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Will the Coming Economic War With China End the American Empire?

By   Follow Me on Twitter     Message Richard Clark     Permalink
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You haven't heard even a whisper about it in the mainstream media.   Yet it's an event  that historians will point to as the first sign of the approaching war.   Unlike previous wars, however, this one will not be fought with bombs and guns.   And yet it could trigger the most cataclysmic destruction of personal wealth in our lifetime.

 

As we speak, China is mobilizing resources and gathering allies around the globe in preparation for this war.   In league with a small group of "rogue' nations, they have one purpose in mind:   to crush the economic, political and military strength of the United States, around the globe, by targeting America's Achilles heel:   the petrodollar.   Their plan is to (by that means and others) send the USdollar (today the world's reserve currency) into the dustbin of history -- which will, among other things, crush the retirement dreams of millions of American citizens.

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America's last great export about to go bust?

 

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We all know that the US is heavily in debt to China.   And the US trade deficit with China keeps growing, up to $558 billion in 2011.   In fact, it's now the largest, ongoing nation-on-nation trade deficit in the history of the world.   But what most Americans don't understand is that because of this huge trade deficit, each year the Chinese Central Bank collects billions of excess dollar reserves that they have, until recently, had no good idea what to do with.

 

For years China simply piled these dollars into their purchase of US treasury bonds.   Washington has long loved this arrangement because it helps the US run trillion-dollar deficits, as it spends like crazy without having to raise taxes.   But the Chinese are too smart to let this losing arrangement continue -- it's costing them way too much money.   With Washington continually creating more trillions out of thin air (click here and here), and record low interest payments being received by the Chinese, for the Treasury bonds they've purchased, China understands full well how much they are losing.   According to Beijing officials, China lost $271 billion between 2003 and 2010 by holding US Treasuries.   And in June of 2011, China's National Development and Reform Commission announced it could lose another $578 billion if it continues to hold these huge US debts.  

 

Not surprisingly then, the Chinese government has begun to take drastic measures to protect their wealth:   Two high-level officials   (Zhou Xiaochuan, the head of the Chinese central bank and Xia Bin, a member of the monetary policy committee of the central bank)   recently made it clear that they are ready to take action.   But China isn't simply planning to pull all their money out of Treasuries.   There's much more to their plan than that.

 

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China is willing to take some short-term losses for long-term gains, which is why it was no surprise when an overlooked article in the International Business Times revealed a shocking announcement, one that the mainstream media has refused to acknowledge.  This article stated that, in a secret alliance with Russia, China has launched what will prove to be the ultimate attack on US supremacy, i.e. an attack on the United States' last great export machine and its key to global domination for the last 40 years:   the petrodollar.   Here then was the shot across the bow that has kicked off an economic war between the US and China, one that will lead to the end of the 30-year bull market in US bonds.

 

Understand that America has gone to great lengths to prevent this from happening.   It's the reason we took down Saddam Hussein, Muammar Gaddafi and why we're now imposing sanctions on Iran.   But with our weakened military and our bloated national debt, China now has the perfect opportunity to take us down.   And unfortunately for us, their $3.5 trillion in holdings of US currency helped them launch their first wave of assaults on September 6, 2012.   But first, before describing this in more detail, we need to briefly review the history that has led to this assault.  

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)
 

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