Thursday, September 21, 2017

China’s Massive Foreign Reserves are a Threat to the US Dollar

China has accumulated a large pile of foreign reserves, the equivalent of $3 trillion. This accumulation, perhaps over $2 trillion of it in dollars, is the consequence of past currency management, the objective having been to enhance the profits of Chinese-based manufacturers exporting to other countries. The early development of the Chinese economy was just an initial phase that encouraged strong flows of inward investment followed by net exports. Furthermore, the Chinese are avid savers, putting aside as much as 40% of their earnings, leading to large and persistent trade surpluses.

On the ground, Chinese economic success has brought substantial improvements to the lives of China’s population. The economy is now being refocused towards services and technology, maturing from its export-led model into a fully-fledged advanced economy with a rising middle class. Furthermore, China has a requirement for enormous quantities of raw materials to satisfy her infrastructure plans, which encompass the whole of Asia.

The need for holding large quantities of dollars, the result of neutralising capital inflows and then suppressing the yuan for export price competitiveness, has now passed. China requires far more modest dollar balances, so she will almost certainly invest them in stockpiles of base metals and the raw materials required for the future. This change in policy is already evidenced by the yuan rising against the dollar by over 7% this year, cheapening commodity imports by this amount compared with dollar prices.

There can therefore be little doubt that China will be a big seller of dollars in future. Her problem is if she is too aggressive in this policy, she will trigger selling by other Asian central banks, and could even risk having her $1.1 trillion holdings of US Treasuries frozen by the US Government. She must tread carefully, unless it suits her to become more aggressive in an escalating financial war. Her policy therefore, is likely to be a seller of dollars into strength rather than weakness. The consequence for the dollar is any price recovery is likely to be capped, and therefore limited in scale and duration.

Wednesday, September 20, 2017

We're Going to Wake Up, and Things Will Be Fundamentally Different

The stock market is at all time highs and precious metals are slumping. But not for long. "One day, we're going to wake up, and things will be fundamentally different," Rob Kirby warns on this week's SD Metals & Markets wrap. The market manipulation will end, and precious metals will skyrocket.

- Source, SD Bullion

Our Enemy is Truly Evil

Radio host, patriot and retired orthopedic surgeon Dr. Dave Janda is an outspoken critic of Obama Care. Dr. Janda says, “Obama Care is cancer–period. You can’t tweak cancer. You have to cut it out. You have to destroy it, and any plan that does not completely get rid of Obama Care, the patient is going to die–period. The patient is going to die.”

So, is the latest push by the Republicans going to fix Obama Care? Janda, who is an expert on health policy, says, “It’s going to make it a little better. You know when someone is serious when they start talking about reducing the control of government and the control of insurance companies when it come to the decision making process about care for each and every patient in our country.”

Janda says the health care issue is part of the control mechanism of the Globalists and New World Order (NOW). Janda explains, “They despise anyone who thinks, anyone that doesn’t slurp their soup that they hand out every morning to us, whether it be the lame stream fake media on TV or radio, the New York Times or the Washington Post. They despise anyone who thinks.”

Janda thinks the Globalists are Luciferian. They support human trafficking, especially in children. The NWO controls our politicians with dirty details involving abuse and molestation of children. Dr. Janda says, “Correct, and many people cannot get their head around this. They think it’s conspiracy theory. They think it’s paranoia. . . . While I was working on health care policy, I ended up meeting people in the intelligence agencies, the Pentagon, DEA, Secret Service and FBI. . . . I asked these folks what percentage of these elected people in the House of Representatives and in the Senate, federally, what percentage of them have control files that are just doing the bidding of the globalists? They essentially own the show. The standard answer I get is 99%.”

Janda thinks this is the weak spot for the Globalists and the NWO, and Janda contends, “I believe there is a concerted effort to take down the child abuse networks around our country and around the world. We just had a G-20 meeting a couple of months ago. The lame stream fake media didn’t report this, but thousands of arrests occurred right at the beginning of the G-20 meeting. In fact, some of the participants of the G-20 meeting were led out in handcuffs because of their involvement in human trafficking and child abuse issues.”

Dr. Janda brings up the human trafficking issue because of one simple reason. Dr. Janda says, “The reason why I bring this up is because each and every one of our listeners has to know who the enemy truly is. If we don’t identify who our enemy is and how evil they are, we will never be able to defeat them.”

On taking down President Trump by taking down the global economy, Janda says, “I think a financial tsunami is about to hit our shores. The elite always try to give us a heads up before they flush the toilet while we serfs are still in the shower.”

Dr. Janda says one tip was given recently by an expert on FOX News who said, “Someday people are going to wake up, and gold is going to be $3,000, $5,000, heck even $6,000 an ounce.”

Dr. Janda gives three other recent warning signs given by the mainstream media about gold prices that tip off a big financial disruption is drawing near.

- Source, USA Watchdog

Monday, September 18, 2017

Ron Paul on Why Politicians Lie

Politicians are known to be avid liars. Why is that? The obvious reason is because there are no ramifications. When a politician campaigns, he's not under oath or contract. Legally, he can say whatever gets the votes. Once a government moves beyond the protection of liberty, it becomes a government of, by, and for the greatest liars.

- Source, Ron Paul

Friday, September 15, 2017

The Economic System Is Moving From West To East, This Is The End Game

Bill Holter of JSMineset discusses how modern day economic system is moving from West to East. The torch is being passed, and not because of the will of the people, but because this is what the elites want to happen. 

The globalist elites are hell bent on seeing the West fall, and to do so, they need to grind our economic engine to a halt, while transferring the might to the East.

Bill Holter explains.

- Video Source

Wednesday, September 13, 2017

Lefties Can't Contain Themselves: Turn Hurricane Relief Telethon Political

For a short while, it appeared that people would come together, that some unity would be seen, that differences would be put aside and the country would make lemonade out of lemons.

This is exactly what unfolded on the ground, in areas devastated by the recent hurricanes that we have witnessed. Once again, hurricane season wrecked our coastlines, leaving ruin and misery in its wake. But, also left in its wake was acts of kindness by the people on the ground who came together to help one another, no matter their race, color, or creed.

Unfortunately, the elitist left, the Hollywood "bureaucrats" just couldn't help themselves. These totally and utterly disconnected degenerates of society took what was SUPPOSED to be a non-partisan relief effort and twisted it into something else, a chance to push their agendas.

The first to do so, and most notable was singer Stevie Wonder, who started off the evening with a "bang", or a "flop", depending on your matter of perspective, by stating the following;

“Anyone who believes that there’s no such thing as global warming must be blind or unintelligent.”

What is even more hilarious, about this ignorant comment, is the fact that he preceded it with a message of unity, a message that was supposed to represent the night's event. Well, I guess he has a memory
 shorter than that of a goldfish, because he promptly threw that message out in the same breath.

Following this, we witnessed a whole string of left dominating celebrities grand stand on stage, with all their smugness.

The next to interject their message was none other than the "fabulous" Beyonce, the queen of the New World Order and one of the favorite puppets of the global elites. Who had the following message for her captured audience:

"During a time when it’s impossible to watch the news without seeing violence or racism in this country. Just when you think it couldn’t possibly be worse, natural disasters take precious life, do massive damage, and forever change lives.”

Going on, Beyonce said, “The effects of climate change are playing out around the world everyday."

They just can't help themselves, can they?

Luckily, even with all the nonsense being interjected by these idiotic "celebrities", the Hand in Hand hurricane relief telethon did manage to raise an impressive $44 million dollars.

Now, we just hope that this money actually gets to make it to the victims, and is not siphoned off and wasted, as so many charities have proven to do with the funds they receive from honest, hard working people.

And next time a disaster like this happens, let's hope our society continues down this path that we are now heading, the path of rejecting these celebrity icons and the power the Mainstream Media places in their hands.

Tuesday, September 12, 2017

Mish Shedlock: There's Been A Bullish Trend Change in Gold

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management.“MikshTalk” is a global economics blog where he typically writes several articles a day about topics such as interest rates and central bank policy, gold and precious metals, jobs, and economic reports, all from an Austrian Economic perspective.

During this 25+ minute interview, Jason starts off by asking Mish if he thinks the Federal Reserve will raise interest rates anymore in 2017 and if that is correlated with the Fed trying to reduce its balance sheet? Mish thinks that Fed is probably done raising rates for 2017 and maybe even 2018. He thinks the Fed may even have to reverse course in the near future and that the Fed meaningfully reducing its balance sheet is a pipe dream considering the global economy, in his opinion, is not doing well.

Jason and Mish discuss the unexpected very large rally in copper prices and Mish thinks there's been a (bullish) trend change in gold recently. Gold may have bottomed in late 2016 or early 2016, but hardly anyone bought that bottom. Mish thinks more people are now buying the dips in gold and gold stocks. Jason and Mish also discuss why deflation is really good and why politicians, bureaucrats and central banks are always fighting deflation, China's economy, what happens in a US/China trade war, how Illinois trying to raise state taxes 33% on residents won't solve anything and if Mish likes anything President Trump has done so far?

Monday, September 11, 2017

Ron Paul on the Fed, China and Whats Happening With Gold

Dr. Ron Paul discusses the Fed and China having their currency convertible to gold in trading for oil and that its a serious change for the U.S. Gold will go much higher on this event.

- Source, Ron Paul

Friday, September 8, 2017

Can Kicked: House Passes Debt Ceiling, Government Funding, $15 Billion Storm Relief Package

After the Senate passed Trump's "pivotal" bill to extend the debt ceiling by three months, while buying the government enough time to avoid shutdown until December 8, as well as $15 billion in funding for storm relief, moments ago the package got a majority of the House to vote on it...


Officially kicking the can on the government shutdown until mid-December, while buying the Treasury enough time until some time in March before it once again runs out of cash.

- Source, Zero Hedge

Dr. Chris Martenson: The Everything Bubble? Markets Make No Sense Anymore?

Jason Burack of Wall St for Main St interviewed returning guest, scientist, former corporate executive and the Co-Founder of Peak Prosperity, Dr. Chris Martenson. Chris is also the co-creator of the popular Crash Course about the 3Es: the economy, energy and the environment and he co-authored the book, Prosper!: How to Prepare for the Future and Create a World Worth Inheriting in 2015.

During this 25+ minute interview, Jason starts off by asking Chris a big picture question about all the coordinated market intervention by central banks with at least $18 trillion in money and credit created out of thin air since the 2008 financial crisis and how it has propelled valuations in stocks, bonds and real estate higher without gold and silver doing much? Chris says this central bank coordination, manipulation and interventions has created the "everything bubble" where a lot of things are divorced from reality and make no sense anymore. 

Jason and Chris discuss how short term rent seeking myopic behavior by economic and political elites means near unlimited bailouts or spending is available for banks or for new wars but no sound long term investments are made into rapidly declining infrastructure in the US.

- Source, Chris Martenson

Thursday, September 7, 2017

Antifa Plays Into The Hands of the Police State

Many people involved in politics swear by the notion that “the ends justify the means,” which is typically the sign of a self-serving actor attempting to justify questionable if not downright evil action in order to get what he or she wants. While pursuit of “the greater good” is often put up for public consumption, the driving force behind this sort of action is almost always personal gain of some sort. This is what most politicians do for a living, which is why they are justifiably hated by the general public.
The moment you justify one very wrong action to achieve a noble goal, what’s to stop you from next even more unethical action, or the next and the next? Nothing. This is what’s so dangerous about going down such a path. Indeed, those who fight monsters often end up becoming the exact thing they claim to be fighting. The world doesn’t benefit from this, only the person who has gained power as a result does, at least superficially. Ultimately, even that person doesn’t benefit when all is said and done. A person who attains their goal by sacrificing principles is a tormented, miserable person. They may seem to “have it all” from the outside, but deep down they hate themselves and what they’ve become. There is no peace. I believe karma eventually catches up to everybody one way or the other.
– From May’s post: Do Ends Justify the Means?
One of the primary motivating factors that drove me to start writing publicly on a daily basis, was a recognition that the chaos and cultural lack of cohesion resulting from the thievery of the financial crisis and the increasingly corrupt, socioeconomic paradigm we live under would provide the pretext for “the state,” whether governed by a Democrat or Republican, to further dismantle civil liberties and usher in a country increasingly defined by less freedom. This was a motivating concern under Obama and it remains a motivating concern under Trump.
As I’ve warned repeatedly over the years, at some point the “war on terror” would be brought home to the good ol’ USA, with all enemies suddenly being labeled domestic terrorists. This is happening right now, thanks in large part to all the media hysteria about antifa and neo-Nazis.
Personally, I try to keep things simple and think it’d be wise if others did did the same for the sake of our future. I believe offensive violence is almost never justified, while self-defense almost always is. The purported objective of any group is irrelevant. The worst tyrants in the world always claim to be working for “the people” as they lock people up in gulags or concentration camps to torture and kill them. Ends don’t justify the means. The means are everything.
The reason I’m writing this post is to demonstrate that antifa is playing right into the hands of those who wish to further the objectives of a burgeoning police state. They provide fuel for unconscious people on the other side of the political spectrum who see their thuggishness and then squeal to the government to “do something about it.” If I didn’t know better, I’d assume antifa were probably a bunch of deep state operatives trying to convince the groveling public to cry out for a strong hand government solution. Since I have no evidence to back this up, I’ll just go ahead and call them useful idiots.
Importantly, it’s not just those dressing up like ninjas punching people for wearing polo shirts who are the only useful idiots. Those on the “right” begging the government to call them terrorists are just as foolish. As I tweeted yesterday:
For more on that angle, see my recent article titled: Stop Asking the Federal Government to Label Groups You Dislike ‘Terrorists.’
Unfortunately, it seems this train has already left the station. The results for those of us who love freedom might not be pretty.
As Politico reported earlier today:
Federal authorities have been warning state and local officials since early 2016 that leftist extremists known as “antifa” had become increasingly confrontational and dangerous, so much so that the Department of Homeland Security formally classified their activities as “domestic terrorist violence,” according to interviews and confidential law enforcement documents obtained by POLITICO.
Since well before the Aug. 12 rally in Charlottesville, Virginia, turned deadly, DHS has been issuing warnings about the growing likelihood of lethal violence between the left-wing anarchists and right-wing white supremacist and nationalist groups.
Previously unreported documents disclose that by April 2016, authorities believed that “anarchist extremists” were the primary instigators of violence at public rallies against a range of targets. They were blamed by authorities for attacks on the police, government and political institutions, along with symbols of “the capitalist system,” racism, social injustice and fascism, according to a confidential 2016 joint intelligence assessment by DHS and the FBI.
Those reports appear to bolster Trump’s insistence that extremists on the left bore some blame for the clashes in Charlottesville and represent a “problem” nationally. But they also reflect the extent that his own political movement has spurred the violent backlash.
“It was in that period [as the Trump campaign emerged] that we really became aware of them,” said one senior law enforcement official tracking domestic extremists in a state that has become a front line in clashes between the groups. “These antifa guys were showing up with weapons, shields and bike helmets and just beating the shit out of people. … They’re using Molotov cocktails, they’re starting fires, they’re throwing bombs and smashing windows.”
Almost immediately, the right-wing targets of the antifa attacks began fighting back, bringing more and larger weapons and launching unprovoked attacks of their own, the documents and interviews show. And the extremists on both sides have been using the confrontations, especially since Charlottesville, to recruit unprecedented numbers of new members, raise money and threaten more confrontations, they say.
The way to stop this is actually pretty simple. Don’t get sucked in. Don’t pick “a side,” and don’t pressure others to do so. It’s just gang warfare and it won’t lead to anything good.
Moreover, we must denounce offensive violence as a political tactic and marginalize those who advocate it. 90% of people don’t want anything to do with street violence irrespective of how much you despise the system, and believe me, I despise it. Don’t give into the negative energy. Negative energy creates negative outcomes.
Now back to Politico.
Even before Charlottesville, dozens and, in some cases, hundreds of people on both sides showed up at events in Texas, California, Oregon and elsewhere, carrying weapons and looking for a fight. In the Texas capital of Austin, armed antifa protesters attacked Trump supporters and white groups at several recent rallies, and then swarmed police in a successful effort to stop them from making arrests.
Rallies are scheduled over the next few months across the country, including in Texas, Oregon, Missouri and Florida. Authorities are particularly concerned about those in states where virtually anyone, including activists under investigation for instigating violence, can brandish assault rifles in public.
“Both the racists and a segment of violent antifa counter-protestors are amped for battle in an escalating arms race, where police departments are outmaneuvered, resulting in increasingly violent dangerous confrontations,” said former New York City police officer Brian Levin, who has been monitoring domestic militants for 31 years, now at the Center for the Study of Hate and Extremism at California State University, San Bernardino. “It’s an orchestrated dance. The rallies spill over into social media and then even more people show up at the next rally primed for violent confrontation.”
Some of the DHS and FBI intelligence reports began flagging the antifa protesters before the election. In one from last September, portions of which were read to POLITICO, DHS studied “recent violent clashes … at lawfully organized white supremacist” events including a June 2016 rally at the California Capitol in Sacramento organized by the Traditionalist Workers Party and its affiliate, the Golden State Skinheads.
According to police, counter-protesters linked to antifa and affiliated groups like By Any Means Necessary attacked, causing a riot after which at least 10 people were hospitalized, some with stab wounds.
“By any means necessary” is basically the dictator’s blueprint. Anyone who espouses such ideology is an unconscious threat to society.
At the Sacramento rally, antifa protesters came looking for violence, and “engaged in several activities indicating proficiency in pre-operational planning, to include organizing carpools to travel from different locations, raising bail money in preparation for arrests, counter-surveilling law enforcement using three-man scout teams, using handheld radios for communication, and coordinating the event via social media,” the DHS report said.
Several state law enforcement officials said that all of those accelerating factors have come to pass. And recent FBI and DHS reports confirm they are actively monitoring “conduct deemed potentially suspicious and indicative of terrorist activity” by antifa groups.
The two agencies also said in their April 2016 assessment that many of the activities the groups engaged in “are not within the purview of FBI and DHS collection” due to civil liberties and privacy protections, including participating in training camps, holding meetings and communicating online.
Read the above paragraph over and over until you get it. The feds will claim they need the public to give up more civil liberties to fight “domestic terrorists.” If you’re dumb enough to give into this, I don’t know what to tell you.
All that said, I will not stand here and tell you that unconscious gangs fighting in the street isn’t a threat. It’s certainly becoming an issue, but we need to take a step back, take a deep breath, and not respond emotionally. Indeed, I think the recent approach voiced by the mayor of Berkeley is wise. He suggests treating groups like antifa as gangs.
Here’s some of what he said:
BERKELEY (CBS SF) — Mayor of Berkeley Jesse Arreguin on Monday said it is time to confront the violent extremism on the left by treating black-clad Antifa protesters as a gang.
“I think we should classify them as a gang,” said Arreguin. “They come dressed in uniforms. They have weapons, almost like a militia and I think we need to think about that in terms of our law enforcement approach.”
This is a preferable approach to using the word “terrorist” since the latter definition causes people to lose their minds and justify a destruction of the Constitution. Let’s not be stupid.

- Source, Silver Doctors

Wednesday, September 6, 2017

The War Against ALT Media Goes Hot

The mainstream media is at war with the ALT media, this has been this way for years, I know personally, because I have been heavily involved in the ALT media, since its early days of inception, something I am incredibly proud of, as I have watched it balloon in size and rise to be the dominating force that it is today.

Throughout this entire time period, the Mainstream media, lamestream media, dinosaur media (pick the name you want to use and insert it here), has kicked and screamed, and doubled down on what has resulted in their rapid decline. Which has been their greed and their williness to sell their souls to the highest bidder. Utterly disregarding their journalistic integrity.

I watched as the MSM attempted to flag mine and others articles on Zero Hedge and Gold Silver Liberty, as #FakeNews, which spectacularly blew up in their faces. I watched as they ate their own words and regretted their actions, rightfully being labelled by Donald Trump as the REAL fake news.

We have had many victories in this battle, but now the war is about to enter into a whole new stage, moving away from the cold war status and not only going hot, but nuclear.

Long has it been known that the internet media monopolies, such as Google, Twitter and Facebook, lean far left. They showed their hands, as did the Legacy media during the elections, where they cast off the illusion of the "hands off" approach and openly backed Hillary Clinton in the election, pledging their allegiance to the left forever.

Now, they are entering into combat and going after conservative websites, attacking their domain registars and forcing them to take down website after website.

In addition to this, Twitter, Facebook and Youtube are all censoring, or flat out banning conservatives who DARE to voice their opinions too loudly.

Luckily, we have a few champions in the cause, namely, Minds and BitChute.

These rising stars in what is being labelled as "ALT social media", have started to rise and are gaining traction, just as I previously predicted they would, due to the free market exerting itself over the stifling, controlling, monopolistic system that is currently in place.

Therefore, it came as no surprsie to me, to learn that these sites too are now finding themselves under pressure, and are learning that similar tactics that have found recent success are being deployed against them., in particular has been especially vocal in their fight for free speech and have been very critical of monopilstic three.

As a result of this, they have found themselves under attack. This attack took shape via its domain registar targeting the entire website, because of what ONE user posted, a rediculous notion and a standard that would NEVER be applied to Facebook, Twitter or Youtube.

Andrew Torba, the founder of Gab, fought back against this oppression, but was forced to ask that the post be removed, to protect the entirety of the userbase, and the website that he fought so hard to build.

This outraged many of the users, as they cried in dismay, stating that Andrew caved and gave in to the demands.

But this was far from the case, as we would quickly learn, Torba immediately began canvasing his userbase, looking for solutions to this problem.

It is unknown what will come next, as this fight continues on. Solutions need to be found and the userbase of these rising stars in the ALT social media space need to lend their aid, and help however they can and in anyway possible. The stakes are simply too high.

But what you must remember, is that this is war. Some battles are won and some are lost. What is ultimately most important is that you live to fight another day as did and carry on the battle, because the war is not ultimately lost, until you are bloody, battered, broken and dead. Fight on, free speech and liberty are still breathing.

Tuesday, September 5, 2017

Angry Hillary Blames Everything From Bernie Sanders To "There's Something About Mary" For 2016 Loss

Though Hillary's book of excuses, entitled "What Happened," won't be released until September 12th, a newly revealed excerpt shows that, after 229 pages dedicated to blaming everything from Trump to Russian hackers, racism, misogyny, etc, by page 230 she finally gets around to blaming Bernie Sanders.  Actually, if you review the following very powerful paragraph closely enough you'll notice that Hillary is able to succinctly blame Bernie, Obama and her entire 2016 campaign staff in just a couple of sentences. 

"Throughout the primaries, every time I wanted to hit back against Bernie's attacks, I was told to restrain myself.  Noting that his plans didn't add up, that they would inevitably mean raising taxes on middle-class families, or that they were little more than a pipe dream - all of this could be used to reinforce his argument that I wasn't a true progressive.  My team kept reminding me that we didn't want to alienate Bernie's supporters.  President Obama urged me to grit my teeth and lay off Bernie as much as I could.  I felt like I was in a straightjacket."

Not surprisingly, according to further insights from CNN, Hillary goes on to point out that Bernie's supporters, much like Trump's, were only motivated by's just obvious really.

She said that his attacks against her during the primary caused "lasting damage" and paved the way for "(Donald) Trump's 'Crooked Hillary' campaign."

Clinton, in a book that will be released September 12 entitled "What Happened," said Sanders "had to resort to innuendo and impugning my character" because the two Democrats "agreed on so much."

"Some of his supporters, the so-called Bernie Bros, took to harassing my supporters online. It got ugly and more than a little sexist," she wrote.

"When I finally challenged Bernie during a debate to name a single time I changed a position or a vote because of a financial contribution, he couldn't come up with anything," Clinton wrote. "Nonetheless, his attacks caused lasting damage, making it harder to unify progressives in the general election and paving the way for Trump's 'Crooked Hillary' campaign."

Sure, it wasn't her laundry list of personal scandals that caused Trump's "Crooked Hillary" campaign to stick...nope, it was Bernie that created that monster.
Finally, just when you thought you'd heard every excuse imaginable, Hillary takes her 'blame game' to a whole new level by viciously calling out the movie "There's Something About Mary" for her 2016 defeat.

She noted that Jake Sullivan, her top policy aide, told her that Sanders' campaign strategy reminded him of a scene from the movie "There's Something About Mary," where a hitchhiker says he has a plan to roll out seven-minute abs to top the famous eight-minute abs.

"Why, why not six-minutes abs?" Ben Stiller's character asks.

Clinton wrote: "That's what it was like in policy debates with Bernie. We would promise a bold infrastructure investment plan or an ambitious new apprenticeship program for young people, and then Bernie would announce basically the same thing, but bigger. On issue after issue, it was like he kept promising four-minute abs, or even no-minutes abs. Magic abs!"

For those who missed it, here is the scene from "There's Something About Mary" that apparently tanked Hillary's shot at the White House...

- Source, Zero Hedge

Currency Wars to Begin? China Slams Trump's Trade Threat As Unacceptable

An angry China slammed President Trump's threat on Monday to cut off trade with countries that deal with North Korea, as "unacceptable" and "unfair." As a reminder, following Sunday's nuclear test by North Korea, Trump threatened to increase economic sanctions and halt trade with any country doing business with North Korea, a threat he has used before without following through. That list would include China, the U.S.’s biggest trading partner, which accounted for about a sixth of its overseas commerce.

The comments were seen as a not-so-veiled warning to China, Kim's closest ally and commercial partner, and led to a prompt response by China's Foreign Ministry spokesman Geng Shuang who classified Trump's comments as "definitely unacceptable."

“What is definitely unacceptable to us is a situation in which on the one hand we work to resolve this issue peacefully but on the other hand our own interests are subject to sanctions and jeopardized,” Geng said at a regular briefing in Beijing, according to the Associated Press.

Of course, a full-blown trade war would have adverse consequences for both nations: China would be drastically affected if the US were to cut trade ties with it, as the United States imports goods worth about $40 billion a month. Of course, such a move would have devastating, and inflationary, consequences on the US as supply chains are forced to find alternatives to China.

When asked on Monday whether Beijing would support tougher UN sanctions including cutting off oil supplies to North Korea, Geng said that whatever happened would depend on discussions among UN Security Council members. He added that China – a permanent member of the UN's Security Council with the power to veto UN actions – would take part in a “responsible and reconstructive way.”

Geng also addressed Australian Prime Minister Malcolm Turnbull's recent remark that Beijing “has by far the greatest leverage” as Pyongyang’s main trading partner and needs to “step up now and bring this regime to its senses.”

“We keep stressing that we cannot solely rely on China to resolve this issue,” Geng said. “We need all parties to work in the same direction.”

hina has previously noted that it is not solely responsible for ending the crisis on the Korean Peninsula. In July, Geng said that “certain people” had been “exaggerating and giving prominence to the so-called ‘China responsibility theory’,” in an apparent reference to Trump's repeated calls for Beijing to put pressure on Pyongyang. China has repeatedly called for all sides to avoid further provocations in the crisis, warning last week that tensions on the peninsula were at “tipping point” and “approaching a crisis.”

As discussed previously, Beijing and Moscow have proposed a 'double-freeze' plan which would see North Korea suspend its missile launches in exchange for a halt in joint US-South Korea military drills. That plan was promptly rejected by Washington, with State Department spokesperson Heather Neuert stating last month that the US is “allowed” to conduct exercises with its ally and “that's just not going to change.”

* * *

On Sunday afternoon, Julian Assange also reacted to Trump's threat to end trade with China, with the WikiLeaks founder tweeting that the US president would be “deposed immediately” if he followed through with the proposed idea.

US trade with China totaled $648 billion back in 2016, according to data from the USTR. This makes China the “largest goods trading partner” of the US, and the 3rd largest US goods export market.

In the meantime, China’s Global Times newspaper warned against cutting off the North’s oil supply.

“If China completely cuts off the supply of oil to North Korea or even closes the China-North Korea border, it is uncertain whether we can deter Pyongyang from conducting further nuclear tests and missile launches. However, confrontation between the two is likely to occur,” it said.

The newspaper warned that a potential conflict between Beijing and Pyongyang would “transcend any conflict between the US and North Korea, and take center stage on the Korean Peninsula.
- Source, Zero Hedge

Monday, September 4, 2017

One Month to Prep: Jim Rickards Sounds Alarm on Red October

The 19th National Congress of the Communist Party of China, CCP, will commence on October 18, a little over six weeks from today. This will be the most important CCP meeting since the death of Mao Zedong and the rise of Deng Xiaoping in the late 1970s.

Communist societies such as China have a dual or parallel government structure. On one side is a normal government with a president, vice premier, cabinet ministers and other subordinate posts. On the other side is the CCP leadership consisting of a General Secretary, Politburo Standing Committee, Politburo, and Central Committee.

The seven-member Politburo Standing Committee runs the CCP. The General Secretary is the single most powerful person in the leadership. The conventional government is controlled by the CCP, which holds the real power.

In recent decades, the General Secretary serves two five-year terms, and is then succeeded by another member of the Standing Committee. At the end of the first five-year term, the Standing Committee elevates one or two candidates who are most likely to succeed the General Secretary at the end of his second term.

The process is carried out in secrecy and decisions are arrived at by consensus. The process is designed to insure smooth transitions and to avoid the cult of the individual that surrounded Mao Zedong.

General Secretary Xi Jinping is trying to upend these traditions. He will certainly be reappointed to a second five-year term next month. But, the standing committee may not elevate likely successors, or may appoint a weak placeholder who will do Xi’s bidding. This would pave the way for Xi to become the new “big man” and the most powerful General Secretary since Mao Zedong.

Since China itself is far richer and more powerful than at any time during Mao’s reign from 1949 to 1976, Xi would be the most powerful Chinese ruler since the early Qing Dynasty, and the Manchu emperor Shunzhi in 1644.

With so much at stake for Xi, investors can be sure that no one in China will be allowed to “rock the boat” before October. The currency should remain stable against the U.S. dollar at least until then in order to avoid acrimony with the United States.

Also, the saber-rattling between the U.S. and North Korea has escalated. But a war in North Korea is unlikely before 2018 because of the military and diplomatic groundwork that needs to be laid before fighting breaks out.

China may be able to maintain a fixed exchange rate until October partly by keeping the capital account closed until then. But, what about high interest rates? Leading Chinese analyst Leland Miller in his China Beige Book report explains that actual credit conditions in China are not as tight as benchmark rates make them seem:

China therefore did not overcome tighter first-quarter credit to achieve its growth result, but rather capitalized on the loosest conditions since 2013.

Investors may be justified in assuming that Beijing will seek to quash any fallout until after the Party Congress next month. But they should be equally clear that what we are seeing now is not a recovery, and it is certainly not an acceleration.

In short, the Chinese economy is on hold until October, and not in a good way.

Bad debts are still piling up. Stress on the reserve position and the exchange rate remains. Yet, China has the policy levers and political muscle to force a stable outcome until Xi’s position is solidified in October.

After that, investors should brace for a financial earthquake from China that will reverberate around the world.

The elements of an epic credit and currency crisis are all in place. China’s reserve position of $4 trillion in 2014 has now shrunk to about $3 trillion. Approximately $1 trillion of that is in illiquid investments, such as the CIC portfolio, or is committed to long-term lending via NDB, AIIB, and the One Belt, One Road initiative.

That leaves about $2 trillion in liquid reserves to do damage control. About $1 trillion of that will be needed to clean-up the banking system as state-owned enterprises (SOE) and wealth management products’ (WMP) bad debts come home to roost. That leaves only $1 trillion to defend the exchange rate.

Based on the rate of capital outflows in 2016, a $1 trillion war chest will be exhausted in less than a year. Reserves do not flow out in a linear way, but accelerate as the absolute level of reserves drop. Outflows could start at $50 billion per month, but quickly accelerate to $100 billion per month as liquid reserves approach zero.

This leaves only one way out for China: a maxi-devaluation of the yuan. A drop of 20% against the dollar, to a level of 8.50 to one dollar, would be viewed as sustainable. That should halt capital outflows.

Once the yuan is devalued, interest rates could be lowered to stimulate growth and keep the jobs machine humming. China will abandon one leg of the impossible trinity (a fixed exchange rate) in order to preserve the other two (open capital account, and independent interest rate policy).

Shorting the yuan is already a popular trade with savvy investors such as Kyle Bass. As with any trade, timing is critical. The yuan will not collapse before October. Yet, it could face a maxi-devaluation soon after that.

Based on far smaller yuan devaluations in August 2015 and December 2015, the repercussions of a new devaluation will not be confined to China. The U.S. stock market crashed over 10% on both prior occasions. An even larger correction could be expected when the maxi-devaluation comes. A flight to quality in gold is another predictable result.

What does that mean for the U.S.?

In short, it means the U.S. is losing its best customer for Treasury debt and will have to find other buyers in a hurry.