{"id":38463,"date":"2018-09-28T18:06:12","date_gmt":"2018-09-28T23:06:12","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38463"},"modified":"2018-09-28T18:06:12","modified_gmt":"2018-09-28T23:06:12","slug":"as-the-trade-war-rages-china-wont-be-held-hostage-by-the-u-s-dollar","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38463","title":{"rendered":"As The Trade War Rages \u2013 China Won\u2019t Be Held Hostage By The U.S. Dollar"},"content":{"rendered":"
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As The Trade War Rages \u2013 China Won\u2019t Be Held Hostage By The U.S. Dollar<\/a><\/h3>\n

In last week\u2019s Palisade Weekly Letter<\/em>, I wrote about how the Chinese are now selling their U.S. debt. And since this was an important write-up, I also published it as an article \u2013 so if you missed it, click here<\/a>.<\/p>\n

I mentioned that although China\u2019s now a net-seller<\/em> of U.S. debt \u2013 they\u2019re slowing <\/em>doing so.<\/p>\n

I reckon they\u2019re doing just enough<\/em> to let the Treasury and Trump know that they can send yields soaring and can\u2019t afford it if China unloads the whole $1+ trillion <\/em>amount.<\/p>\n

That\u2019s why we at Palisade Research\u00a0<\/em>have called this China\u2019s \u2018nuclear<\/em>\u2018 option \u2013 it\u2019s no doubt a financial weapon of mass-destruction (FWMD<\/em>).<\/p>\n

If China suddenly dumped their $1+ trillion<\/em> of U.S. debt, it would cause markets worldwide to implode.<\/p>\n

But that also means China would suffer. . .<\/p>\n

Now, China isn\u2019t stupid. They\u2019ve worked decades <\/em>to grow their massive dollar surplus and reserves. They won\u2019t recklessly lose it all for nothing.<\/p>\n

But still, this put\u2019s China in a corner. Because although they won\u2019t risk blowing themselves up to hurt the U.S. \u2013 what if the U.S. must cheapen the dollar to boost trade? Or get out of a recession? Or monetize the Treasury\u2019s never-ending spending and huge fiscal deficits?<\/p>\n

The depreciation of the U.S. dollar for any reason is a huge threat to China currently.<\/p>\n

Today China holds roughly 3 trillion of dollar reserves. That\u2019s down 25% from the 4 trillion they had in beginning of 2015 (the strong dollar really hurt them).<\/p>\n

<\/p>\n

And putting things into context \u2013\u00a0if the U.S. dollar devalues by just 10%, that\u2019s more than\u00a0300<\/em>billion<\/em> of purchasing power lost from China\u2019s dollar reserves. . .<\/p>\n

Gone \u2013 just like that. And completely out of China\u2019s control.<\/p>\n

Imagine if someone else held the power to devalue the money in your own bank account. That puts you at their mercy \u2013 in a very fragile place \u2013 right?<\/em><\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

As The Trade War Rages \u2013 China Won\u2019t Be Held Hostage By The U.S. Dollar In last week\u2019s Palisade Weekly Letter, I wrote about how the Chinese are now selling their U.S. debt. And since this was an important write-up, I also published it as an article \u2013 so if you missed it, click here. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[19913,130,21998,19915,9937,805,3222,827,839],"class_list":["post-38463","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adem-tumerkan","tag-china","tag-dollar-reserves","tag-palisade-research","tag-tariffs","tag-trade","tag-trade-war","tag-united-states","tag-us-dollar"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=38463"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38463\/revisions"}],"predecessor-version":[{"id":38464,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38463\/revisions\/38464"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}