Gold spiked above 1500/ounce for the first time ever today as the USD began to weaken against the Euro after strengthening yesterday in the wake of more attacks by Wall Street against Portugal’s credit rating. Oil also continued to go up despite the continued surplus in the supply.
China reacted with “unease” about Standard & Poors suggesting it could downgrade the US credit rating. Japan down played the significance of the report as you might expect since they have real problems. China has repeatedly complained that the US is debasing the USD in order to reduce what it owes to its creditors with China estimated by the US Treasury to be the largest holder at about 1.2 trillion.
China also holds more than 3 trillion in foreign currency with perhaps 2 trillion in USDs but this is all a state secret and so nobody really knows. The US has recently increased dramatically its estimate of China’s ownership of US Treasuries based on surveys of known holders of US bonds. China uses multiple front operations to mask what it does in the financial markets and had been believed to be selling large numbers of US bonds.
China doesn’t ever expect to see the trillions that we owe them as they know full well this was never “real” money. China just doesn’t want their mushrooming empire hindered by the collapse of the American empire and to that end they hosted a meeting of the BRICS countries last week. This is Brazil, Russia, India, China and South Africa which just became the newest member of this economic alliance.
With almost 3 billion people, a quarter of the world’s land mass and a GDP larger than the US they are an economic force to deal with. China is of course the dominate player and they decided that South Africa would join the club and this will give China even more influence on the African continent.
The big news from this latest meeting is that they will no longer use the USD in trade between the “big five” but will use their own currencies instead. This news, if even noticed by conservatives will doubtless result in a “Naw-aa, look at all the dollars they hold! They need us!”
They need us for what exactly? We don’t export anything that the BRICS countries don’t already have plenty of and they have big chunk of the world’s gold bullion in their vaults to back their currencies. They also have more nukes between them then we have, just in case President Trump wants to start flexing his muscle to take oil away from the countries that supply the BRICS. Perhaps Vice President Palin with all her experience “seeing Russia from her house” will advise him not to do that. www.prairie2.com