- American people buy stuff they don’t need from Chinese company with money they don’t have on US bank credit card.
- US Bank creates new US dollars out of thin air by creating debt for American people and giving US dollars to Chinese company.
- New debt stays in America while new US dollars leave America.
- Chinese company takes new US dollars to Chinese central bank and exchanges for Chinese RMB.
- Chinese central bank prints new Chinese RMB out of thin air to give to Chinese company in exchange for US dollars.
- Chinese central bank puts US dollars in a vault out of circulation.
- New US dollar’s are out of circulation, not impacting market value of existing US dollars and therefore not impacting US dollar price inflation.
- New Chinese RMB are in circulation, negatively impacting value of existing Chinese RMBs causing Chinese RMB price inflation to rise.
- US dollar value remains artificially high while Chinese RMB value declines.
- THE WORLD VIA THE PETRODOLLAR MUST BUY SAUDI OIL IN US DOLLARS. THIS CREATES ARTIFICIAL DOLLAR DEMAND AND SENDS ALL THE INFLATION FROM QE MONEY PRINTING TO EVERYWHERE AROUND THE WORLD. THE WORLD PAYS THE INFLATION ON THE FEDS MONEY PRINTING TO PAY FOR THE US MILITARY AND BAIL OUT US BANKS.
- American people and Chinese people are poorer. US bank, Chinese company and Chinese central bank are wealthier.
Summary
Geopolitical risks are increasing that suggest a seminal shift in economic power in the coming weeks.
The next major battle between the East and the West will take after the G20 with the arrest of the Huawei executive.
IMF ultimatum to the US could escalate the trend to move away from the dollar in international trade and the creation of a parallel SWIFT system.
The risks are high that the dollar will breach support levels and the likelihood of a new era of high inflation in the US seems certain.
What such a shift means for investment assets.
A trade pact between China and Germany is the latest in a series of blows to the US dollar as reported on Friday by Bloomberg - Bundesbank, PBOC in Pact to Turn Frankfurt Into Renminbi Hub (1):
Germany's Bundesbank and the Peopleâs Bank of China agreed to cooperate in the clearing and settling of payments in renminbi, paving the way for Frankfurt to corner a share of the offshore market.The central banks signed a memorandum of understanding in Berlin today, when Chinese President Xi Jinping met German Chancellor Angela Merkel, the Frankfurt-based Bundesbank said in an e-mailed statement.Germany's financial capital prevailed over Paris and Luxembourg in a euro-area race to win trade in renminbi, which overtook the euro to become the second-most used currency in global trade finance in October, according to the Society for Worldwide Interbank Financial Telecommunication. The U.K. Treasury said on March 26 that the Bank of England would sign an initial agreement with the PBOC on March 31 to clear and settle yuan transactions in London.
Read that again if you missed it. What it says is that the renminbi has overtaken the euro in global trade settlements and now is positioned ahead of all currencies except the US dollar. I have been reporting on this highly significant paradigm shift for more than a year now and at this point it would appear my warnings were well founded. There are two very significant events scheduled in the next few weeks that seem certain to move us closer to the end of the dollar's reign as the world's reserve currency.
Now, lets look at the UK money supply VS US Money supply and Inflation.
The above makes sense, because money printing IS INFLATION! That's what it is. Forget the rest, most of it all just investor sentiment and fads.
Now look at the US Below, the US exports most of its inflation.
What does it mean? It means when the Petrodollar collapses, and the world dumps all its US treasury bonds, all those returning dollars will be causing HYPERINFLATION!
