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Russia, China, and the SDRs Thing

by Mr. Moto

There appears to me some substance in the Russia, China and SDRs news.

I have been waiting on what opportunity both of them, together, would find for themselves. Not that they are to blame for anything. They must do what is best for them.

News has also been that Russia intends to up its gold reserves by 10%, which dovetails nicely with the SDRs suggestion offered by both Russia and China.

Just a threat? Maybe.

China obviously desires to hold assets other than U.S. Treasuries. Not that they would sell, only purchase something else. How much?

It seems Russia and China could gobble-up all the IMF’s gold without breaking a sweat. And, given the opportunity, I think they would.

I do not see that either of them have much confidence in the way the U.S. continues to pursue financial and economic stability. I believe they see another trillion dollars, or so, printed in the near future.

Moving to IMF SDRs as a “super-reserve” currency would provide China a subtle means to decrease its accumulation of US dollar assets, rebalancing its reserves to match the SDR basket that is around 45% US dollars. China’s reserves were recently reported at roundly 65% US dollars.

Lastly, consider the Georgia crisis, our recent performances in South Asia, and a possible missile shield in Eastern Europe. Some people are not real happy with us. They may not wish to annihilate us, but crippling would not be out of the question.

Out of concern for themselves and to deliver a geopolitical blow, I can not help but feel the time is near that Russia and China cause some hurt.

But they require further economic and financial deterioration in the US; something that provides an opportunity to do what they would like to do anyway.

As has been their way for entirely too long, U.S. politicians, their overlords and oligarchs, as well as the electronic and print media, will blame this on anything but our own consequences.

Could be, too, that Russia and China have quietly threatened to purchase gold in size. And they may very well.

An ultimatum of sorts may have already been delivered.

Given that we experience some further economic deterioration, what would Washington prefer: SDRs interfering with the dollars’ reserve status, or the purchasing of gold by Russia and China somewhere on the order of 3,400 tonnes?

If China and Russia hold the trump card, the answer may very well be gold. All they require is an excuse.

I would think Russia and China may prefer, too, that the Anglo-American cartel not have its way so much with the price of gold; or most other commodities for that matter.

What happens here in the US should something of this nature come about? The forex value of the dollar would decline sharply, and the financial markets would blow right by the Federal Reserve as they move market rates of interest higher.

Of course, these consequences also do something to the deflationary spiral in asset prices here in the U.S.

All this will not be so good for individuals who may not be prepared. But, again, those who have handled the recent calamity so terribly, will have someone beyond our borders to blame.

Lastly, I am not so concerned for what China and/or Russia may do. I do worry for how U.S. policy-makers might respond, and what opportunities many powerful people here will make for themselves.

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