 2011 which was 103.9 tons, what is far more important is that in the first seven months of 2012 alone China has imported nearly as much gold as the total holdings of the hedge fund at the heart of the Eurozone, elsewhere known simply as the European Central Bank, and just as importantly considering the import run-rate has hardly slowed down in August, which data we will have in a few weeks, it is now safe to say that in 2012 alone China has imported more gold than the ECB's entire official 502.1 tons of holdings.

And all over the world Chinese companies are buying up gold producers.  China National Gold Group Corporation has put in a $3.9 billion bid to buy African Barrick Gold PLC, but that is only one example.

A recent Fox Business article listed a bunch of other similar transactions that have taken place recently....

Zijin Mining Group Co. (2899.HK), China's second-largest gold producer by output, said last week that its subsidiary has acquired more than 50% of Kalgoorlie's Norton Gold Fields (NGF.AU).

That deal gives it a foothold in the Australian market, the world's second-largest source of gold output after China itself. In 2011, Zijin bought 60% of Kazakhstan-based miner Altynken, which has access to a gold mine in Kyrgyzstan.

Since 2008, Chinese companies have completed 10 US$20-million-plus acquisitions of Australian gold assets, worth a combined $1.6 billion, according to Dealogic. Half were initiated since last year.

In November, Shandong Gold-Mining Co. (600547.SH) launched a bid to acquire Brazilian gold miner Jaguar Mining Inc. (JAG.T) for $1 billion.

You would have to be blind to not see what is happening.

Other big names have been hoarding gold as well.  In a previous article I detailed how George Soros, John Paulson and central banks all over the planet have been hungrily accumulating gold.

So what does all of this mean for the price of gold?

That's right - it is likely to keep heading up.

In fact, Citi analyst Tom Fitzpatrick believes that the price of gold will likely hit $2500 within 6 months.

Personally, I believe that there will be times when precious metals both fall and rise in price dramatically.  It is going to be a wild ride.  But in the long-term I believe that all precious metals will be going up as fiat currencies such as the U.S. dollar fail.

Sadly, most Americans have no idea just how incredibly vulnerable the U.S. dollar really is.

The following is an excerpt from a recent piece by investigative journalist Bob Woodward.  It shows just how worried our leaders are about a crash of U.S. Treasuries....

Another possible outcome, Geithner said, was perhaps worse. “Suppose we have an auction and no one shows up?”

The cascading impact would be unknowable. The world could decide to dump U.S. Treasuries. Prices would plummet, interest rates would skyrocket. The one pillar of stability, the United States, the rock in the global economy, could collapse.

What happens someday if the rest of the world decides to reject our currency and our debt?

Right now we are able to trade our dollars for the things that we "need" such as oil from the Middle East and cheap plastic consumer products from China.

But what happens if the Federal Reserve keeps printing and printing and printing and the rest of the world eventually decides that the U.S. dollar is not even worth the paper it is printed on?

The truth is that the amount of printing the Federal Reserve has been doing and the amount of borrowing the federal government has been doing are both completely and totally unsustainable.

At this point, Moody's is threatening to cut the credit rating of the federal government if a deal is not reached soon to reduce our debt to GDP ratio.

And Moody's is not the only one concerned about our exploding debt.

German Finance Minister Wolfgang Schaeuble recently stated that he believes that "there is great uncertainty about the course American politics will take in dealing the U.S. government's debts, which are much too high".

Just because the economy is relatively stable right now does not mean that it is always going to be that way.

If we keep debasing our currency like this, at some point the rest of the world is going to decide that China and Russia have been right all along and that we need a new global reserve currency.

That day is coming.  It might not come tomorrow or next week or next month but it is definitely coming.

Once the U.S. dollar loses reserve currency status, that will be a major turning point in the history of our country.  We will never fully recover from that, and we will never get back to the same level of prosperity that we are enjoying today.

So enjoy spending those dollars while you can.  The party is almost over.

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  • DEFCONStudios

    Michael,

    Will you do an Article about QE3 because it seems very soon the way QE3 is headed (QE Forever) Hyperinflation and Dollar debasement will be complete.

    • TRUTH

      EEEEEXXXXXXXCeLLenT! OUR PLAN IS UNDERWAY! HAHAHAHAHAAAAAA!!!!!!!!!!!!time to rid white alien cave apes for good!

  • http://basspig.wordpress.com M. Weiss

    The immediate short term problem I see with this 3rd worldization of the US economy is that private sector wages are going down, while public sector are going up. Given that public sector is funded largely through the fraud of home ‘ownership’ being actually home custodianship rented from the government, I see a lot of shocked families who thought they owned their homes, becoming homeless due to property tax auctions when their declining incomes no longer keep up with public sector wage demands.

    • TRUTH

      you better start listening to MegadetH the song entitled FORECLOSURE OF A DREAM! because that’s what’s going to happen that’s even if you own a house HAHAHAAAA!!!!!!!!!!!!

  • JWB

    Keep driving your cars, you stupid morons, keep wasting fuel, keep sending jobs overseas, just like the good little right winger fascists you are….and thanks for all the smears towards progressives. You people will never get it. Drill, pollute, GMO the place until autism explodes, bomb Iraq, bomb Iran, you are not men, you are impotent robots made brave by the automobile. Guess what tough guys? 30 plus years of Reagan paranoia did NOTHING to improve our security, it broke this country, and the Fox News generation has no FORESIGHT. When your false freedom is defined by SUV’s, the NFL, and Ted Nugent canned hunts, you reap.

    Progressives predicted all the disasters set to happen, but no one listened. We pushed for energy change, we pushed for domestic infrastructure and manufacturing, a farming revolution, for educational funding, for Wall Street regulation, only to be smeared time and time again as “liberals”. You guys never promote or support ideas like employee owned business, labor, conservation ( Izaak Walton, anyone?) when it comes down to it, because it’s easier to cry “socialism” when a few dollars in taxes are involved. And before you go all Mises, remember JFK wanted to address this before Rand Paul and his Civil War surgeon daddy ever saw the the honey pot microphone of Alex Jones.

    • Randome-11

      So why you guys depends on right-wingers for your monthly tugboats, then?

      You are no vbetter than them, in fact, you are even worst.

    • christopher manny

      Nice diatrible. Wipe the spittle off your shirt and repeat after me: i am somebody. I am liberal, i have self-esteem. lol

  • robert

    As long as private central banks run 90% of the countries of the world and petroleum is trading in US dollars then China and Russia can change nothing except start a war which is possible.

    Sorry to throw water on all the US dollar reserve being replaced crowd however the fact is the Euro is toast and the Ruble and Renminbi will never replace the US dollar.

    • TRUTH

      THANK GOD! you thieves are finally going to get what’s coming to you! HAHAHAAAAA!!!!!!!!!

  • Washington

    US Democrats Apologized for Russian Warships 14.09.2012

    http://rusnavy.com/news/navy/index.php?ELEMENT_ID=15916

  • SEAL

    Russia and China are merely operating in their own self interest. I just wish America would operate in our self interest and get rid of the Fed. The Fed is the problem in the debasement of the dollar, not Russia and China. American leaders of both parties just don’t want to take the blame for what they have done to keep their jobs so they blame others. Our leaders will not allow any financial pain to come to the voters, as is needed, because they will be thrown out of office if they do. Americans are about to reap what we have been voting for since the Fed was founded. Our leaders will go on kicking this can down the road until the collapse happens.

    I have bought gold, silver, food, lead, and the weapons to use that lead. I have a gravity fed source of spring water for my concrete home. I have taught myself to be as self sufficient as possible. I hope you all have been planning ahead also. I wish you all good luck when the SHTF.

    • TRUTH

      you white? you are illegal in America and you people will be the first targets the world is 2 thirds non white by the way.what’s the point you will end up dying any ways don’t forget you aint the only guy with firearms.try killing the masses have fun with that im pretty sure you will have a nice wait time while reloading.

      • jimdep

        bring it on mulatto!

  • Caz

    The net effect, no matter what our policies in the USA, is that Americans will have to stop living lavish lifestyles that they can’t afford. This includes cutting back on energy. Stop keeping the room at 65 degrees in the summer, and 85 degrees in the winter and learn to live with nature better.

  • o_0

    Isn’t the root of the problem the fact that the US based it’s economic stability on salving other countries with their currency?

    they just had to try and get out of it some day

  • jasper

    7 billion people in the world,how do you feed that

    • TRUTH

      wipe out the whites who are not Russian and wipe out the muslims there problem solved!

  • paul

    If the author is assuming that Russia and China are allies he is making a big mistake. China is currently involved in the wholesale colonization and purchasing of the Russian Far East, where Russia’s population has declined 20% since the fall of the Soviet Union. The Far East will be Russia in name only within 20-30 years, with the mineral wealth flowing directly to China. By that point Russia will have lost the North Caucasus as well.

    • TRUTH

      doubt it. IndiA is allies with RussiA. Vietnam doesn’t like china and japan doesn’t like china they are having territorial disputes. china wont do anything to take Russian land

  • Austin

    The US has had an unfair advantage for too long by the US dollar being the worlds reserve currency. With that advantage gone forever your people will have to work very hard to survive. The immigrants will go back home to greener pastures and will not clean your toilets and swimming pools any more. It might be so hard that your swimming pools will be converted to fish ponds for your survival. It will be good for you to be humbled and to finaly join the rest of us. We are all brothers and sisters of a single planet. The economic system we have is destroying the planet and it is also destroying the American people and government who have become spoined and corrupted. Don’t worry, we will send you aid when you need it most, and we will care for your masses when they come to us.

    • christopher manny

      And you will beg the US for natural gas.

      • unknown

        it is arrogant fools like you exactly why this is going on yea i live in america and i kinda hope it does crash and burn this country has been running off racial oppression and imperialism for way to long someone or something needs to put this country back in line or we’ll be dealing with ww3

        • christopher manny

          Oh sure, and yet we have a black president. Oppressive country, sure. Whatever.

          • TRUTH

            he is half white dummy!half Kenyan half white

        • TRUTH

          not bad because whites ill LOSE! their self entitlement will be the death of them.look at Ontario Canada with floodings. gods telling whites to take a bath or die trying HAHAHAAAA!!!!!!!!!!whites and their hereditary cancer will die with whites finally soon we will incinerate the remains and not place it in museums.not priceless just worthless

    • Scotty

      Barrack Hussien Obama, posting in his pajamas again? Go back to bed with the wookie.

    • TRUTH

      no! whites will be extinct mor genocided by then nice try though! only people survive will be Russian and that’s it. its great to know that the failure race of white trash are going to be wiped out for good finally. there is no compromise you must be wiped out!and I know you will fight and then you will die!hue means color by the way human means person of color

  • Empty Chair

    Yes even in dark ages war and famin, man sought for and killed for gold. From ancient kings to blinged out crime leaders, it has always been treasured. In the short run I’d want food and ammo, but there will will always have to be a medium of trade. You keep your fiat paper, I’ll take gold and silver like they did for thousands of years before me and thousands after…

    • Scotty

      ammo and mini bottles of jack daniels to trade with.

  • poor college kid

    Does anyone know who originally posted this? I would like to use this for class project for a sociology of media class.

  • xiou

    it is funny, you people have put the world in to poverty and that was kool. we chinese have suffered poverty for decades now its our turn to have fun. being white doesnot make you superior humans! watch “confessions of a economic hitman” and you’ll know why you were so rich and the rest of the world was so poor. wat goes around comes around. all men equal! US isnt collapsing the earth is balancing its self. us=bully corporation vs rest of the world=innocent people, ur dirty game back fired

    • DownFUCKENunder

      I’m not American, but without the West you Chinese would still be living under a Manchu Emperor.

      You’ve had to “learn from the barbarians” – The West is the master, the Chinese the cheating student about to fail.

      watch out for the failing student, they’ll lash out attempting to save “face”

      …and if you take “confession of an eco hitman” as the truth… then you probably think that Chairman Mao did a great job in leading the Great Farmers’ Revolution. And that the Cultural Revolution and ’89 are just Western propaganda.

    • Scotty

      Barry Soetero, how did you get on here?

  • Econman

    Basically, when the monopoly money Fed notes lose reserve status, the USA is done as a superpower & the economy will completely collapse.

    Why else would the Department of Homeland Stupidity be buying billions of rounds of hollow point bullets, enough for shooting every American twice?

    It’s inveitable. Why should the rest of the world sell precious goods & natural resources for fake money?

    • Scotty

      Then we’ll finally start pumping our oil reserves. Here’s what you do, switch the economy to diesel and natural gas, pump oil, and freeze government spending. Phase out Social Security and Medicare, and Health Saving and Retirment accounts.

    • TRUTH

      ya that’s awesome and did you see the millions of black caskets! those are meant for white false patriots who are illegal in America that would be british,french,germans,irish the insects of this planet which need to be annihilated.

  • Nalliah Thayabharan

    China and Russia know where the USA is headed in its relations towards them. USA will never voluntarily give up the delusion about itself as “master of the universe”.
    Obama already is about to pick Susan Rice (US Ambassador to UN) to replace Hillary Clinton as Secretary of the State. if Hillary Clinton was a “war hawk” — then Susan Rice is much more so …
    George Bush “merely” opened the current and foreseeable US “war on the planet forever” — Torture, renditions, spying, militarism galore, Obama expands them
    Susan Rice notoriously known for “undiplomatically” “reprimanding” Russia and China months ago for Refusing to join in the “regime change” in Syria calling Russia and China “evil” for doing so while she was glaring in her own inability to hide her fury in the UN because “BLOOD LUST” of her and her Zionist puppets’ in Washington can’t get “support” from Russia or China.
    Obama has already repeatedly signaled to China and Russia – THEY are to be OBEDIENT to the USA or else”.
    In spite of the fact – unknown or unacknowledged perhaps to most of the US citizens, including their leaders — that the MOST IMPORTANT leadership “changes” or “continuities” in the past 2 years – are those in RUSSIA bringing back Vladimir Putin — and CHINA with its new and highly competent “seven-member” politburo ruling council.
    China’s communist party decides its selections — the fact remains that members of the politburo ruling council are the result of decades of “tests” from their original grass-roots level positions to “provincial regions” posts — to repeatedly prove they handled their assignments properly — in economics, social science, public administration, law, etc. In short — HIGHLY competent members of the politburo ruling council — next to whom — the leaders of the USA are cartoon characters by comparison. Members of politburo ruling council will NOT be intimidated by the USA …not by a long shot.

  • Muscovy

    Not all men are equal, just at anything to see that but all humans deserve an equal chance

  • Muscovy

    Mao sucked at nearly everything but empty promises and smiling, at least Stalin actually built a powerhouse but Mao Mao couldn’t even build a factory after murdering all his educated people in Cultural Revolution

    • Chris Barcelo

      Stalin built a power house? Maybe if his house is all that mattered. The citizens didn’t get to share in any of that ‘greatness’ and were murdered as well.

  • 1961mjansson

    Petrodollar no more! A sheep no More

  • HAAHAAHAA=P

    excellent ! time to paralyze America where it hurts the most! get rid of dollar HAHAHAAAAA!!!!!!!!!!!and then its just a matter of time all hell breaks loose! serves those illegal white terrorists right for being on indian land north America. this way is best then when martial law comes in the American white illegals will be stuck in America and have their travelling visas freeze and unable to leave the country and will have someone knock down their door and loot from them and send them to concentration camps while all phones and internet services are out. HAHAHAAAAAA!!!!!!!!!!! then they will get ataste of what they put native aboriginals through since 500 years

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