China Is Working to Make the US Obsolete (Video)
Alasdair Macleod, head of research for GoldMoney, explained to USAWatchdog that America is losing influence in international banking. China is steadily gaining more support for a new bank that would finance major infrastructure projects in developing countries.
The Asia Infrastructure Investment Bank (AIIB) represents enormous investment potential by creating an Asian market enveloping more than half the world’s population. China already has support for the AIIB from countries throughout Asia, the Middle East, and the eurozone. However, it is doubtful that China will ever invite the United States to be a member. In fact, it would probably prefer the US dollar to play no part in the what would be the largest market the world has ever seen.
The US is being left in the dust in other ways as well. While China continues to buy up gold, Macleod warned that almost all Western traders fail to understand the value of the commodity. To compete with the growing economic powerhouses in Asia, the US should adopt a similar strategy of gold accumulation and simultaneously stop flooding the world with dollars that will have to return home one day.
Highlights from the interview:
“The AIIB [Asia Infrastructure Investment Bank] is basically led by China… Now the reason this bank is being set up is twofold. Firstly, China wants, through the Shanghai Cooperation Organization, with Russia, to build the largest internal market the world has ever seen. It will run roughly from Genghis Khan’s Straits of Bering to the gates of Jerusalem. We’re talking over half the world’s population once India joins in… From America’s point of view, she’s losing a huge sphere of influence in the Pacific. You then come over to Europe, where you’ve got NATO. The importance of the AIIB is that NATO’s members have decided that commercial logic is driving policy, as far as they’re concerned, a lot more political logic. Even though they’re still members of NATO, they’re all deserting the ship as far as America is concerned and signing up to join the AIIB… And this is happening outside the control of America, and that is really what is upsetting America… I don’t think America can join this [bank]. I very much doubt China would let her in…
“I don’t think it’s any secret to anybody that China has been increasing the use of its currency for trade settlement. What it wants to do is it wants get away from using the dollar as much as possible and particularly get away from using the dollar for trade settlement within the Shanghai Cooperation Organization. It’s not just a question of China is accumulating dollars. This is something that China does not want to see. It does not want America to know every move they make in terms of trade. It’s also a question of the fact that every bank transaction in dollars is reflected in an account back in New York…
“You can see that with this new bank and everybody trying to get on board with it, because they recognize the financial implications and the financial business, basically it undermines the relationships between America and its NATO partners. I think the idea that we’re going to be supporting further actions against Russia, that is going to be more and more tricky for America to make stick…
“I follow gold extremely closely. I’m aware of legislation on gold as to how that was going to be proceeded in China. The original legislation came out in 1983, and since then they have stuck to this path. They have continued to acquire gold secretly, and they have now let their own population buy into gold. This was all, if you like, written into stone a long time ago. The Chinese plan a long way ahead. What we’re seeing today is nothing new, and that’s worth emphasizing…
“I think the dollar does have problems. There’s no doubt that there are an awful lot of dollars around the world, which, one way or another, are not going to have very much use. We already have the situation with the old petrodollar. The Saudis in the Gulf states sell hardly any oil to the States now. It all goes to China. So they don’t have any use for the dollar. In essence, I think in the coming months it would be not unreasonable for the Saudis to turn around and say, ‘Henceforth, we’re going to be perfectly happy to accept payment in the form of yuan…’ As that happens, you’ve got this problem that there are all these surplus dollars washing around the world, which, naturally, will try to get home… I would think that the dollar will weaken later on this year…
“All markets are horribly mis-priced. It’s not just gold… the financial markets are completely mis-priced at the moment. And gold is part of that. [Gold is ridiculously underpriced]…
“They [the Fed] can’t really raise rates without really collapsing the system. What we must have is economic recovery for them to be able to raise rates…
“Another problem is because gold has been out of the system since the Nixon chop back in 1971, I think there are very, very few people in the financial centers now who actually understand the role of gold. When I first went into the stock market, we didn’t have all these guys who came out of university with Keynesian economics and monetarist theory and all the rest of it. Basically, we were all traders, and we learned the hard way, and we learned what was right and what was wrong… You don’t get anyone trading [now] who hasn’t got good degrees. And good degrees have educated the sense of what gold is out of their brains… All the members of the Shanghai Cooperation Organization are buyers of gold…
“In the longer term, it’s not going to take very much of a rise in the price of gold, for example, to compensate for any losses that the Chinese might have on their US Treasury portfolio… I think what’s likely to drive the gold price up is not China and it’s not India. I think it’s us. The fact is we’ve sold this down so much that there’s so little gold left in vaults now. So much so that even HSBC has stopped providing facilities to its private customers… There is not enough gold for us to buy. The stocks are effectively very very low, and any buyers coming into the market are going to have to bid it up to get it. They’ll probably end up bidding it up a long, long way. Once it starts moving, and we could be in the early stages of it now… but once it really starts moving and people get the feeling that they have missed the bottom, then it could move up very, very quickly.”
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