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Friday, September 16, 2011

China says U.S. flooding world with dollars amounts to default by inflation, will hence 'liquidate' US Treasuries

China to 'liquidate' US Treasuries, not dollars

(The Telegraph) -- by Ambrose Evans-Pritchard --

The debt markets have been warned.

A key rate setter-for China's central bank let slip – or was it a slip? – that Beijing aims to run down its portfolio of US debt as soon as safely possible.

"The incremental parts of our of our foreign reserve holdings should be invested in physical assets," said Li Daokui at the World Economic Forum in the very rainy city of Dalian – former Port Arthur from Russian colonial days.

"We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way."

"Once the US Treasury market stabilizes we can liquidate more of our holdings of Treasuries," he said.

To my knowledge, this is the first time that a top adviser to China's central bank has uttered the word "liquidate". Until now the policy has been to diversify slowly by investing the fresh $200bn accumulated each quarter into other currencies and assets – chiefly AAA euro debt from Germany, France and the hard core.

We don't know how much US debt is held by SAFE (State Administration of Foreign Exchange), the bank's FX arm. The figure is thought to be over $2.2 trillion.

The Chinese are clearly vexed with Washington, viewing the Fed's QE as a stealth default on US debt. Mr Li came close to calling America a basket case, saying the picture is far worse than when Ronald Reagan and Margaret Thatcher took over in the early 1980s.

Mr Li, one of three outside academics on China's MPC, described the debt deals on Capitol Hill as "just trying to by time", saying it will not be enough to stop America's "debt dynamic" turning dangerous...MORE...LINK

Chris Moore comments:

This is just another example of how the post-Western, post-Christian and pseudo-Christian Global elites are destroying Western civilization. They’ve essentially plundered the good credit built up by responsible, past generations on a massive, self-serving spending spree.

They don’t care; they’re money-worshipping sociopaths. To them, self-enrichment at any cost is the highest principle on earth.

This is why they should be stripped of their wealth and put on trial for treason. The funds can be used to salvage what’s left of the future for younger generations of Americans and Westerners.

Finally, America can use the long reach of the U.S. Military and Homeland Security for something productive: tracking down and imprisoning these sociopaths, and stripping them of their wealth.

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