*****Yuan Displacing Us Dollar As Medium Of Exchange*****

Bloomberg reports that yuan is increasingly displacing the US dollar as the medium of exchange across Asian borders.

(emphasis mine) [my comment]

Yuan Deposes Dollar on China Border in Sign of Future
By Bloomberg News

July 8 (Bloomberg) -- Huang Xinyuan, who sells mining equipment and pesticides to customers across China's border with Vietnam, says he no longer wants payment in U.S. dollars and prefers the yuan.

Sales using the greenback at Guangxi Jinbei Group, where Huang is vice president, dropped to 30 percent of contracts in 2008 from 87 percent in 2007. The yuan, which has gained 21 percent since it was allowed to strengthen against the dollar starting in 2005, offers greater stability, he said.

"In recent years, the dollar has gone in only one direction and that is down," said Huang, 45, in his second- floor office in Pingxiang, a town set amongst karst limestone hills and sugar-cane fields in China's southwest Guangxi Zhuang Autonomous Region, three kilometers (1.9 miles) from Vietnam. "Settling our orders in yuan removes a major risk."

China expanded yuan settlement agreements last week from border zones to its largest financial centers, including Shanghai, Guangzhou and Hong Kong. The program is being rolled out across Malaysia, Indonesia, Brazil and Russia, all nations seeking to reduce the dollar's role as the linchpin of world finance and trade.

The central bank first brought up the concept of a supranational currency to replace the greenback in reserves in March. It will sponsor use of the yuan in trade by arranging export tax rebates. Russia and India said the global financial crisis had highlighted the dollar's flaws and called for a debate before the Group of Eight leaders meet in L'Aquila, Italy, starting today.

'Raise Questions'

"It does give you an idea of what the future could look like," said Ben Simpfendorfer, chief China economist in Hong Kong at Royal Bank of Scotland Group Plc, the fifth-biggest foreign-exchange trader. "The Chinese see an opportunity at this point to raise questions about the dollar and its status as a reserve currency."

China, the biggest overseas holder of U.S. Treasuries, trimmed its holdings of government notes and bonds by $4.4 billion to $763.5 billion in April. Premier Wen Jiabao said in March that he was "worried" the dollar would weaken as U.S. President Barack Obama sells record amounts of debt to fund his $787 billion economic stimulus plan.

"The objective is to develop a substitute for the dollar as the world's reserve currency," said Tim Condon, Singapore- based head of Asia research at ING Groep NV, part of the largest Dutch financial-services group. "That will reduce the ability of the U.S. government to finance deficits with impunity."

'Justifiable Confidence'

Treasury Secretary Timothy Geithner said during a visit to Beijing on June 2 that Chinese officials expressed "justifiable confidence" in the strength of the American economy [They also laughed at him when he told them China's investment in US assets were safe]. China expects the greenback to maintain its role for "many years to come," Deputy Foreign Minister He Yafei told reporters in Rome on July 5.

In Pingxiang's Puzhai border zone, traders prefer the yuan. A parking lot that doubles as a wholesale market is jammed with container trucks with license plates from as far as Shandong, about 1,930 kilometers to the north. Garlic-laden motorcycles snake through a checkpoint to the border control.

Traders from Vietnam bring harvests of lychees and dragon fruit, departing with toys, household appliances and medical supplies to sell back home.

Luo Huiguang, 27, who sells as much as 100 tons daily of onions and garlic, collects payment in yuan wired from Vietnam.

"I prefer it to the Vietnam dong or U.S. dollar,"
said Luo as he shuttled between warehouses and trucks. "There's less hassle and we don't need to convert the currency."

Erase Profits

Exporters typically set prices to earn 5 percent profit on sales, so 1 percent currency transaction costs and swings in the value of the dollar can wipe out returns, Simpfendorfer said. Many businesses lack the scale to hedge foreign-exchange risks, said Huang at Jinbei, which did $50 million in trade last year.

Limited use of the yuan has been allowed since 2003 in border trade with Vietnam and Laos to the south and Mongolia and Russia in the north, according to a book published by the Beijing-based State Administration of Foreign Exchange.

The central bank extended settlement last week by offering companies in Shanghai and four southern cities tax breaks to start conducting trade in the currency with Hong Kong, Macau and the 10 members of the Association of Southeast Asian Nations, which includes Indonesia, Thailand and Malaysia. [China is offering TAX BREAKS to encourage the use of yuan in trade settlement. This is clearly designed to accelerate the adoption of the currency and shows how serious China is about replacing the dollar.]

In five years, yuan contracts may account for 50 percent of China's trade with Hong Kong, which totaled $204 billion in 2008, according to Lian Ping, chief economist in Shanghai at Bank of Communications Co., the nation's fifth-largest lender. They may make up 30 percent of shipments between the nation and Asean countries that last year reached $231 billion, he said.

Yuan Appreciation

"The yuan will resume appreciation next year," ["yuan will resume appreciation" = the dollar will resume depreciation] Lian said. "More people will use the yuan in international trade."

China's central bank has limited the yuan's gains in the past year to 0.3 percent to help support exports during the global recession. The dollar may depreciate by 5 percent annually against the currency over the next two years [it will be far more than that], ING's Condon said. Simpfendorfer forecast the yuan will rise 5 percent to 6.5 per dollar from 6.833 by the middle of next year. The median forecast of 27 analysts in a Bloomberg survey was 6.7.

For all the concern that the dollar's role is waning, China has continued to lead buying of U.S. assets. The greenback accounted for 65 percent of central bank reserves on March 31, up from 62.8 percent in June 2008 , according to the International Monetary Fund in Washington.

'China's Desire'

"This is not a six-month or one-year story [Yes, it is. Rising commodity prices will force China to move faster than it wants]," said Kenneth Akintewe, a Singapore-based fund manager who helps oversee $138 billion of assets at Aberdeen Asset Management Plc. "China's desire to control the currency, particularly in the current environment, will supersede its ambitions for the yuan [and China's desperation to control inflation will supersede its desire to control its currency]."

China's currency isn't fully convertible for investment purposes. HSBC Holdings Plc, based in London, and Bank of East Asia Ltd. in Hong Kong won approval in May to be the first foreign banks to sell yuan bonds in Hong Kong.

Asian companies may be willing to [will] accept yuan to win market share in the world's fastest-growing economy, said Pushpanathan Sundram, a deputy secretary-general of Asean. The U.S. economy will contract 3 percent in 2009, while China expands 7.2 percent and the Asia-Pacific region grows 5 percent, according to World Bank forecasts.

"The use of the yuan may eventually boil down to simple economics," Pushpanathan said. "Given China's growing share in international trade, traders may find it makes economic sense to make settlements in the yuan."

Russia, Brazil

Since December, the People's Bank of China has provided 650 billion yuan ($95 billion) to Argentina, Belarus, Hong Kong, Indonesia, Malaysia and South Korea through so-called currency swaps, encouraging its use in trade and finance. Russia and China agreed to expand use of the ruble and yuan in bilateral trade on June 17. Brazil and China began studying a similar proposal in May.

Converting payments to a third currency "seems to be unreasonable" when Chinese partners are both supplying equipment and buying processed raw materials, said Pavel Maslovsky, deputy chairman of Peter Hambro Mining Plc, Russia's second-largest gold producer. It develops iron ore projects in the Amur region bordering China.

"The Chinese economy is in such a shape now that their project to export yuan may turn highly efficient," said Eduard Taran, chairman of OOO RATM Holding, a Siberian cement producer also considering buying Chinese machinery in yuan and exporting output in the currency.

About 160 kilometers north of Pingxiang, yellow cranes jut skywards from a dusty 3 square-kilometer construction site in the provincial capital of Nanning. The plot will house trade missions and businesses from the Asean countries.

"Many countries view China as the savior in this global economic crisis," said Pan Hejun, vice-mayor. "It's natural that other countries will be willing to use the yuan to settle trade and hold it among their reserves."

The Star.com reports that yuan settlement takes off smoothly.

Saturday July 11, 2009
Yuan settlement takes off smoothly
SHANGHAI BUND WITH CHOW HOW BAN

A WEEK into the new policy on yuan settlement for cross-border trade, Chinese companies and their foreign trade partners are finding it a breeze.

However, this being a pilot project by China's Central Bank to test the waters, problems related to the renminbi's exchange rate and convenience of settling in yuan may yet pop up in the coming months.

Late last year
[on Chrismas Day, if you remember], the State Council made its first announcement on China's intention to reduce its dependence on the US dollar.

Four months later, the government designated Shanghai and four cities in Guangdong province — Guangzhou, Dongguan, Shenzhen and Zhuhai — as participants in a test on the use the yuan for cross-border transactions.

The first yuan trade settlement was carried out in Shanghai on July 6.

Indonesia-based PT Central Energi, through its Bank of China International account in Hong Kong, made payment of 13.68 million yuan (RM7mil) to Shanghai Electric Group for a power facility deal.

The money was credited into the Shanghai company's Bank of China account in the city.

In another deal, Shanghai Huanyu Import & Export Co signed a contract to import 300,000 yuan (RM156,000) worth of lights and audio equipment from Hong Kong-based Ever Keen International Ltd.

The transaction was handled by HSBC in Hong Kong and Bank of Communications in Shanghai.

Previously, Chinese companies had to convert yuan into US dollars or other currencies to settle international trade.

So far, only Bank of China and Bank of Communications have been authorised by the central bank to conduct yuan trade settlements for local companies.

The pilot project only covers trade between companies in China and their trade partners in the special administrative regions of Hong Kong and Macau and Asean members.

Even then,
not all Chinese companies can trade in yuan, a source close to the participating banks said. For a start, this is limited to those companies approved by the Chinese government.

Bank of China and Bank of Communications signed clearing agreements with participating banks in Hong Kong, Macau, Malaysia, Thailand, Singapore and Indonesia over the week.

It is learnt that Maybank in Malaysia, OCBC in Singapore and Bank Mandiri in Indonesia are among the 11 Bank of China partners overseas.

Bank of Communications has made clearing agreements with eight banks, including HSBC and Hang Seng Bank.

Among challenges the banks and their clients may face will be whether participating banks can offer competitive exchange rates restricted by the regulatory rate set by Chinese authorities, and whether the payee can keep or trade the yuan in the foreign bank after the transactions.

Nevertheless,
a new settlement system will mean exciting times in the banking industry. Economists believe that it will augur well especially for local co mpanies.

The central bank had said that
the project addresses the concerns of companies in China and neighbouring nations of relatively huge foreign-exchange risks, especially as major currencies like the greenback and Euro have been fluctuating since the onset of the global financial crisis.

The Shanghai municipal government said the policy will make the renminbi a more recognisable currency internationally, in line with the city's aim to become a global financial centre.

Mayor Han Zheng said: "The yuan settlement trial in Shanghai has great significance for the city's vision to become an international financial centre."

The pilot project will also benefit cities in the Yangtze River Delta region.

Shanghai Daily quoted central bank vice-governor Su Ning as saying that the programme would help bolster the mainland's trade with Hong Kong, Macau and Asean nations.

He said
the yuan, which had strengthened more than 20% against the greenback, was a stable trading currency comparatively.

Xu Weimin, chairman of Shanghai Silk Group, which also used the yuan for trade settlement, said: "It's always good to have an additional choice.

"The US dollar's fluctuations have hurt us badly. If our clients agree, we would prefer to use the yuan to settle trade."

To make transactions easier,
the central bank has outlined ways for participating overseas banks to source for Chinese currency.

Financial institutions in these places will be able to buy or borrow in yuan from mainland lenders for the first time to settle trades. [Meaning that overseas financial institutions will be able to hold yuan reserves.]

Mainland lenders can also provide trade finance to overseas firms as well.

(Prior to this, the central bank had six currency swap deals valued at 650 billion yuan or RM338bil with Hong Kong, Malaysia, Indonesia, South Korea, Belarus and Argentina to allow its counterparts to sell yuan to importers buying Chinese goods.)

The new yuan trade move came amid China's increasing call for the world monetary system to move away from US dollar dominance.

Premier Wen Jiabao, in March, expressed concern that the weakening US dollar would cause losses on the US assets it holds.

As of May, the United States owed China US$772bil (RM2.8 trillion). The United States had to issue a larger amount of Treasury bonds to finance its economic rescue packages and budget deficit, and this threatens devaluation of the debts and the dollar.

China has pressed for a bigger role for developing countries in international monetary policy, but is not quite ready to push for a new global currency to replace the dollar.

The Wall Street Journal reports that China's central bank welcomes more banks getting involved in yuan settlement.

JULY 20, 2009, 5:29 A.M. ET
China PBOC Vice Gov: Welcome More Banks In Yuan Trade Trial

BEIJING (Dow Jones)--China's central bank welcomes more banks getting involved in the pilot program to use the yuan as a settlement currency for trade, People's Bank of China Vice Gov. Su Ning said.

About 10 or so banks in Shanghai are actively preparing for the trial, and a few foreign banks have also expressed an interest in participating, Su said in an interview in a question-and-answer format in the latest edition of the central bank-backed China Finance magazine.

"We warmly welcome this," Su said.

Beijing launched the trial program for settling cross-border trade deals in yuan between selected companies and designated commercial banks as part of efforts to promote the broader use of the currency and gradually reduce China's dependence on the dollar.

So far Bank of China Ltd. (3988.HK) and Bank of Communications Ltd. (3328.HK) have settled transactions in yuan as part of the trial.

Newsmax reports that China moves to internationalize currency.

China Moves to Internationalize Currency
Friday, July 17, 2009 8:35 AM

China is turning its talk about making the renminbi an alternative to the dollar into action, said Qu Hongbin, China chief economist at HSBC.

He told the Financial Times that China is moving faster than expected to make the renminbi a truly international currency.

"China is beginning an ambitious scheme to raise the role of the renminbi in international trade and finance and to reduce reliance on the U.S. dollar," Qu said. "This will likely be a multi-year and gradual process. Yet, we believe the pace is likely to be faster than many expect."

The move could mean that half of China's $2 trillion annual trade total is settled in renminbi by 2012, a far cry from the 10-percent total today. [half of China's $2 trillion annual trade total will be settled in renminbi by 2011, if not 2010]

Hu echoed what U.S. officials have been saying for years: internationalization of the renminbi should be a major priority, matching China's rise up the economic ladder.

China announced a program last week enlarging renminbi settlement accords between Hong Kong and five major trading cities.

China also has initiated talks with other central banks in Asia to create more swap agreements, covering all the country's trade within the continent, excluding Japan. [Japan's exclusion is no accident. The country, together with the UK and the US, is likely to face a currency collapse in the near future]

Most experts anticipate the dollar's role as a reserve currency won't be challenged for some time. ["Most experts" didn't see credit crisis coming. "most experts" don't have a clue what is coming in the next year either.]
But World Bank President Robert Zoellick told Reuters: "The U.S. should take all these (remarks by) commentators as serious statements about the need to preserve the unique status of the dollar as a reserve currency." [Three years from now, virtually no international trades will be settled in dollars.]

My reaction: The yuan is increasingly displacing the US dollar as the international medium of exchange.


Yuan has already deposed US dollar on Chinese Border

1) In Pingxiang's Puzhai border zone, traders prefer the yuan, with payments collected in yuan wired from Vietnam.

2) Limited use of the yuan has been allowed since 2003 in border trade with Vietnam and Laos to the south and Mongolia and Russia in the north.

Yuan settlement has been expanded from border zones to China's largest financial centers

1) China has expanded yuan settlement agreements from border zones to its largest financial centers, including Shanghai, Guangzhou and Hong Kong.

2) The yuan settlement program has been rolled out across Malaysia, Indonesia, Brazil and Russia, all nations seeking to reduce the dollar's role as the linchpin of world finance and trade.

Reasons for yuan trade settlement

1) The program's objective is to develop a substitute for the dollar as the world's reserve currency that will reduce the ability of the U.S. government to finance deficits with impunity.

2) the project addresses the concerns of companies in China and neighbouring nations of relatively huge foreign-exchange risks, especially as major currencies like the greenback

3) the yuan, which had strengthened more than 20% against the greenback, is seen a stable trading currency comparatively.

Yuan settlement takes off smoothly

1) A WEEK into the new policy on yuan settlement for cross-border trade, Chinese companies and their foreign trade partners are finding it a breeze.

2) Previously, Chinese companies had to convert yuan into US dollars or other currencies to settle international trade.

3) The first yuan trade settlement was carried out in Shanghai on July 6.

Implications of yuan settlement

1) The policy will make the renminbi a more recognisable currency internationally

2) The new yuan trade move cames amid China's increasing call for the world monetary system to move away from US dollar dominance.

3) China is turning its talk about making the renminbi as an alternative to the dollar into action.

4) China is moving faster than expected to make the renminbi a truly international currency.

5) Overseas Financial institutions participating in the program will be able to buy or borrow in yuan from mainland lenders for the first time to settle trades. This means that overseas financial institutions will be able to hold yuan reserves.

Other steps towards internationalizing the yuan

1) Since December, the People's Bank of China has provided 650 billion yuan ($95 billion) to Argentina, Belarus, Hong Kong, Indonesia, Malaysia and South Korea through so-called currency swaps, to encourage the use of its currency in trade and finance.

2) Russia and China agreed to expand use of the ruble and yuan in bilateral trade on June 17.

3) Brazil and China began studying a similar proposal in May.

More worrisome developments for the dollar

1) China, the biggest overseas holder of U.S. Treasuries, trimmed its holdings of government notes and bonds by $4.4 billion to $763.5 billion in April.

2) The central bank extended settlement last week by offering companies in Shanghai and four southern cities tax breaks to start conducting trade in the currency with Hong Kong, Macau and the 10 members of the Association of Southeast Asian Nations, which includes Indonesia, Thailand and Malaysia.

3) Although China's central bank has limited the yuan's gains in the past year to 0.3 percent to help support exports during the global recession, most expect the yuan to resume appreciation next year (if not sooner).

China continues to more forwards

1) China's central bank is welcoming more banks getting involved in the pilot program to use the yuan as a settlement currency for trade

2) About 10 or so banks in Shanghai are actively preparing for the trial, and a few foreign banks have also expressed an interest in participating

3) China also has initiated talks with other central banks in Asia to create more swap agreements, covering all the country's trade within the continent, excluding Japan.


Conclusion: Implications of all these yuan developments:

1) China is offering TAX BREAKS to encourage the use of yuan in trade settlement. This is clearly designed to accelerate the adoption of the currency and shows how serious China is about replacing the dollar

2) While most "experts" anticipate the dollar's role as a reserve currency won't be challenged for some time, rising commodity prices will force China to move faster than it wants in appreciating the yuan. China's desperation to control inflation will supersede its desire to control its currency.

3) Allowing overseas financial institutions to hold yuan reserves is one step away from allowing foreign central banks to do the same.

4) Half of China's $2 trillion annual trade total will be settled in renminbi by 2011, if not 2010. Three years from now, virtually no international trades will be settled in dollars.

5) Japan's exclusion from talks with other central banks in Asia to create more swap agreements is no accident and reflex the weakness of Japan's economy (which is overly reliant on US exports and is facing a demographic collapse). The country, together with the UK and the US, is likely to experience a currency collapse over the next two years]


It was only six months ago that China made the yuan an international currency, look how fast they have moved since them.

This entry was posted in China, Currency_Collapse, News_Developments. Bookmark the permalink.

15 Responses to *****Yuan Displacing Us Dollar As Medium Of Exchange*****

  1. Anonymous says:

    one thing i dislike about china/us currency is that they're in paper, not polymer.

  2. Eric; Everbank offers a 3 year CD that invests in BRIC currencies.

    http://www.everbank.com/001CertificatesMSBRIC.aspx?referID=11609

    Interesting timing don't you think?

  3. James says:

    Although the Chinese are cutting back on US Treasury purchases, it looks like other countries or someone is buying up record amounts of our unsafe debt. US Debt Being Purchased in Record Amounts I wonder how long the world is going to buy up our debt and support our weak dollar. Any solid data out there showing who is buying these US Treasuries?

  4. Robert says:

    @conservative whack job, google about everbank and their Icelandic Kroner CD scandal. Eric covered it here on Marketskeptics too:

    *****Bad Ways Of Betting Against The Dollar*****

    I wouldn't touch these guys with a barge pole.

  5. . says:

    China to Deploy Foreign Reserves

    By Jamil Anderlini in Beijing

    Published: July 21 2009 19:09 | Last updated: July 21 2009 19:09

    Beijing will use its foreign exchange reserves, the largest in the world, to support and accelerate overseas expansion and acquisitions by Chinese companies, Wen Jiabao, the country’s premier, said in comments published on Tuesday.

    “We should hasten the implementation of our ‘going out’ strategy and combine the utilisation of foreign exchange reserves with the ‘going out’ of our enterprises,” he told Chinese diplomats late on Monday.

    Mr Wen said Beijing also wanted Chinese companies to increase its share of global exports.

    The “going out” strategy is a slogan for encouraging investment and acquisitions abroad, particularly by big state-owned industrial groups such as PetroChina, Chinalco, China Telecom and Bank of China.

    Qu Hongbin, chief China economist at HSBC, said: “This is the first time we have heard an official articulation of this policy ... to directly support corporations to buy offshore assets.”

    China’s outbound non-financial direct investment rose to $40.7bn last year from just $143m in 2002.

    Mr Wen did not elaborate on how much of the $2,132bn of reserves would be channelled to Chinese enterprises but Mr Qu said this was part of a strategy to reduce its reliance on the US dollar as a reserve currency.

    “This is reserve diversification in a broader sense. Instead of accumulating foreign exchange reserves and short-term financial assets, the government wants the nation to accumulate more long-term corporate real assets.”

    State-owned groups, particularly in the oil and natural resources sectors, have stepped up their hunt for overseas companies and assets on sale because of the global crisis.

    China Investment Corp, the $200bn sovereign wealth fund, has been buying stakes in overseas resources companies and has taken a 1.1 per cent stake in Diageo, the British distiller.

    In an interview published in state-controlled media, the chairman of China Development Bank said Chinese outbound investment would accelerate but should focus on resource-rich developing economies.

    “Everyone is saying we should go to the western markets to scoop up [underpriced assets],” said Chen Yuan. “I think we should not go to America’s Wall Street, but should look more to places with natural and energy resources.”

  6. . says:

    James,
    Jim Willie had this to say about the "someone" [The Fed] who is buying up record amounts of our debt. It appears the Fed is 'laundering' their purchases through various Carribean banks.

    "The major question unasked and unanswered is whether the USFed gave foreign central banks the USDollars with which to bid up the USTreasurys at auction. My belief is obviously yes, for three reasons. First, the USFed was struggling at auctions with rising bond yields and bad publicity. Second, the process was applying sufficient pressure to their own stable of primary bond dealers, which was sitting on over $360 billion in gradually lower quality bond inventory, to bring down their own dealer network. Dresdner Kleinwort exited the dealer network, but two Canadian big banks entered (or are entering) the dealer network motivated by grave imprudence. See Toronto Dominion and Royal Bank of Canada. Third, they have the means, they have the ability, they have the sway, they have the bold defiant arrogance. The US banker syndicate can rejigger the Indirect Bidder definition, but that is but a small smokescreen that fades by noontime. Notice how Indirect Bidders (largely foreign central banks) grabbed over half the USTreasury supply with a participation rate of 54% in a recent purchase of $18.878 billion of the $35 billion for sale."

  7. Paul says:

    Here's something to add to the list of things to watch: http://news.bbc.co.uk/2/hi/business/8046599.stm

    When September roles around the Japanese people will be electing new leaders. In case you all haven't heard, if Masaharu Nakagawa's Democratic Party of Japan wins a controlling stake, they will stop buying US bonds unless they are denominated in yen. Just something to keep an eye on as the end of summer approaches.

  8. CDB says:

    Paul said: "In case you all haven't heard, if Masaharu Nakagawa's Democratic Party of Japan wins a controlling stake, they will stop buying US bonds unless they are denominated in yen."

    Coincidentally, I had just found the following site in Japan that has this to say:

    "There will be a truth commission convened when the Democratic Party of Japan takes power.

    "In the past senior members of Japan's opposition Democratic Party of Japan have told me they intend to set up a South African style truth commission if they ever get power. Since all the opinion polls show they are set to get power in the election to be held on August 30th, that means the truth may start coming out as early as this fall. The most important testimony will that about CIA dirty tricks and murders in Japan. The world will finally be told the truth about how arch-Nazi Heinz (Henry) Kissinger had Prime Minister Kakuei Tanaka removed from power. We will also learn how Prime Ministers Obuchi, Ohira, Takeshita and Hashimoto were murdered for not be obedient enough. Hopefully the Japanese murder team members will appear in Parliament and on TV and describe how they carried out each murder on the orders of their Nazi handlers.

    "There will be a lot of stuff happening this autumn to I recommend that everyone rest up this summer."

    http://benjaminfulford.typepad.com/benjaminfulford/

  9. CDB says:

    Eric,
    Have you heard any of the following lately? The document they are referring to is linked here:

    http://benjaminfulford.typepad.com/.a/6a00d8341c647c53ef011570f60dd3970c-pi

    "The two "Japanese" (actually, both were Filipinos ) arrested in Italy recently reportedly with $134.5 billion worth of F.R.N. s, (....)were also carrying a series of documents signed by the likes of Alan Greenspan and Ben Bernanke with federal reserve logos and stamps embossed, signed and witnessed.

    "The two were released after proving their credentials, and were released because they were carrying genuine diplomatic passports.

    "The Pictures of the documents they carried are attached and we would like to hear some expert opinion on their contents (somebody is preventing us from uploading more than one picture)."

    "According to the official story put out to the corporate media, the Treasuries were forgeries (no doubt they will say the same about the documents pictured here) but if that is the case, why were the people carrying the “forgeries” immediately released, by extreme persons in high places in Italy, who had the power to silence Prime Minister Belosconi?

    The truth is the Treasury certificates they carried were legitimate and are now in the safe hands of a new financial system. The instruments will be used to finance part of a Program at ending war, poverty and environmental destruction. It will also be used to develop previously forbidden technology. We may see some visible changes as early as next week as they carry out the new banking paradigms being incorporated, but not without resistance from the old, abusive Wall Street guard.

    Bernanke’s latest check has bounced but, as mentioned before, things will drag on to the September 30 secret fiscal year end then all hell will break out as the financial world, takes a ninety degree down-turn . The information above comes from very highly placed sources.

    Excerpted from:
    http://benjaminfulford.typepad.com/benjaminfulford/

  10. Anonymous says:

    Oh the storm clouds they my grow all around America, but none, NONE, can match the military might of UNITED STATES OF AMERICA.

    Threaten us, and we will bring our covert ops hornets into your countries, plant dissident seeds and over throw your leadership.

    Hit us where is hurts, and we will nuke every fucken nation that is against us.

    We will never surrender and we wont allow anyone to be above us!

  11. Anonymous says:

    I'm sure the Soviet leadership thought the same way back in the 1970's and 1980's.

  12. Anonymous says:

    Newbie question (learning as I go) - so the smart move would be to purchase yuan?

  13. Numonic says:

    Anon, here's a quote from one of my other replys in another blog...

    "But i wouldn't suggest moving in to China's currency because it too will suffer devaluation even after the dollar defaults on all it's debt. It will suffer devaluation because even though other currencies will be defaulting, China's economy even after the stimulus' will still be in shambles and more stimulus and importing will be needed to stimulate and save domestic demand. Problem is the rest of the worlds manufacturing sector is poor and what China needs, the rest of the world doesn't have. So China will be trying to import enough to satisfy it's domestic demand but it will fail because there won't be enough in the rest of the world to do that. And with all those Chinese dollars chasing not enough products, the value of the Yuan will devalue.
    "

    buy and personally and privately hold physical gold and silver. Be the only one who knows where it is kept.

  14. Anonymous says:

    Thanks Numonic, for the reply.

    That (gold and silver, the kind I can hold in my hand) I am doing.

  15. Eric:
    In "*****Hyperinflation will begin in China and destroy the dollar*****", you said, "The Chinese economy will shrink in 2009". By that do you mean the Chinese economy will shrink in terms of RMB, nominal USD, purchasing power terms, or some combination of those?

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