exchange

The Currency War Escalates as China Seeks to Dethrone the Dollar

what's up everybody welcome to heresy

financial my name is Joe Brown just a

few days ago the president of the

Shanghai Gold Exchange called for a new

currency to replace the dollar as the

reserve currency of the world now not in

retaliation to that specifically but in

retaliation to the whole coronavirus

situation in general there are rumors

that President Trump and his

administration is looking at ways to

potentially try and default on the

Treasury debt that China specifically

holds pairing these two facts together

looks like we are entering into further

stages of the currency war which trade

wars usually lead to currency wars so in

light of everything that is happening

right now for the past couple of years

with China's growth threatening the

global dominance of the United States of

America it is no surprise that we are

entering into this stage of the fight

what are the implications of China

pushing for a new global reserve

currency and what would the implications

be of the United States actually

defaulting on the over trillion dollars

of Treasury debt that China holds let's

dive in so Reuters recently reported

that the president of the Shanghai Gold

Exchange as the biggest gold exchange in

the world located in Shanghai China he

spoke about how it is very

disadvantageous to everyone in the world

except for the United States of America

for the dollar to hold such a preeminent

spot as the global reserve currency the

fact is that the United States can and

has for decades used the dollar global

reserve currency status as a weapon to

force countries to play by its rules it

can do this because the United States

dollar is what futures contracts for

commodities are denominated in so

dollars make up the other side of pretty

much every global transaction and all

payments are routed through the Swift

system which United States controls and

so when you hear the word sanctions like

Iran or Venezuela or any countries that

the United States looks at and says hey

you're not playing by our rules you're

doing something we don't want you to do

they can impose

sanctions on that country all that means

is that we're gonna lock you out from

being able to use the dollar you're not

going to be able to use the swift system

to be able to transact and it

essentially locks a country out from

being able to do any business with any

other countries so it puts a huge heavy

toll on that country because they can't

buy or sell things from other countries

that are also playing by America's rules

now the United States has used this and

abused this power for so long that many

countries have been looking for ways to

get around this for a long time over the

past year there have been new

infrastructure set in place that at the

right time could be used to displace

Swift as the Global payment routing

system countries throughout Europe

Russia China and the Middle East have

coordinated to making a new system

called Instax now it's not currently in

use or in play right now to get around

sanctions by the US Trump has been very

outspoken about the fact that there will

be heavy consequences late on any

country that uses it to get around US

sanctions but the infrastructure is

there and waiting to be put into place

as soon as the right moment comes it's

no coincidence at least to me that it's

the president of the Shanghai Gold

Exchange in China that is proposing this

China has been loading up on their gold

reserves and stockpiling gold and Russia

as well there are many countries many

central banks all over the world that

have been dumping Treasuries over the

last couple of years and buying gold

instead and this is simply because

nobody can outright manipulate or

fraudulently control the supply of gold

yes you can mine new gold but the mining

of new gold is directly tied to the cost

of labor associated with extracting it

from the earth it's not something like

the dollar that you can just print

larger and larger denominated bills or

digitally assign new dollars to primary

dealer and bank accounts and the

president of the Shanghai Gold Exchange

directly commented on the fact that the

Federal Reserve in conjunction with the

federal government have embarked on a

path of extreme fiscal and monetary

irresponsibility in order to deal with

the coronavirus crisis he basically

acknowledged that everything they're

doing will have a long

effect on the dollar to severely impact

its purchasing power and its value over

time and so he said look it's not it's

not in anybody's best interest except

for the USA to continue to use the

dollar as the global reserve currency

because it hurts everybody else

now his proposed solution was to have a

currency that is not controlled by any

single country so that cannot be

manipulated to the advantage of any

single country and he mentioned yes gold

for thousands of years has performed

this role and the Reuters article that

is talking about this makes a comment

and says hey look gold has its

limitations it's not conducive to

international trade that's not true it's

the false gold exchange standards that

were set in place in Bretton Woods that

were not conducive to global trade and

global exchange those were still set to

the advantage of the United States of

America but for thousands of years when

money was actually gold and the word

dollar and the word pound and the word

Frank were actually just defined as

weights of gold certain ounces or grains

of gold that meant there was one global

currency that nobody controlled those

were just different words that meant

different weights of gold so you could

take any gold minted by anyone in the

world and that was good payment there

were no currency exchanges anywhere in

the world and it was extremely difficult

for any one country to gain advantage

over another country in terms of

currency manipulation because quite

frankly the only way you could do that

was to debase the amount of gold or

silver in your coin now if you haven't

followed the rise of China over the last

couple of decades I would highly

recommend a book it's called destined

for war can America and China escape

Thucydides trap lucidity z' was a

historian an Athenian historian who

documented the Peloponnesian War between

the Spartans and the Athenians and in

one of the most famous and often quoted

quotes throughout all of history

he wrote it was the rise of Athens and

the fear that that instilled in Sparta

that made war inevitable Ray Dalio also

talks about this dynamic a lot that the

reigning power of the USA and the rising

power of China puts great tension on the

world because of the chain

changing dynamics in global power and

the same thing has happened dozens of

times throughout history and even in the

last 500 years it's happened about 16

times with the rise of China's influence

all over especially the eastern

hemisphere especially in Asia it's no

surprise that them saying things like

this and performing certain actions are

at the slightest getting on the nerves

of American politicians in response to

potentially a lot more than even what

we're discussing here in the video the

Trump administration there are rumors

that they're talking about basically

placing reparations on China for their

coronavirus and they would do so by

potentially defaulting on some or all of

the Treasuries that China currently owns

which is over a trillion dollars worth

now even them just talking about this

could spark a sell-off in Treasuries and

Treasuries have been getting sold off

ever since the crisis really started to

hit the markets back in February that is

why the Federal Reserve so quickly

opened up so many facilities and

programs in order to accept Treasuries

for dollars because everybody was

selling Treasuries so fast that it was

making yields spike and they cannot

allow yields on Treasuries to spike or

else the government just defaults

because they can't afford that the

interest on their current debt load

because so much of their debt is

short-term dated and so they're

continually having to roll it over so as

they have to roll it over they'd have to

get new debt with a higher interest rate

and so the Federals are the Federal

Reserve is putting a floor underneath

all the selling fight buy all the

central banks all around the world by

buying it with printed dollars and so

talking about the fact that you might

default on a trillion dollars worth of

your debt on purpose as an act of

retribution against a country who is was

more and more becoming a global rival to

your own supreme dominance that doesn't

speak confidence in your currency and in

your global leadership and so it's very

possible that even the rumors that they

might do this might spark even more of a

sell-off in Treasuries and especially if

they actually do it nobody would want to

get caught in the crosshairs of holding

Treasuries that might be worth

absolutely nothing instead of just worth

a lot less from all the inflation and so

this could cause a tsunami of the rest

of the Treasuries that the world is

holding being sold off in exchange for

dollars and in case you're wondering why

does that matter

if country is central banking in Europe

or in Asia dumps their Treasuries they

get dollars instead well it's highly

inflationary because if you don't want

Treasuries that are basically dollars

that pay you interest you're not going

to want dollars that don't pay you

interest you're going to get rid of

those but if everybody's getting rid of

Treasuries and then everybody's getting

rid of dollars the only place that those

dollars can go is back to United States

of America where people and businesses

are required to accept them by law and

the way that the dollars come back home

is by purchasing US assets and products

and goods that are located in the United

States of America and this is the exact

same dynamic that you see that has

happened in many countries all over the

world all throughout history whenever

there is a crisis in the confidence of a

currency because of monetary expansion

there's a crack up boom where everything

gets more expensive because all of the

dollars or all of the units of currency

flood back in from foreigners in order

to dump it and get products at least

something that will retain some of its

value instead of being wiped out and so

the United States is currently in this

in this pattern where they're trying to

stop basically the implosion of their

currency but everything that they're

doing to try and stop that is only

accelerating it so judging by what's

happened in the past decades the past

few years and then what's going on right

now it looks like these kind of things

will continue looks like these kind of

things will escalate the trade war

currency war between US and China and

then the rest of the world as they try

and position themselves so that the rest

of the world so that they're not at the

mercy of the United States and the

dollar those kind of things are only

going to continue thank you so much for

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