China Dumping USD!

[cunnosieur]

http://www.businessinsider.com/chin...reasury-obligations-nose-dived-in-late-2008-1

 

[longbow]

No need to buy so much if they decide to let Yuan increase in value.

 

[GoFlyKiteNow]

No need to buy so much if they decide to let Yuan increase in value.

Revalue.. yes, they should do that.
If they continue to keep the old rates, they are actually
burning away a lot of their money. Last year alone
they have reportedly lost over 300 billion..


Hmm..I am amused by the original post in this thread.
Dumping USD !..Indeed..!!...when you dump
something you either dump and lose ( like garbage ),
or replace that dumping with an alternative.

So my question - what is that replacement alternative ?!!
You dump dollar in exchange for what ?
Any answers ?
Thx

 

[hockbeng]

Revalue.. yes, they should do that.
If they continue to keep the old rates, they are actually
burning away a lot of their money. Last year alone
they have reportedly lost over 300 billion..


Hmm..I am amused by the original post in this thread.
Dumping USD !..Indeed..!!...when you dump
something you either dump and lose ( like garbage ),
or replace that dumping with an alternative.

So my question - what is that replacement alternative ?!!
You dump dollar in exchange for what ?
Any answers ?
Thx

Gold,Silver & platinum and oil!

 

[GoFlyKiteNow]

Gold,Silver & platinum and oil!

Somehow, I expected that answer.

No, it cant work that way.
There aint enough gold and other precious metals around in the open market place to absorb even 10 % of the global liquidity.

About OIL..it is pegged to the USD.

 

[Ash007]

Somehow, I expected that answer.

No, it cant work that way.
There aint enough gold and other precious metals around in the open market place to absorb even 10 % of the global liquidity.

About OIL..it is pegged to the USD.

How about copper/Iron ores. China reportedly bought up tons and tons of copper and Iron ores last year.

 

[botakboon]

Dumping USD is excellent.

Only sucker governments like Japs & SGP will compromise their own people to protect US interest. The new Japs govt will never do the same as the old.

Everyone should just cut lose from US and let it sink.

 

[hockbeng]

Somehow, I expected that answer.

No, it cant work that way.
There aint enough gold and other precious metals around in the open market place to absorb even 10 % of the global liquidity.

About OIL..it is pegged to the USD.

Exactly!
You want to park your wealth in something that has value and will continue to have value.

And for something to be valuable, it has to be in limited or short supply.

There will always be an unlimited supply of USD. All they have to do is print print print! How can that be of value?

I'd rather hold oil than hold USD. Paper currency is essentially worthless and no economic use.

There is more than enough commodities to absorb all the usds; all you need is hyperinflation and this will occur when the world realizes what the US is doing.

 

[theDoors]

Exports from China to US came almost to halt. No more accumulated dollars for China to buy US treasury bonds. The petrodollar recycling system is starting to unravel.

 

[hockbeng]

Somehow, I expected that answer.

No, it cant work that way.
There aint enough gold and other precious metals around in the open market place to absorb even 10 % of the global liquidity.

About OIL..it is pegged to the USD.

What we need is another major world war for everyone to realize what truly has value: agricultural land & food, raw material, oil, copper, iron, gold, doctors, scientists, farmers, the common worker.


NOT paper money, lawyers or bankers.

 

[theDoors]

Somehow, I expected that answer.

No, it cant work that way.
There aint enough gold and other precious metals around in the open market place to absorb even 10 % of the global liquidity.

About OIL..it is pegged to the USD.

Time to deflate the inverted pyramid of paper money...
Accumulated paper wealth might vanish overnight...

 

[GoFlyKiteNow]

Exactly!
You want to park your wealth in something that has value and will continue to have value.

And for something to be valuable, it has to be in limited or short supply.

There will always be an unlimited supply of USD. All they have to do is print print print! How can that be of value?

I'd rather hold oil than hold USD. Paper currency is essentially worthless and no economic use.

There is more than enough commodities to absorb all the usds; all you need is hyperinflation and this will occur when the world realizes what the US is doing.

Of course, your argument is logical. The printing of money and inflation etc.
BUT....
You may have heard about the term "Creative Destruction" in economics.
Therein lies the clue to the issue of printed money and what the US does.

Coming back to your comment that you rather hold OIL...

Lets say you took all your reserves and bought oil in late late 2008 when the price of oil was 150 USD a barrel.
Then the crisis came and oil tumbled to 35 USD.
Your OIL stockpile will still be the same in qty basis.
But in monetary value it would have lost over 70% of its value.
So who is the loser ?

The same with other commodities.

Now., about all the commodities in the world....you would have noticed that for every 100 dollar of commodity that is produced, it is leveraged between 10 and 20 times. Meaning, that the 100 USD has transformed into 1000 to 2000 dollars. ( paper money creation ).

So, logically, if there is 100 dollars worth of commodity , then there is 10 times that amount floating around in paper liquidity. Hence there will never be enough commodity to absorb all the floating liquidity.

I am writing all this in a very simplistic manner.
Don't take it literally.

 

[theDoors]

So, logically, if there is 100 dollars worth of commodity , then there is 10 times that amount floating around in paper liquidity. Hence there will never be enough commodity to absorb all the floating liquidity.

I am writing all this in a very simplistic manner.
Don't take it literally.

Simplistic but not too far off...

 

[theDoors]

There is a breakdown of the petrodollar recycling system.

Too much dollars, not enough enough consumption/speculation/bubbles to absorb the dollars.

 

[hockbeng]

Of course, your argument is logical. The printing of money and inflation etc.
BUT....
You may have heard about the term "Creative Destruction" in economics.
Therein lies the clue to the issue of printed money and what the US does.

Coming back to your comment that you rather hold OIL...

Lets say you took all your reserves and bought oil in late late 2008 when the price of oil was 150 USD a barrel.
Then the crisis came and oil tumbled to 35 USD.
Your OIL stockpile will still be the same in qty basis.
But in monetary value it would have lost over 70% of its value.
So who is the loser ?

The same with other commodities.

Now., about all the commodities in the world....you would have noticed that for every 100 dollar of commodity that is produced, it is leveraged between 10 and 20 times. Meaning, that the 100 USD has transformed into 1000 to 2000 dollars. ( paper money creation ).

So, logically, if there is 100 dollars worth of commodity , then there is 10 times that amount floating around in paper liquidity. Hence there will never be enough commodity to absorb all the floating liquidity.

I am writing all this in a very simplistic manner.
Don't take it literally.

Why choose 2008 to buy oil?

If you had known what the US was doing since the bursting of the dotcom bubble in 2001 and bought oil, gold, copper, iron, coal mines every year from 2001 to 2009, you would have made a fortune!

As an individual or a country with reserves to protect, it is true that I would not be holding to all USDs available in the world, but only a part of it. But I would be sure to get my reserves hell out of USDs to protect its value for the very reason you described.

 

[GoFlyKiteNow]

Simplistic but not too far off...

Nice graphical illustration.
Like they say - a picture is worth a 1000 words.
Thx

 

[theDoors]

Why choose 2008 to buy oil?

If you had known what the US was doing since the bursting of the dotcom bubble in 2001 and bought oil, gold, copper, iron, coal mines every year from 2001 to 2009, you would have made a fortune!

As an individual or a country with reserves to protect, it is true that I would not be holding to all USDs available in the world, but only a part of it. But I would be sure to get my reserves hell out of USDs to protect its value for the very reason you described.

As an individual investor, that would be the rational choice.

In game theory, it's call a dilemma.

Imagine in a fire, everyone try to get at the same time, the exit chokes. Only the lucky few escapes at the onset.

China being largest holder of US dollar dominated assets have been supporting the dollar for the last 1 year postponing the inevitable. If the dollar depreciates, China reserves depreciates.Now China's supply of dollar is dwindling due to the trickle of US trade.

On the hand, market players have been borrowing cheap dollar to "buy" up the market. The dollar has effectively replace the yen as the carry trade currency.

How long this merry go round can last, depends on when any of the current bubbles burst.

 

[KennyMGM]

Why choose 2008 to buy oil?

If you had known what the US was doing since the bursting of the dotcom bubble in 2001 and bought oil, gold, copper, iron, coal mines every year from 2001 to 2009, you would have made a fortune!

As an individual or a country with reserves to protect, it is true that I would not be holding to all USDs available in the world, but only a part of it. But I would be sure to get my reserves hell out of USDs to protect its value for the very reason you described.

In hindsight , everything can be done the smart way and we all could have made tons of money. But then again, when it comes to the future, our minds work one way and the markets another way.

Margaret Thatcher once said, - That if you try to buck the market, the market will buck you. In response to Dr Mahatir's disastrous bid to control the price of Tin and rubber in the London metal and commodity market.

 

[hockbeng]

In hindsight , everything can be done the smart way and we all could have made tons of money. But then again, when it comes to the future, our minds work one way and the markets another way.

Margaret Thatcher once said, - That if you try to buck the market, the market will buck you. In response to Dr Mahatir's disastrous bid to control the price of Tin and rubber in the London metal and commodity market.

It is not bucking the trend for the sake of it.

If your car is heading towards a cliff, would you buck the trend and apply the brakes?

 

[KennyMGM]

It is not bucking the trend for the sake of it.

If your car is heading towards a cliff, would you buck the trend and apply the brakes?

Most likely no.

In the market, it is called the PACK behavior.
Follow the pack. Happens without fail.

After that comes hindsight.