As the dollar loses value and importance, many nations are preparing to dump it.
News with Rick Sanchez –
China dumps US debt, fears dollar plunge
– Flash Points –
1 – The Fed’s unrestrained money-printing has frightened China.2 – China realizes that US dominance is coming to an end.
3 – China explicitly stated that these moves are only “the beginning.”
4 – The dollar’s status as global reserve currency puts China and other nations in a “politically and economically disadvantageous” situation.
– Synopsis –
Wary and Worried
In fact, back in August 2015, China had already sold off $180 billion worth of treasuries. In 2019, it dumped another $110 billion worth of treasuries, and over the past month or so, it has sold off a further $10 billion.
Apart from its fears owing to the Fed’s money-printing frenzy, China is also wary of the Fed’s threat to lower interest rates to below zero. While the Fed recently stated that it will not do so in the near future, China is obviously concerned about holding a dollar asset that is becoming increasingly weaker.
(Selling) Off to a Good Start
Although China has been divesting US treasuries for over 5 years now, it refers to the recent moves as only a “beginning.”
The real “beginning” dates back at least 5 years. We can say that China is off to a slow but steady start, and now it seems to be kicking into high gear. Apparently it plans to dump more and more of the US debt that it holds. Once it goes into full “dollar-dumping” mode, the effects will be profound and horrific.