The Basics of Forex, or Foreign Exchange, or Currency Reserves and how this will decimate the poor in America
“Deposits of a foreign currency held by a central bank. Holding the currencies of other countries as assets allow governments to keep their currencies stable and reduce the effect of economic shocks. The use of foreign exchange reserves became popular after the decline of the gold standar...d.”
This is good. Unless it becomes unbalanced, or in America’s case, unless we devalue the US Dollar to such a point that those holding our dollar band together against us.
Headline in Financial Times this morning; China’s Forex reserves reach $3.4tn - Last updated: April 11, 2013 - 12:17 pm
This headline will NOT make the regular news, but should concern you all, as I believe it is about to impact America in a way that Sam Zell, the CEO of Equity Residential, one of America’s largest Real Estate Investment Trust told CNBC, could lead to a drop in the US standard of living by as much as 25%.
China’s mountain of reserves reached $3.44tn – roughly the size of the German economy. It is mostly in Dollars, followed by Japan’s Yen.
Cheng Siwei, head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing".
"If they keep printing money to buy bonds (Through our Treasury) it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.
"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," Cheng added. (This means they’re secretly buying it)
Mr. Cheng said the Fed's loose monetary policy was stoking an unstable asset boom in China.
"This is where Greenspan went wrong from 2000 to 2004," he said. "He thought everything was alright because inflation was low, but assets absorbed the liquidity." *He is referring to our Housing Bubble*
"The US spends tomorrow's money today," he said. "We Chinese spend today's money tomorrow."
"He who goes borrowing, goes sorrowing," said Mr Cheng. It was a quote from US founding father Benjamin Franklin, Mr. Cheng noted.
Very sad that China knows our history better than we do and is adhering to what our founding fathers taught us about monetary policy and we’re ignoring it.
The unilateral moves by China are a sign of the growing impatience with America’s unwillingness to get its act together. The US' public debt has reached 100% of GDP and shows no sign of a let-up. China is also signaling its willingness to confront the US, if it is required to protect its interests. It is doing so by divesting itself from our dollar as quietly as possible so as not to impact the global markets and hurt themselves.
If they don’t want our dollar anymore, should you? Why is our largest creditor not happy with the dollar? It’s simple; we are devaluing it at a record pace by spending more than we produce. The effects of this will be devastating.
Liberals and Democrats claim they want to help the poor and anyone and everyone else they deem worthy. They claim, I and those like me are simply white, angry, racist, conservatives, who are heartless. Here is the irony of it all, if my fears come true and the Liberals and Democrats continue to go forward with their plans under Obama and state governments to live beyond our means and tax and spend more than any time in our history and at record levels never before attempted in the history of the world, and China as well as our allies grow tired of this, they will have no choice but to act. When they do, there will be no more money or ability for Liberals and Democrats to use other people’s money to help those they claim they want to help.
Bottom line, their folly will be the poor’s worst nightmares realized. And it is already happening and you have not a clue. Why? Why would Obama and others allow this? "Chris, you're over reacting." All I can tell you is that if one wishes to remove America's ability to spread God, self reliance and freedom, destroying our US dollar is the quickest way.