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Thread: an excellent explanation of the Yen / Yuan / Dollar 'trade war'

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    Default an excellent explanation of the Yen / Yuan / Dollar 'trade war'

    from

    (snip)"China is fighting a trade war on two fronts as they are threatening to retaliate against US businesses operating in China if Congress passes legislation intended to force a revaluation of the Yuan. The House of Representatives is set to consider legislation this week that would let companies petition for higher duties on imports from China to compensate for the effects of a weak yuan. Forcing China to raise the value of its currency may create 500,000 jobs in the U.S., most in manufacturing at above-average wages, according to C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington. China’s currency, which is undervalued by as much as 25 percent, is the most important trade issue facing the U.S., he said in testimony last week.

    So we are pressuring China to strengthen their currency, which would make our currency relatively weaker. One would think the dollar couldn’t get much weaker than it is now (snip)

    (snip)"Of course a 10% drop on the dollar could be just the ticket for the markets - since our stocks are priced in dollars. That makes them look pretty good compared to cash that’s sitting on the sidelines (or tied up in notes) that’s lost over 10% of it’s buying power since June.

    That’s right, JUNE! As people who travel to Europe are well aware, prices of things outside the US have gone up considerably in dollar terms. For our Multi-National Corporate Masters, who collect half their funds overseas, the dollar dive just represents another 10% pay cut for their American slaves, which is why the rich men are keeping the pressure on Congress, Treasury and the Fed to keep that dollar down. Americans aren’t buying anyway so who gives a crap about their worthless currency?

    As The Market Oracle points out, the only people really buying Treasury Bonds, which finance our deficits are the "Primary Dealers," the too big to fail banks who get their money from the Fed and the Treasury through the wide-open "liquidity windows." Of course they don’t mind tying up their money in dollars as they borrowed dollars to buy the dollars and the Banksters make money on the rate spread. Banks borrow money at 0.25% FROM THE GOVERNMENT and they lend it back TO THE GOVERNMENT for 1-2.5% and THAT is how the US can give the banks over $4Tn of bailouts and stimulus WITHOUT CREATING A SINGLE JOB!





    Look at what’s happening people: "They" (Banksters and their pet Government) have devalued 10% of your dollar-denominated assets in 3 months by printing 10% more money - all of which THEY kept. In fact, one of the parties in Congress wants to keep MORE of the money they are stealing and give LESS of it back to the people so they can make sure they have enough money to pay off the Banksters for all the loans they gave us with the money they stole from us. Man you guys are SUCKERS!!! Here is your market rally priced in Euros:





    At PSW, we’ve been shorting Treasuries for a while now, expecting this bubble to pop and I warned members about this yesterday, saying (about where to keep your money):

    I don’t care if you don’t trust the market - trusting the government to pay you back at all in 10 years is dodgey and believing that the dollars they give you after they rack up another $15Tn in debt (not to mention after a decade of unfunded baby boomer obligations coming home to roost) will be worth anything like the dollars you gave them a decade before is not even in the realm of rational. I am not joking - it’s not… People buying long-term TBills are simply not thinking things through at all."(snip)

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    Default Re: an excellent explanation of the Yen / Yuan / Dollar 'trade war'

    Chinese response ...

    (snip)"When China speaks, the U.S. should listen:

    Any appreciation of the dollar is “really temporary” and a devaluation of the currency is inevitable as U.S. debt rises, Yu said in a speech in Singapore today...Such a huge amount of debt is terrible,” Yu said. “The situation will be worsening day by day. I think we are one step nearer to a U.S.-dollar crisis.
    Here's the link if you have not seen the article by now:

    This guy also goes on to say that "China should reduce its holdings of U.S.-dollar assets to diversify risks of 'sharp depreciation...'” Essentially this is a statement telling the world that continued support of the U.S. dollar by China will be limited at best. Translation: the dollar is going a lot lower.

    Make no mistake about it, even though the comment above came from "a former advisor to China's central bank," when the Chinese Government wants to make a policy statement, it's usually done through "representatives" like this.

    As per the graph below, you can see that the dollar has broken a head-and-shoulders chart formation, which usually implies much lower price levels are to be expected:





    To be sure, the dollar is technically a bit "oversold" and can bounce at any time. But the weekly chart is not reflecting an oversold condition, which means any corrective "bounce" will be brief. Of course, this also means that gold and silver will be going much higher. "(snip)

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