Hello JW, Before commenting on your script, I point you to:
(a) Ominous sign of inflation numbers to come Message 19591265 and Message 19588827
(b) Conundrum of China inflation fact vs. US deflation fiction Message 19591309
(c) Tale of gold hunt in Beijing Message 19591980
(d) Puzzle of reversing the previous China capital flight when China is trying to cool economy Message 19593318
(e) Old Europe cozying up to New China Message 19593471
(f) Talk of submarines Message 19593677
(g) New Russia flirting with New China Message 19608148
(h) Energy crisis Message 19604319
(i) Anticipating a looting Message 19608272
Regarding <<trade friction with China, + domestic credit demand in China will combine to reduce their appetite for their losing investments in USTrezBonds>>
... may be true, but I believe the USA acting out its hegemonic philosophy, more than anything else, encourages China to distance itself from USD-space, whereas credit bubbles and printing money may actually tie China to USD-space, because China also needs to print, and to provide employment, just like the US, banking problems be darned, at least until J6P in the US is fully spent.
On <<I BELIEVE CHINA WORMS ITS WAY OUT BY ESTABLISHING A GOLD-BACKED YUAN CURRENCY
which overrides all capital banking reserve problems>>
... This point is interesting. What I NOW definitely seem to SEE:
(a) China is encouraging repatriation of previously flown capital back to China even thought it is trying to cool the economy (but I note the economy can be cooled effectively by other, non-conventional, means Message 19604755 ;0)
(b) China is encouraging private gold ownership and encouraging the mattress cash (USD and RMB) to get back into the banking system;
(c) It appears that China is motivated to allow its citizens a safety cushion (gold) and wean them off of USD;
(d) It appears China is intent on spending its USD hoard on things it needs;
(e) It appears China is intent on achieving serious nuclear and conventional deterrent;
… and so, let us watch, wait and see what happens next with the renewal of the Washington Agreement on gold, which CBs will be selling and which CBs will be buying, and whether the buying CBs will on-sell its gold to its citizens.
It may be that China wants its citizens, as opposed to its central bank, to hold the gold and China intends to back its currency as the US does, with guns and butter, obtaining the best of both currency regimes, namely (a) social stability due to private mattress gold acting as an anchor, and (b) modulated economic growth because of fiat paper desired by some :0?
China may simply leave the world to cast a ballot for alternative paper currencies, one backed by a population with gold, and the other supported by a population with obligations.
Chugs, Jay |
