via the London Telegraph: “The head of China’s central bank has given the strongest signal yet that the country will move away from pegging its currency to the dollar, but he said any changes would be gradual.”

The government of China took a radical step toward no longer artificially propping up the reckless, overinflated monopoly money known as the U.S. dollar. The consequences of the never-ending printing presses at the Federal [sic] Reserve and U.S. Treasury and the U.S. central bank’s limitless ‘good faith’ guarantees to bailout infinite risk taken on by the elite of the financial class on the backs of American serfs and the global plantation are coming to fruition.

Zhou Xiaochuan, China’s central bank governor said at an annual legislative session in Bejing “that the days of the ‘special yuan’ policy were numbered,” Garry White reports today at the London Telegraph. “He described the dollar peg as a ‘temporary’ response to the global financial crisis, but gave no timescale for any change in policy.” Mr. White later adds:

The relative value of the dollar is important to China, as the country is the world’s largest holder of U.S. government debt. According to data form the U.S. Treasury Department, China held $894.8bn (£591bn) of U.S. Treasury securities at the end of December. Roughly two-thirds of the country’s reserves are believed to be in dollars and dollar-denominated assets such as gold.

In a Dececmber post on the surge of gold’s value against the USD, we wrote:

“China’s manufacturing grew at the fastest pace in five years,” Claudia Carpenter and Millie Munshi report at Bloomberg, also contributing to the fall in the USD. They add that China, Russia and India have all recently increased their holdings in gold.

Last month, gold hit a then-record high when India replaced billions of U.S. dollars with gold. India and China have formed an economic alliance (BRIC) with Brazil and Russia to begin dumping U.S. monopoly money from their reserves toward hard reserves like gold. The USD’s saving grace, Middle East oil, is wearing thin as Middle East members of the Organization of the Petroleum Exporting Countries are conspiring with Japan and other countries to abandon the U.S. dollar. Iran has completely abandoned the dollar from the its reserves. Nine Latin American powers have approved a document to replace the dollar with a new intra-regional currency. Japan has neither the financial nor the political capital to further enable the losing proposition of the U.S. warfare-welfare State.

When India conducted a relative firesale on the USD in early November, Little Alex included in a post:

“An I.M.F. official said the sale was concluded at an average price of about $1,045 an ounce and that the transaction would be paid in hard currency and not in [SDR’s],” Surojit Gupta and Lesley Wroughton report at Reuters. The move comes months after China announced that as it was heavily increasing its holdings in toxic U.S. currency, it had increased its gold reserves by nearly 60% over the last six years.

“The proportion of gold as part of its total foreign reserves has fallen from over 20% in 1994 to just under 4%,” Reuters adds—as paper money issued in “good faith” and credit guarantees by central banks have flooded the marketplace to the financial oligarchs on the backs of the global plantation. “The market’s focus has now shifted to China, which has reportedly been in talks with the I.M.F. about buying some of the fund’s bullion as Beijing seeks to shift some of its more than $2tn in foreign exchange reserves away from the U.S. dollar.”

As rationally predicted by us and reports on geopolitical events, alliances and closed-door meeting by international journalists like Robert Fisk, the process of geopolitical factions dumping the USD will have to be a long one. After the faith is gone (as events, reason and minimal consciousness tells us it is and has been for a number of years), the tactic of large U.S. paper/dollar/debt holders will be to artificially exaggerate good faith to convince others their holdings are worth buying or the abandonment constitutes a globally widespread loss of catastophic proportions like this world has never seen. Confirming this theory, Mr. White concluded his article on Mr. Zhou’s statements:

When China eventually abandons the peg, the country will have to manage its exit strategy carefully. If the central bank allows a gradual appreciation of its currency, which would be the best strategy for its exporters, there could be an inflow of funds from speculators betting on further appreciation. However, a one-off revaluation could deal a severe blow to the country’s manufacturing sector.

  1. […] The rest is here: China Ready to Abandon U.S. Dollar « Little Alex in Wonderland […]

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