Posted 7 months ago | by Ben Armstrong
China to Dump US Debt – Global Monetary Chaos Will Drive Cryptos Higher
Don't be positive about US-Sino relations. While the Trump administration is giving China some leeway on Phase One of the trade deal, there is probably more going on than is being talked about in the corporate media.
"China may gradually reduce its holdings of US Treasury bonds to about $800 billion from the current level of more than $1 trillion, as the ballooning US federal deficit increases default risks and the Trump administration continues its blistering attack on China"
The attack that is referenced by the Global Times is the economic and political attack that Trump has been waging for the past few years – but the CCP seems to understand that the USA is willing to use military force as well.
In the same article the an expert cited by the Global Times states,
"But of course, China might sell all of its US bonds in an extreme case, like a military conflict."
It is somewhat humorous to make this statement at all, as full scale economic war would be a part of any sustained military conflict between the US and China. In reality, the China's move to dump some of its US bonds is meaningless, as the US central bank is willing to buy just about anything these days.
Apolitical Assets are in a Sweet Spot
A US/China military conflict would likely metastasize into WW3 – which puts the current monetary order into a very tight spot. The other three major currencies – the Japanese Yen, British Pound and Euro are independent in name only – all roads lead to the US Federal Reserve.
One of the biggest arguments against a move away from the USD has always been that there is no other monetary system that could absorb the value of the current system – but that isn't really a sane way to think.
Money is just a way to move information around – and cryptos can easily do that on the global stage. In addition to being able to replace fiat currency at a technical level – cryptos have no nation to act as a political liability.
With no impediments to being used globally – and with zero political strings attached – cryptos are set to shine as the post WW2 global order finally falls into the inferno.
There is no Monetary Solution to a Political Problem
Since the last two big explosions of WW2 seemingly ended the last big war – the major Western central banks have had to pretty easy.
Unlike the former Soviet Union, and numerous minor economies (looking at you Argentina) rich Western nations have used a stable political base to expand the role of their currencies into the global economy.
Those days – from the look of it – are officially over.
The current FED policy would make Gono blush – although for the moment Robinhood traders (and the top dogs as well) are mired in a delusion that mistakes money for value.
In the same way that the word water can't quench your thirst – the dog$#i* fiat currency that the central banks have flooded the global markets with can't create value. Money delegates value and allows economic cooperation – you can't eat a $100 bill and stay healthy.
Keep an Eye Out for Escalation
Make no mistake, all the negative themes that we were facing before the global COVID-19 political blunder are getting worse. The most dangerous is the fallout between US/China, which will go into overdrive after the US elections in November.
Cryptos can help you to do business – or buy the things you need – but you will need to face the fact that Western society is falling apart – and it is past the point of no return. Don't mistake money for value – and remember that you need food and clean water every day.
The mass exodus from US cities could be due to the realization by the upper middle class that in addition to riots and throngs of poor people – most cities have nasty water – and produce no appreciable amount of food.