The Beginning Of The End
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China Is On A Debt Binge And A Buying Spree Unlike Anything The World Has Ever Seen Before

Chinese Black Dragon - Photo by AngelusWhen it comes to reckless money creation, it turns out that China is the king.  Over the past five years, Chinese bank assets have grown from about 9 trillion dollars to more than 24 trillion dollars.  This has been fueled by the greatest private debt binge that the world has ever seen.  According to a recent World Bank report, the level of private domestic debt in China has grown from about 9 trillion dollars in 2008 to more than 23 trillion dollars today.  In other words, in just five years the amount of money that has been loaned out by banks in China is roughly equivalent to the amount of debt that the U.S. government has accumulated since the end of the Reagan administration.  And Chinese bank assets now absolutely dwarf the assets of the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England combined.  You can see an amazing chart which shows this right here.  A lot of this "hot money" has been flowing out of China and into U.S. companies, U.S. stocks and U.S. real estate.  Unfortunately for China (and for the rest of us), there are lots of signs that the gigantic debt bubble in China is about to burst, and when that does happen the entire world is going to feel the pain.

It was Zero Hedge that initially broke this story.  Over the past several years, most of the focus has been on the reckless money printing that the Federal Reserve has been doing, but the truth is that China has been far more reckless...

You read that right: in the past five years the total assets on US bank books have risen by a paltry $2.1 trillion while over the same period, Chinese bank assets have exploded by an unprecedented $15.4 trillion hitting a gargantuan CNY147 trillion or an epic $24 trillion - some two and a half times the GDP of China!

 Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!

I was curious to see what all of this debt creation was doing to the money supply in China.  So I looked it up, and I discovered that M2 in China has grown by about 1000% since 1999...

M2 Money Supply China

So what has China been doing with all of that money?

Well, they have been on a buying spree unlike anything the world has ever seen before.  For example, according to Reuters China has essentially bought the entire oil industry of Ecuador...

China's aggressive quest for foreign oil has reached a new milestone, according to records reviewed by Reuters: near monopoly control of crude exports from an OPEC nation, Ecuador.

Last November, Marco Calvopiña, the general manager of Ecuador's state oil company PetroEcuador, was dispatched to China to help secure $2 billion in financing for his government. Negotiations, which included committing to sell millions of barrels of Ecuador's oil to Chinese state-run firms through 2020, dragged on for days.

And the Chinese have been doing lots of shopping in the United States as well.  The following is an excerpt from a recent CNBC article entitled "Chinese buying up California housing"...

At a brand new housing development in Irvine, Calif., some of America's largest home builders are back at work after a crippling housing crash. Lennar, Pulte, K Hovnanian, Ryland to name a few. It's a rebirth for U.S. construction, but the customers are largely Chinese.

"They see the market here still has room for appreciation," said Irvine-area real estate agent Kinney Yong, of RE/MAX Premier Realty. "What's driving them over here is that they have this cash, and they want to park it somewhere or invest somewhere."

Apparently a lot of these buyers have so much cash that they are willing to outbid anyone if they like the house...

The homes range from the mid-$700,000s to well over $1 million. Cash is king, and there is a seemingly limitless amount.

"The price doesn't matter, 800,000, 1 million, 1.5. If they like it they will purchase it," said Helen Zhang of Tarbell Realtors.

So when you hear that housing prices are "going up", you might want to double check the numbers.  Much of this is being caused by foreign buyers that are gobbling up properties in certain "hot" markets.

We see this happening on the east coast as well.  In fact, a Chinese firm recently purchased one of the most important landmarks in New York City...

Chinese conglomerate Fosun International Ltd. (0656.HK) will buy office building One Chase Manhattan Plaza for $725 million, adding to a growing list of property purchases by Chinese buyers in New York city.

The Hong Kong-listed firm said it will buy the property from JP Morgan Chase Bank, according to a release on the Hong Kong Stock Exchange website.

Chinese firms, in particular local developers, have looked overseas to diversify their property holdings as the economy at home slows. Chinese individuals also have been investing in property abroad amid tight policy measures in the mainland residential market.

Earlier this month, Chinese state-owned developer Greenland Holdings Group agreed to buy a 70% stake in an apartment project next to the Barclays Center in Brooklyn, N.Y., in what is the largest commercial-real-estate development in the U.S. to get direct backing from a Chinese firm.

And in a previous article, I discussed how the Chinese have just bought up the largest pork producer in the entire country...

Just think about what the Smithfield Foods acquisition alone will mean.  Smithfield Foods is the largest pork producer and processor in the world.  It has facilities in 26 U.S. states and it employs tens of thousands of Americans.  It directly owns 460 farms and has contracts with approximately 2,100 others.  But now a Chinese company has bought it for $4.7 billion, and that means that the Chinese will now be the most important employer in dozens of rural communities all over America.

For many more examples of how the Chinese are gobbling up companies, real estate and natural resources all over the United States, please see my previous article entitled "Meet Your New Boss: Buying Large Employers Will Enable China To Dominate 1000s Of U.S. Communities".

But more than anything else, the Chinese seem particularly interested in acquiring real money.

And by that, I mean gold and silver.

In recent years, the Chinese have been buying up thousands of tons of gold at very depressed prices.  Meanwhile, the western world has been unloading gold at a staggering pace.  By the time this is all over, the western world is going to end up bitterly regretting this massive transfer of real wealth.

Unfortunately for the Chinese, it appears that the unsustainable credit bubble that they have created is starting to burst.  According to Bloomberg, the amount of bad loans that the five largest banks in China wrote off during the first half of this year was three times larger than last year...

China’s biggest banks are already affected, tripling the amount of bad loans they wrote off in the first half of this year and cleaning up their books ahead of what may be a fresh wave of defaults. Industrial & Commercial Bank of China Ltd. and its four largest competitors expunged 22.1 billion yuan of debt that couldn’t be collected through June, up from 7.65 billion yuan a year earlier, regulatory filings show.

And Goldman Sachs is projecting that China may be facing 3 trillion dollars in credit losses as this bubble implodes...

Interest owed by borrowers rose to an estimated 12.5 percent of China’s economy from 7 percent in 2008, Fitch Ratings estimated in September. By the end of 2017, it may climb to as much as 22 percent and “ultimately overwhelm borrowers.”

Meanwhile, China’s total credit will be pushed to almost 250 percent of gross domestic product by then, almost double the 130 percent of 2008, according to Fitch.

The nation might face credit losses of as much as $3 trillion as defaults ensue from the expansion of the past four years, particularly by non-bank lenders such as trusts, exceeding that seen prior to other credit crises, Goldman Sachs Group Inc. estimated in August.

The Chinese are trying to get this debt spiral under control by tightening the money supply.  That may sound wise, but the truth is that it is going to create a substantial credit crunch and the entire globe will end up sharing in the pain...

Yields on Chinese government debt have soared to their highest levels in nearly nine years amid Beijing's relentless drive to tighten the monetary spigots in the world's second-largest economy.

The higher yields on government debt have pushed up borrowing costs broadly, creating obstacles for companies and government agencies looking to tap bond markets. Several Chinese development banks, which have mandates to encourage growth through targeted investments, have had to either scale back borrowing plans or postpone bond sales.

This could ultimately be a much bigger story than whether or not the Fed decides to "taper" or not.

It has been the Chinese that have been the greatest source of fresh liquidity since the last financial crisis, and now it appears that source of liquidity is tightening up.

So as the flow of "hot money" out of China starts to slow down, what is that going to mean for the rest of the planet?

And when you consider this in conjunction with the fact that China has just announced that it is going to stop stockpiling U.S. dollars, it becomes clear that we have reached a major turning point in the financial world.

2014 is shaping up to be a very interesting year, and nobody is quite sure what is going to happen next.

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  • Syrin

    The entire planet is drunk on debt. I hope everyone is prepared for what happens when the booze runs out.

    • markthetruth

      That’s not Logical because it the whole world does the same, it will Equal out and nobody will run out ! the party will keep going ! if you run the

      ‘Expected Value of Binomial Distribution’

      the valve could be infinite !

      the end.

      • nekksys

        You’re right; however, the mindset behind of the entire planet’s economies is one centered on money and not on value. The world economies are all debt-based. When that collapses, the same line of thinking will still exist.

        In order for any nation to survive the coming collapse, they will first have to conceive a way to shift to a value based economy and adjust the economic thinking that goes with it.

      • AK

        I disagree. The debt accumulation is unsustainable because the interest of the debt becomes a bigger and bigger piece of the pie and if rates start to rise it’s game over. That is what the whole stimulus by the Fed is all about, it’s not about stimulating the economy, it’s about driving down interest rates to make the accumulating debt affordable. This is a Ponzi scheme and sooner or later this will unravel and when it does, we are going to see a deleveraging event that will make the great depression look like a party.

        • tayronachan

          @AK, I agree, and interest rates have been moving up the last couple of months.

          • esqualido

            Oh, yes indeed- one local bank not only offered me a free alarm clock, but a doubling of the return on my 2-year CD to 0.20%

        • esqualido

          The USG, with Igor (the Fed) clasping his hands and cackling with glee figured that they could starve everyone on Social Security with virtually zero% interest on savings. The fly in the ointment is that all it would take to make trillions flee our shores would be a piddling 1-2%. But as long as this meant the banks which own the Fed could get their money interest-free, everything was OK with them

      • Hammerstrike

        The moochers are indebted to the producers.

    • MeMadMax

      They’ll figure out a way to keep the party going…

  • Bill

    Nobody knows what is going to happen but everybody knows it isn’t good!!!

    • markthetruth

      One Persons Does !!!

      the end…

    • Syrin

      I have a pretty good idea of what will happen. The real question is when.

      • AK

        Agreed – I don’t think it is too difficult to figure out what will happen, the question is when as you stated and what finally triggers the unraveling.

        • Bill

          I was trying to point out that there are so many possible balloons about to pop it’s impossible to pick the one that will start the chain reaction. The bad guys don’t want it to be ffigured out. Perhaps that is the plan. If nobody can figure out which balloon pops first nobody can stop the chain reaction.

          The End (right Mark?)

          • tayronachan

            When it starts to unravel, i’m sure TPTB will pull out all the stops to get us into a major war. Right now, they seem to be doing everything they can to get the hi-cap semi-autos. I guess TPTB figure there will be some pissed off Americans looking to blame someone if, I mean when, things fly apart.

  • stopthesocialism

    There’s something wrong with Chinese buying up US homes whilst the US has record numbers of homeless.

    • hero

      They are the communist elite laundering money or wanting to leave china when communism collapses.

  • K

    If you knew the dollars you were holding, along with most other currencies, were about to crash. If you also knew your own currency was about to crash. Might you not dump it all, for gold, real estate, food companies,etc. while people were still willing to take it?

    • Infidel51

      Bingo.

    • Rodster

      When the lightbulb goes off around the world that the entire financial system is a rigged game and we are the pawns like in the Hunger Games it will be too late by then.

      Here you have Nation that supposedly is the heir apparent to the #1 worlds economy and holding the worlds reserve currency only to find out THEY ARE EVEN BIGGER CROOKS than the Fed.

      This is why the MSM refuses to do its job and tell the truth. When this corrupt global ponzi scheme finally gets exposed no one will trust ANY NATION including China with any sovereign currency. It enslaves people through corruption and deceit whereby it insures poverty to its citizens.

      I think a global currency will rise from the ashes but it too will fail because of those who pull the strings.

      • Rodster

        …or as George Carlin used to say “It’s a Big Club and you ain’t in it”

      • AK

        I think you are right that the Chinese currency will ultimately crash as well and I think it’s by design. They can’t have the rest of the world’s currencies plummet while the Chinese currency gains in value as it will significantly reduce their exports. My guess is that they are waiting for a global melt-down of all currencies and in the mean-time they are accumulating as much Gold as the market will yield and when the time comes they will be in the driver’s seat to determine what comes next. He who has all the Gold makes the rules, and all indications are that the U.S. has leased, swapped, hypothecated and re-hypothecated all their Gold which has all migrated East. No doubt we will find out in the coming years.

        • esqualido

          “They can’t have the rest of the world’s currencies plummet while the Chinese currency gains in value.”
          It was almost yesterday Congress was screaming China was intentionally undervaluing the yuan- well, it appreciated from 8 to 6 to the dollar, making raw materials much cheaper for them and a hell of a lot more expensive here. I do not believe this article one bit- the proof is in the exchange rate

      • Erin Tarn

        Currency is not real. No currency is eternal. In the end, only food, water, and air matter.

    • glacialhills

      Exactly!, that is why they are building all of those ghost cities in their deserts and just dumping iron, copper, ore in piles near docks. They are spending up all those dollars they have as quickly as possible to get at least a portion of the value out of them before they are worth nothing.

    • AK

      K – the problem is that China has such a massive currency reserve that isn’t anywhere near enough Gold and real estate transactions take time. They definitely are on a buying spree converting as much of their soon to be worthless currencies but they are trying to do inconspicuously so as not to have Gold go through the roof while they are still accumulating.

  • markthetruth

    We print Money then;
    spend it on Chinese Labor and Goods then;
    they stock pile the Money then;
    the printed money they is used to hard Assets by buying up our Real estate and Resources .

    So in the end we are helping them to own us so we can live at a High Standard that they can now that away.

    Go figure we sold ourselves out all for Greed.

    the end…

    • XSANDIEGOCA

      Apres nous, le deluge

      • Orac4Prez

        Too True…. But few will understand the reference.

        • pnoldguy

          But we can look it up!

    • JustanOguy

      Excellent summary.

    • AK

      That’s exactly right and we have kept the party going by going deeper and deeper into debt which benefits the banks and the Federal Reserve. This whole thing was done by design when the most powerful bankers on the planet created the Federal Reserve 100 years ago. They carried out their plans perfectly and enriched all the big banks while making the rest of us debt slaves.

  • lady of jade

    I often take pills. That are imported from China. Chinese herbal medicine. It works. For me anyway.

    • Ralfine

      The point of taking pills or herbal medicine is not to take them often.

      Medicine is for acute illnesses or uncurable illnesses, prolonging a dead person’s life.

      Did you try the Elixier of Life yet?

      80% of a healthy person’s body is water, so should your food.

      • C.L. Strasburg

        “prolonging a dead person’s life”
        I’m seeing a pic of Zombies in my mind’s eye. :)

    • El Pollo de Oro

      I’m a fan of Chinese herbal medicine, Chinese tea and Chinese food (traditional Chinese food, not the MSG-ridden crap you get in the BRA). It’s the Chinese “people’s republic” government I have a problem with.

  • Nicnak

    I have 0 debt and never borrowed money.
    today I have money…. Guess why?
    you can borrow some of my money if you want,. I will take your house and everything you have if you don’t pay me back. I m not interested you pay me back, I want you to be my slave so you work for me for free forever….

    Kind Regards,

    your Bank

    • xander cross

      You speak the truth.

  • LAM

    Are we really so dumb as to relinquish all of our gold? Is China so dumb as to burden themselves with crushing debt? Are we? Are China, Russia, India, etc., buying gold like there is no tomorrow to hedge against an expected decline in the value of their dollar holdings? Are our relations with the Saudis deteriorating because they no longer have the leverage to maintain the petro dollar? Who will benefit from devalued currencies? In Brave New World Revisited Alduos Huxley wrote in 1958 ” Tyranny requires a permanent state of crisis”. Are we on the verge of another endless war? Will people eagerly go marching off waving their flags? Will they bother to ask why? The leaders of Lehman Brothers and Bear Stearns were clueless right up to the day their institutions collapsed. Are our national leaders just as clueless? Who’s really running the show? I invite any commenters to offer their answers.

    • XSANDIEGOCA

      America’s Leaders kowtow to Beijing. We no longer matter.

    • AK

      These are all very good questions and I will give you my take based on the evidence that we see around the world today. There is no question that the days of the dollar as the reserve currency are numbered. The U.S. will do EVERYTHING to prolong that for as long as possible and for years that meant selling our Gold into the market to keep the Gold prices from rising too quickly as this is a definitive sign of weakness for the dollar. China is investing into their infrastructure, so this debt will one day become productive whereas U.S. debt is nothing but unproductive, capital destroying government spending. China has strategically positioned themselves to conduct trade with all their major trading partners (excluding the U.S. of course) using the remnimbi or the currency of their trading partner. Many other countries are entering into trade agreements that circumvent the dollar as well and it is only a question of time until oil will be traded in other currencies. In the meantime, China does not care about strengthening their currency (yet). Their economy still depends largely on exports and they don’t want to sacrifice this so they are continuously debasing their own currency along with all the other major currencies in the world. China knows that currencies will ultimately crash and they are preparing for that event by accumulating as much Gold as they can possibly get their hands on. All indications are that they have accumulated at a minimum 5,000 metric tons of Gold but estimates run as high as 10,000 metric tons which is more than the 8,200 tons that the U.S. claims they still have. I have no doubt that all the gold in the U.S. is gone which is why Germany was told to go pound sand when they wanted their Gold back. NOBODY is even allowed to see the gold and that is because it is no longer there. When the currencies collapse, those who have all the gold will make the rules as to what comes next. China will be in a position to dictate what comes next and their new currency will play major part in this new global currency. Presumably Gold will play some part in that to give the new currency legitimacy because people will have lost all confidence in currencies after the collapse. That is in a nut-shell how I see things shake out and it is relatively easy to verify all these assumptions by current events.

    • Mondobeyondo

      Well – no doubt, there are sadly some Americans who don’t see a problem with relinquishing all our gold. You think I’m kidding? Some of them have no problem giving up our freedoms, so…

    • Hammerstrike

      You got 1 billion dollars but these are going to become worthless in one year.

  • Ralfine

    Sounds like 1994 in Hong Kong, when mainland Chinese came over with tons of cash and bought anything they could get.

    Office rents in central rose by 100% within a few months. My home rent rose by 50% at the end of the 2year rental period.

    For the US this could be reducing the trade imbalance with China, so would be a good thing?

    Basically, China’s population is more than that of the USA, EU and Japan combined.

    And with all banks the idea is that if you only have enough assets, you will be bailed out by the government with taxmoney.

  • Outdoorsman46

    Dont forget that another reason that china is hyper-inflating is to weaken their currency. They do this to to keep an unfair advantage in the name of free trade. LOL For decades the U.S. has been able to export her inflation but as the dollar is replaced by the Renminbi as the worlds reserve currency, China will gain that advantage. One of two things will happen when this becomes evident to the moronic imbeciles we have elected. The morons and their handlers will start WW3 with China to preserve their power or the American sheeple will wake the fu%# up and rise up to kick these traiters out. Peronally I dont think any of them deserve anything better than a firing squad but I m in a good mood today so I guess we could give them a choice between a firing squad or a one way ticket to venezuela. Remember, its better to die on your feet than live on your knees. May God bless you all. Kraig

    • hero

      There’s high inflation in china because the central bank prints money to pass the economic mistakes on the common people.

    • AK

      You got it 100% right. This administration consists of a bunch of psychopaths who have proven time and again that they don’t care about the American people and who will stop at nothing to preserve their power including starting WW3. May god help us all…..

    • Hammerstrike

      Actually no.

      1) They are mererly slowing down the rate at which the federal reserve parasite from draining the profits of their international trade.

      2) No more single world currency unless all but one superpower survives.

      3) They have turned the US military into a massive disaster. Economy to back that military has been gutted.

      4) War will cause massive panic and disorder, they would effectively loose power.

  • hero

    Chinese buying real estate in US are mostly the elite & may have connections with the communist party. They’re ready to defect when china collapses. The common chinese & small businesses have no money. The country is almost broke with real estate bad loans totaling more than $3.6trillion officially. Add in regional govts & it may double. In total, it’s more than the $2trillion 2008 real estate crisis in the US. 2014 is predicted to be the toughest year for the china when QE in the US ends. I wouldn’t be surprised if the communist party ended next year.

  • md

    China is also buying up the smaller aircraft manufacturers- Cirrus, Glassair, and now Hawker-Beechcraft. One model of Cessna is now made in China

  • nekksys

    With the details of this story fresh in my mind, I can now say without hesitation or reservation the coming economic collapse will be of abolustely astronomical proportions. The ensuing finance-, social- and nutrition-based conflicts that will arise out of this collapse will be unlike anything that has ever occurred throughout the history of the world.

    Folks, if you aren’t prepared to kill to keep what you have, are not ready to provide for yourself and your family, unwilling to hunt or fish or farm to survive, then you will be a casualty of this catastrophe which lies ahead of us. Make no mistake about this: death and brutality will become the normal way of life after everything falls.

    • xander cross

      I think that you’re right on this one. This is why the media distract many of us with football, mindless reality shows, pointless music. They need to distract you so you won’t noticed the collapse.

  • Alan Whittier

    “the gigantic debt bubble (…) is about to burst”

    How often have we been told that?

    And?

    Nothing happened!

    The truth is, we have seen a very dramatic recovery! It drives me mad when hearing all that bubble burst, crash stuff.

    Let’s face it: Most of the people who are telling you this are just angry because they didn’t buy stocks back in 2009. They are ANGRY.

    • Airedale

      On the other hand, if you adjust for inflation you’d be surprised how worthless your money would be.

    • AK

      That is so naïve. Just because the debt bubble hasn’t burst, it’s not going to happen? People warned for years about a housing bubble and they were ridiculed until the very end for suggesting such a preposterous thing. The debt is unsustainable. It is a 100% mathematical certainty THAT THE DEBT BUBBLE WILL BURST!!! Mark my word, this will happen – period – the end. The big question is WHEN? Everybody who has proclaimed that is should have happened in a given month or year is simply a fool – they are not wrong they are just fools for sticking their necks out to predict the impossible. NOBODY can predict WHEN this will happen, only THAT it will happen. If you can’t see that you are completely delusional and you will be swept away with debt bubble debris that is going to hit as hard as anything we have ever experienced in our life-time.

    • Gay Veteran

      dramatic recovery?!?!?!?
      LOL, for the banksters!

  • DJohn1

    There is a finite amount of Gold that is all ready mined on this planet. What that Gold is worth is anyone’s guess. When I was growing up we had a set value of $35 per ounce. Then Nixon put it on the open market and temporarily it went to over $600 an ounce. It went to around $350 an ounce when the Russians dumped their gold on the market in the 90s. When 9/11 happened, we spent it up to around $1600 an ounce or better.

    Inflation should be timed with the growth or lack thereof, of population growth. So if the planet has a gain in population, we need additional funds floating out there to support that growth.
    What really happens is the wealth all goes to a small portion of the population of the planet, and the rest of us just get less wealthy as time goes on.
    Still, there has to be enough free floating currency for the population to exchange goods.
    Gold is simply a substitute. The real currency out there is whatever it costs for food to exchange with dollars and cents. The ownership of land and houses comes next. Then the ownership of transportation is a distant third.
    Clothing was in third but I put it fourth in value right now.
    The cost of owning land in the United States really offsets its value. Property taxes are rampant here. So even if you own your own house, you have to contend with debt to own it.
    Generally real estate in the past has gone up approximately 4.5% per year. No longer is this true. It is going down in value as the number of wage earners have gone down.

    Just like gold, there is a limited amount of real estate and land. What is sending it through the basement is the available wage earners willing to tie themselves to real estate in very unstable times. No one can afford to buy if the prices continue to go down.

    So to me the currency of the future has to be food.
    Everyone needs it.

    The question with China becomes “Who will feed China?” My answer to that is whomever feeds China will rule China. That is regardless of wars and talk of wars.
    China and India hold the most enormous tigers ever to come about. That is the population of these countries is enormous. If and when they cannot feed that population then those in power will simply revolt and a new type of government will have to come about. The tiger is being held by its tail. To turn loose of that tail will be the end of those countries.
    Now the rest of us are also holding onto that tail!
    All it takes is one of those countries to decide aggression is the answer to their problems. Kill the population that needs to be fed.
    And that is the problem we all face.

  • jt4

    When the collapse occurs, is it possible the world will simply push the reset button as though nothing really happened?

  • Jon Krüger

    Economic Collapse: “the amount of money that has been loaned out by banks in China..in the past five years.. Chinese bank assets have exploded by an unprecedented $15.4 trillion”

    JK: This is new currency being put into circulation by private banks creating money out of thin air, using the fractional reserve system. It is not new currency being issued by the government of China.
    China still owns its central bank and only it creates paper-and-coin currency(Yuan). But all the other banks and financial institutions are cloning it as virtual currency on computer databases in the form of credit. That’s the only reason China has galloping inflation. China is holding banks fractional reserve ratio to about 1 to 10(1). So when seed-money passes through n banks it can be cloned by a factor of 10ⁿ.
    The NWO prefers to financially colonize a country by first taking over its central bank, but if they can’t, they have a workaround. They can do it entirely through taking control of other banks and using the fractional reserve system. China is one example, and Canada is another(2). Canada too, kept control of its central bank and the paper-and-coin currency it issues, yet Canada got colonized anyways. 97% of the money in circulation in Canada today is NOT issued by the Bank of Canada.
    BOTTOM LINE:
    The government of China has lost control of the money supply. Many of the institutions in China cloning the Yuan are at least part-owned by foreigners. This means China has been colonized by the same people who financially colonized the U.S. in 1913.

    • Jon Krüger

      FOOTNOTES:
      (1) h**p://news.xinhuanet.com/english2010/business/2011-08/20/c_131062964.htm
      [[The new rules will keep the minimum capital adequacy ratio for banks of systematic importance at 11.5 percent, while raising the ratio for banks of non-systematic importance to 10.5 percent.]]
      (2) h**p://www.youtube.com/watch?v=mUjBLLzYPGg
      “Perpetual Debt: Bank of CANADA & why we should use it instead of Wall St.”
      h**p://www.youtube.com/watch?gl=CA&hl=en&v=O8Zl1Wax8MI
      “THE CRIME OF THE CANADIAN BANKING SYSTEM” – Bill Abram

    • AK

      Interesting theory. The most powerful bankers created the Federal Reserve in 1913 as you stated and this was done to fleece the American people and they have done a remarkable job at that. Now that they have pretty much sucked us dry they have to go where the new wealth is being created which clearly is China. That makes perfect sense. Do you have any reading material to back that up? I would love to read more about this.

    • esqualido

      So if the Chinese have been printing yuan five times faster than the Fed, how did their currency appreciate vs the USD from 8 to 6?

  • Lee Oswald

    A very poorly reasoned article.

    China is NOT fueling a debt bubble at all. They are Amerika’s largest CREDITOR nation and as such have been stockpiling U.S. Treasuries for decades, purposely keeping the RMB ( ¥) undervalued in order to favor China’s export-based economy.

    However China has very recently announced, this past week in fact, that it is shifting gears altogether and ABANDONING it’s export-based model in order to focus on developing INTERNAL CONSUMPTION instead. They’ve labeled it DE-AMERICANIZING. Hence they are selling-off their massive holdings in order to convert soon-to-be-worthless U.S. dollars into tangible assets such as real estate, factories, and businesses.

    Make no mistake about it: the USSA is FINISHED, while China is just STARTING.

    • AK

      Well put, and you are right the USA will become the new USSA as it desperately clings to power against an increasingly hostile population. THEY know that this is coming and that is why they have declared war on the American people and will stop at nothing to take away each and every one of our rights. It is so obvious by now that a blind person can see it coming.

      • Hammerstrike

        Unlike the “gang of 8″, Obama and his clique knows how to deal with mobs.

  • http://aircrap.org/ Dave Murphy

    HEY USA SELL CHINA 1,000 COAL EXHAUST SCRUBBERS!

  • http://www.breakouttheory.com/ BreakoutTheory.com

    So long as China is reinvesting, they really have nothing to worry about. Much of that money is going into growth and expansion. What should we Americans do? Get rid of the attitude, learn to speak Chinese, and conquer the Chinese market.

    • Rodster

      Yes, Keynesian economics is always the path to long term prosperity. Just ask the US, Japan, UK and the EU.

  • davidmpark

    WOW! Saw this one coming!

    And after all the nasty comments I got last time about how I doubted China had a strong economy. They bought it all with inflated fiat (fake) currency just like everyone else! :)

    As to their gold and silver reserves, I’d like to see some hard proof they still have it. Most of the time, when commies go for purchasing precious metals it’s to launder funds. Bet most of that gold got exchanged into something else they want to hide. Probably weapons. Their belligerent actions near Japan suggest that.

    Their currency hits hyperinflation and common distrust, the only way they’ll hold onto those colonized lands and reserves is through military force. They claim in total war they can loose millions of citizens without any problem (more proof they can’t take care of themselves), yet, that’s only on the mainland. Even they can’t constantly send troops and equipment to replace those ruined by active fighting. And the Chinese wouldn’t rule out nuclear strikes. They’re commies after all.

    No matter what happens in the years to come, all those systems and methods used to control people will collapse. Only to be reinstated over and over and constantly failing. The simple, common, God loving man willing to do their best and live in peace will save this world.

    • xander cross

      Interesting times we live in isn’t it.

      • davidmpark

        Very!

    • xander cross

      Now we understand why their been so much war games as of late. It’s not about money anymore, its about war over land and resources such as food, water, and materials.

      • John Smith

        And the resulting slave populations

  • Guy

    So this confuses me. So then… we “win”? This is pretty hard to believe (that they’d fall for this cr*p) but that’s maybe what I’m seeing here. The gold is of no concern seriously, if they had to go to gold they’d last 6, maybe 7 years at a greatly austere standard of living before they were out of it, as you can’t print it. So… then if that doesn’t work as anything more than a quick shot of economic adrenaline… what then? They crater first? Does that mean we “win” or does that mean everyone loses?

    • xander cross

      Everyone loses economically, but militarily, that might be different?

  • Mondobeyondo

    Reminds me of that David Bowie song, “The Man who Sold the World”. That’s America, folks. We were “the man”. We had the world in the palm of our collective hands, for the past 60 years or so.
    And we have literally sold the world to, well, the rest of the world. Our industry has been dismantled and sent to…. China, among other nations.
    We as Americans, ought to be ashamed of ourselves. Unfortunately, collectively we’re too concerned about greed to have any shame.
    Happy Thanksgiving!

    • K

      Happy Thanksgiving, back at you Mondo.

  • Mondobeyondo

    “M2 in China has grown by about 1000% since 1999…” – WOW!
    China, young apprentice, you have learned well from your (soon to be former) master. May the money forces be with you, because you’re about to suffer the same fate as the U.S. if you continue.

  • wombobobo

    gary wants to tax the chinese hard

  • FounderChurch

    China buying up America: Don’t worry about that… Instead worry about the BASIC health of our nation and our families. That is what to worry about. Both are very very sick. Our real troubles start and end with our Genocidal Holocaust birthrate caused not by abortion but by birth control. There are a hundred other problems but they mostly stem from our birth dearth. Search “FounderChurch”

  • 2Gary2

    The Walton Family, which owns Walmart, controls a fortune equal to the
    wealth of the bottom 42% of Americans combined. Their fortune was built
    on a long and dishonorable record of violations of worker rights and
    keeping down worker pay to maximize their corporate profits.

    Tax these rich and spread the wealth. They are a big reason we are beholden to China.

    • wombobobo

      move to china you communist

      • Colin

        As far back as the 1870s, people who spoke out against corporate abuse of workers were labeled as Communists. When railroad workers went out on strike in the 1877 Railroad Strike, the New York World reported that Pittsburgh, one of the cities affected by the strike, was “…in the hands of men dominated by the devilish spirit of Communism.” (American History, December 2013, pg. 59)

        (In 1877, the railroad companies had slashed worker wages during a time of depression. The workers went on strike. The President, for the first time in our country’s history, intervened and used the power granted to him as Commander-in-Chief to end the strikes. In three years, the workers’ wages were restored.)

  • Joe Kleinkamp

    Lost all respect for Megyn Kelly on FOX tonight. Up until I saw the real Megyn tonight I had been a big fan of hers. She is smart and educated and I’ve seen her go toe to toe with O’reilly and win. Tonight she really disappointed. She asked the question to a guest — if someone doesn’t like working at Walmart why don’t they just go work somewhere else? She’s intelligent enough to already know the answer to that question. The answer is that many or even most of those employees already did work somewhere else but, thanks to the globalism supported by both major political parties, they are left with no choice but to work for low retail wages at Walmart or any number of other corporate chains selling goods produced by Chinese workers doing the jobs they once did. For the first time Megyn came across as the spoiled little elitist who just can’t understand why everyone isn’t capable of achieving a college degree and the looks and personality to get rich smiling out at millions of adoring fans.

  • Maxx

    You have to understand fellos. If things get that bad in China, all they have to do is cash out on all that dept (bonds) they bought from us. That will keep the going for a while.
    China does not want us to go under, we are there number one supporter ( comsumer)
    Plus the Rothschilds will fix things when they feel like it……

    • mawq

      How long can the world keep buying crappy cheap chinese goods? I always try shop local.

    • forgodssake

      “Their number one…”

      “THERE” = that tree is over “there”.

      THEIR = possessive, “their stuff”.

  • yummmmmm

    yehey, so the Chinese were wiser than we thought. The tightening wont affect them much but the FED can’t do anything to turn back the rushing tsunami against it. Is this what they call just “grabbing financial control”? Is this the hidden weapon why China provoked America to fly over the Senkaku so that it will have reason to “save” face & provoke the decisive financial earthquake which will give them the finanacial control? Very interesting…

  • HoHoHum

    Sorry. China’s very healthy BALANCE SHEET allows CHINA to go bonkers for a while, to perk things up … as USA did in the past (when affordable).
    ——-
    The USA today, unfortunately, let the PRIVATEERS go bonkers big-time for the last 30-years (Reagan’s new “DEREGULATION”) for personal, private, profit, AND, when the PRIVATEERS eventually went bankrupt … guess what? … the U.S. Government (PUBLIC CITIZEN) stepped right in and bought the debt from the PRIVATE sector, consequently bailing the PRIVATEERS out for more fun and personal profit at citizen expense.
    This is called the new “CAPITALIST CORPORATE SOCIALISM”. This version of “SOCIALISM” is (apparently) acceptable by all.

    • hero

      It only looks nice….scratch the surface & the money may not be there.

      During the 96 Asian Financial Crisis, many Asian countries had huge US Dollar reserves but they were all gone when they tried to cover their losses in real estate. I have no idea what happened….a typical example was South Korea. They lied a lot until they were found.

      When Asian talk money, never believe their numbers. I speak from experience as an Asian & will stand by my words.

  • tacoma

    Hey Michael, don’t you think you should start posting anything on the Chinese currency, the next major reserve currency of the world, in CNY instead of USD?

  • GSOB

    China Is On A Debt Binge And A Buying Spree Unlike Anything The World Has Ever Seen Before

    Monkey see, monkey do.

  • A D

    CHINA will want LAND & RESOURCES like water/food and it will be given to them by Oboma…

  • A D

    The USA is a shell country, owned by CHINA and the Middle East. Only a fool thinks they will not take the LAND & RESOURCES.

  • hero

    Michael, one more thing….You forgot to say how much of their statistics is real or bs. Their official GDP is about 7.9% but is it true????

    Look at electricity consumption….It is about 80% of GDP conservatively in any country & china’s GDP should be about 3.8%….I guess investment component of the GDP is inflated because they’re building empty apartments. If you do a little research, you can come up with something very interesting.

  • pissedman

    This is exactly what they did to Japan years ago. Japan bought tons of real estate and companies only to see it all crash in a spiraling downtown engineered by the fed. Hilarious. Expect the taper to come on fast when the plug is pulled. All assets are coming down across the.board as.planned.

  • Filipeeeeenis

    The Chinese are smart, if US collapse, at least they can tear down the buildings and ship back to China.

  • Ron

    Well they needed to do something with all those worthless U.S dollars. Or just demand payment and crush the USA. Some smart people we have running our country.

  • TaxpayerX

    Buying real estate Nuevo Mexico (California) demonstrates that the Chinese really aren’t all that smart.

  • Tim Dermody

    So this might not be news to many, but what i see happening is a delibrit crash of the USD. China holds about 10 percent of US debt, where US investers hold the whopping majority. With a crash of the dollar the bonds held by US investors will be virtually worthless and China will step in to buy them up at pennys on the dollar. As soon as they hold the majority of our debt, their influence and power will run concurrently. Bye bye freedoms and constitutionally protected rights. You precious children will be working the factorys here while you stand in a bread line all day. They (china) are planning to buildi a city in Upstate New York as we speak. I wonder if they’ll call that the Capitol.

  • Tim Dermody

    The Chinese are doing the same thing to us as we did to the USSR. A massive arms race that will break us and they’ll step in to fix it once we’re belly up. Ah hell, how are the Kardashians doing these days?

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