China Announces That It Is Going To Stop Stockpiling U.S. Dollars
China just dropped an absolute bombshell, but it was almost entirely ignored by the mainstream media in the United States. The central bank of China has decided that it is "no longer in China’s favor to accumulate foreign-exchange reserves". During the third quarter of 2013, China's foreign-exchange reserves were valued at approximately $3.66 trillion. And of course the biggest chunk of that was made up of U.S. dollars.
But now China has announced that the time has come for it to stop stockpiling U.S. dollars.
And if that does indeed turn out to be the case, than many U.S. analysts are suggesting that China could also soon stop buying any more U.S. debt. Needless to say, all of this would be very bad for the United States.
For years, China has been systematically propping up the value of the U.S. dollar and keeping the value of the yuan artificially low.This has resulted in a massive flood of super cheap products from across the Pacific that U.S. consumers have been eagerly gobbling up.
Thanks to the massively unbalanced trade that we have had with China, tens of thousands of our businesses, millions of our jobs and trillions of our dollars have left this country and gone over to China.
Neither Yi nor Zhou gave a time frame for any changes.
It isn't going to happen overnight, but the value of the U.S. dollar is going to start to go down, and all of that cheap stuff that you are used to buying at Wal-Mart and the dollar store is going to become a lot more expensive.
But of even more importance is what this latest move by China could mean for U.S. government debt. As most Americans have heard, we are heavily dependent on foreign nations such as China lending us money. Right now, China owns nearly 1.3 trillion dollars of our debt. "Together, with the Federal Reserve tapering its bond purchases, it has the potential to add to the bearish long-term outlook on U.S. Treasurys."
So who is going to buy all of our debt? That is a very good question. If the Federal Reserve starts tapering bond purchases and China quits buying our debt, who is going to fill the void?
If there is significantly less demand for government bonds, that will cause interest rates to rise dramatically. And if interest rates rise dramatically from where they are now, that will set off the kind of nightmare scenario that I keep talking about. China accounts for more global trade that anyone else does, and they also own more of our debt than any other nation does. If China starts dumping our dollars and our debt, much of the rest of the planet would likely follow suit and we would be in for a world of hurt.
And just this week there was another major announcement which indicates that China is getting ready to make a major move against the U.S. dollar. According to Reuters, crude oil futures may soon be priced in yuan on the Shanghai Futures Exchange.China, which overtook the United States as the world's top oil importer in September, hopes the contract will become a benchmark in Asia and has said it would allow foreign investors to trade in the contract without setting up a local subsidiary.
If that actually happens, that will be absolutely huge.The world is changing, and most Americans have absolutely no idea what this is going to mean for them.As demand for the U.S. dollar and U.S. debt goes down, the things that we buy at the store will cost a lot more, our standard of living will go down and it will become a lot more expensive for everyone (including the U.S. government) to borrow money.
The years ahead are going to be very challenging, and so I hope that you are getting ready for them.
Link -
http://seekingalpha.com/article/1857411-china-announces-that-it-is-going-to-stop...=========================================
In fact, the Chinese have already effectively assumed this position several years, as indicated in the following chart -http://www.nowandfutures.com/images/tic_major_holders.pngWhat is now changing is that they are becoming a little more Public, a little more overt and that is perhaps because there is now more backing for that stance, coming from the likes of Russia, some of the Oil Producing nations & a few others, But also because of the "ongoing" nature of the US "Monetizing" their own Debt, via the US FedRes buying US Treasury Debt, which it has done by "magically" printing money out of "thin air".
As I have said previously, "for all actions & in-actions, there are Consequences" and although the US Politicians may not have thought so, I can assure them, the will be Consequences!As suggested in the article, the world is changing, But most US citizens & indeed people in OZ & throughout the world, have no idea what's going on, nor how it will affect them.
That said, the years ahead will indeed be very challenging!
As to timing, that is still an unknown, But the next few years will most likely see a lot of turmoil! 
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