It’s Official But Don’t Assume It’s Benign

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Chinese Yuan Enters Reserve Currency Status with the IMF

If World War 3 is cyber-economic (and it is), the yesterday we just saw one of our most important weapons given away. Yesterday was a huge day for China. Christine Largade, managing Director of the International Monetary Fund announced that the Yuan has just taken its place alongside the dollar, Euro, British pound, and Japanese yen as an official reserve currency. The move has been expected for a while but was delayed in August.

Initially, the move toward China comes at the expense of the pound, yen, and euro while the dollar retains its dominant ranking in the IMF’s special basket (known as Special Drawing Rights). Before today’s announcement, the makeup of the basket was 42% from the U.S. dollar, 37% for the euro, 11% for the British pound, and 9% for the Japanese yen. Going forward, the dollar will still hold 42%, followed by 31% for the Euro, 11% for the yuan (also known as renminbi), and 8% each for the pound and yen.

While this is being reported as benign or even trivial (according to at least one University of Chicago professor), there are many serious implications that must be addressed. First, this seems pretty similar to the Iran deal. The West gave a lot of concessions and really got very little in return. The Chinese were desperate to get the status and recognition of a reserve currency. We should have demanded an end to their cyber espionage, theft, and hacking. When Presidents Xi and Obama met in Washington a few weeks ago, we were promised that the days of cyber crime were ending. Instead,they have ramped up and the stakes have gotten higher. We’ve also seen Chinese territorial aggression in the international waters of the South China Sea. Most recently, we’ve seen China moving toward satellite warfare which is potentially cataclysmic. We will cover that in a future post. But the fact is that the IMF, representing the West, has rewarded China with nothing in return at least for us. It is as if we see bestowing reserve currency status as somehow completely separate from China’s cyber-economic warfare activities. The frightening fact is that we just handed the Chinese a powerful weapon and simultaneously reduced the value of our economic weapons, with regard to China but also rogue states like North Korea.

That’s not an idle opinion but rather the analysis of The New York Times yesterday:

As the renminbi becomes more deeply woven into the global economy, it undermines the ability of the West to impose financial sanctions on countries accused of human rights abuses and other violations, as in the case of Sudan and North Korea. Such countries can increasingly do transactions in renminbi.

China contends that it is crucial to respect nations’ sovereignty and that leaders should be allowed to set policy without fearing international criticism or intervention. China remains a close business and financial partner of Sudan and North Korea, even inviting the president of Sudan to a recent military parade in Beijing.

The United States is far and away the largest funding source for the IMF. Perhaps we should have exerted some influence to protect one of our most valuable economic weapons? Sadly, it appears this wasn’t even an issue for discussion. In fact, we are making moves to support the use of the Yuan as much as possible.

Be aware that we long predicted that this day was coming. The so-called experts didn’t even consider this possible a few years ago. Now that it’s happening, we are told that it’s a good thing… It won’t hurt the dollar… It will bring China more into the community of nations. The problem is, however, that the push has been underway for some time and not by friendly forces. The idea was first proposed by a KGB buddy of Putin’s. Replace the American dollar with a Chinese/Russian alternative and thus take control of the global monetary system. The plan was almost executed in 2008 although the Chinese authorities withdrew from the scheme and alerted us.

Initially, the plans to replace the American dollar were embraced primarily by elements in the People’s Liberation Army. They understood that currency manipulation could be a powerful weapon as evidenced by their publication in 1999 of the book, Unrestricted Warfare. But in 2013, even the Communist Party was on board with a plan to “de-Americanize the world” by dethroning the dollar. The plan was laid out in 2011 in Quishi, an official Journal of the Party. Since that time, China’s economy has slowed dramatically but this has not stopped a detailed plan to undermine our currency. The intention was to disguise the effort as normal economic moves. The problem has been, however, that China has regularly gone against what seemed to be their own short-term self interest in pursuit of longer-term goals. That’s a hard concept to grasp with a Western mindset.

Recent moves made it clear that China is first seeking to establish the renminbi as a reserve currency and then ultimately to undermine the dollar completely. Of course, China is not a monolith. The business community and elements of the Party do not want an economic war with the U.S. But elements of the military and parts of the Communist Party absolutely have plans to dethrone the dollar in a financial war.

Full article: It’s Official But Don’t Assume It’s Benign (Global Economic Warfare)

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