I have had a few emails asking me if I thought China was going to implement some sort of gold backing to the yuan.
Here is my answer. If you understand my logic you will see that there is absolutely no way that the Chinese can promulgate any form of gold backing to their currency. Moreover, anyone discussing this is seriously misguided or spreading disinformation to those receptive to the anti-dollar rhetoric.
If you listen to my podcasts you know I am predicting that some sort of force majeure will drastically transform the world in a way that will forever alter our lives here on earth. Without exception, war has always been used to accomplish this task.
Now that virtually all the major economies are in sync, only a catastrophic war will completely rewrite the slate and upend the notion of the nation-state as we know it. I don’t have to refer to bible prophecy to conclude with perfect certainty that this future lies ahead. All I need to do is look at the behavior of the governments around the world to get my answer. These globalists may be pure evil as we define it, but they are not stupid and crazy. Thus, once we accept that war is coming then everything the nations are doing makes perfect sense.
The globalists who control the governments know war is coming and are planning for it. This is why the financial system is being abused the way it is. It is by design. There is no going back and the globalists are going to exhaust this current monetary system to prepare and grow their nations as much as possible before this war comes.
With respect to gold backing of a currency, any type of asset-backing to a currency is immediately deflationary or inflationary to the extent that the supply of this asset can grow. Now that virtually all economies around the world have established fiat currencies there is no way that this process can be reversed under normal circumstances.
Socialist economies with their government programs and deficit spending can only exist under a fiat currency regime. To placate its masses China has greatly expanded its benefit programs as much as any other socialist nation.
Once a currency is transformed into fiat there is no going back as a gold backing would immediately crash the economy. Why? The outstanding debt accumulated under the fiat regime’s existence would immediately submerge the economy under a sea of unserviceable red ink. Basically, there would not be enough money growth to keep up with debt service and the economy would be completely consumed under its debt obligation.
So, can China transform the yuan into gold backing? Does it even want to? I think these answers are now obvious.
Here is an excerpt from an Investors Business Daily (IBD) article from last month that illustrates my point:
“The real risk that China poses to the U.S. and global economies is that its rapid economic growth since the 2008-2009 global economic recession has been powered by a credit bubble of epic proportions,” wrote Desmond Lachman, an American Enterprise Institute fellow who previously served as a deputy director of the IMF, earlier this year.
What does “epic” mean? By one account, China has expanded credit by nearly 100% of the nation’s GDP since the end of the credit crisis. Since 2007, China has added $24 trillion in debt at all levels, which is more than the U.S. government’s total debt of just under $20 trillion.
It’s fueled an investment boom and excess capacity. The Washington Post in 2015 reported that China used more cement in just two years — 2011 to 2013 — than the U.S. used in all of the 20th century. Let that sink in for a moment. Meanwhile, China now produces five times as much steel as all of Europe each month.
But where are the customers? China built cities without people, malls without customers, and roads without cars, in anticipation that all of those would soon be filled. But many remain empty. China’s population is aging fast, and its growth is grinding to a halt. Still, many of China’s heavily-indebted businesses continue to borrow from government lenders, who have no incentive to stop the game.
The IMF, in a report last month, warned: “International experience suggests that China’s credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment.”
IBD – Is China’s Debt Bubble About To Burst?
Now, if we consider that China plans on striking the west, specifically the US, then this wild debt bubble makes sense. The Chinese know that these debts will be wiped away and a new monetary system will emerge in the wake of this upcoming war. This debt generation will juice the economy over the next decade, so that China will be much larger when war comes.
Essentially, the major powers are hoping to build their countries as quickly as possible, while keeping their citizens asleep. It is working as the fiat monetary system provides all the benefits needed to keep the populace pacified until that fateful date comes.
Sorry, gold bugs. There will be no gold backing to the yuan. So, the next time you read disinformation articles like these;
China’s New Gold-Backed Oil Benchmark to Deal Blow to U.S. Dollar
How China Just ‘Reset’ the Global Monetary System With Gold
stop to think who is writing them.
Martin Armstrong is praising the Chinese government and thinks they are beyond reproach, but he would laugh in your face if you mentioned to him that they are our future enemy. He spreads the globalist agenda of defacing the United States to the benefit of our adversaries. In some way he is just like Tokyo Rose. So are outfits like Newsmax, whose job is to spiritually euthanize its readers with FUD. It works well.
Imagine if Mr. Armstring lived in China and criticized their government. He would end up in prison, never to be heard from again.