Economist Fang Gang says the value of the Chinese yuan against the US dollar will rise gradually this year.(Photo/Xinhua)China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings -- Zero Hedge
All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait. Instead, China has decided to serve the world another surprise. Following last week's announcement by PBoC Governor Zhou (Where's Waldo) Xiaochuan that the country's excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the "buy US debt" Nash equilibrium will be. Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so. And to think that this comes just as news that the Japanese pension fund will soon be dumping who knows what. So, once again, how about that "end of QE" again?
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My Comment: US influence and power on the world stage always stood on four pillars .... (1) its economy, (2) the US as a reserve currency, (3) its military, (4) its alliances and agreements with other nations. Points (1) and especially (2) are going to be severely impacted by this Chinese decision.
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