China is now trading oil in gold backed Yuan.

[J.L.W]

And stocks have only just had a good day. (Thanks Stormy for that!)

[ancapper]

Wow, that appears to be a NAP compliant solution, so good news?

[Dylan Lawrence Moore]

Anyone got an actual source that China is backing its currency with gold? Everyone keeps talking about it and I can't find one.

[barn]

Hi @J.L.W

 

On 03/27/2018 at 3:17 AM, J.L.W said:

And stocks have only just had a good day. (Thanks Stormy for that!)

Thought you might be interested in this...

 

[J.L.W]

I saw that BPS video as well and thought about posting it here. I agree that the situation is in general far more complex. The idea of finding anything in politics which is actually significant as a stand alone piece of data is... a rookie mistake IMO.

I remember years ago when I first read zerohedge I felt as though I was learning something, and that I knew something, but the absolute incredible complexity of all of this has given me pause. 'A little learning is a dangerous thing' indeed.

I literally can't read the Q posts and understand anything. I need to read others who understand the area more and even then I know so little.

I understand a little more now why some commentators focus on the emotional and cultural aspects of these things. Kanye West has been a big move and it is a big part of the important "work" that needs to be done.

[Dylan Lawrence Moore]

Can someone tell me why it's important that the USD is the world's reserve currency? So what if oil gets traded in yuan? What's important is what a country saves in, not what they trade in.

Video also mentions that yuan will be convertible for gold. Again, can anyone find me a source for this? I haven't been able to find one.

 

[Boss]

Well, I think Americans benefit from having the world's reserve currency as other countries will do cheap manufacturing labor for the USD. If the USD was weak or to an extreme, dead. China and other manufacturers wouldn't bother shipping to the US. And as the cliche goes, everything is made in China. 

Just look at Zimbabwe or Venezuela, no one is working away to get those kinds of dollars, they are out of stock and not getting more shipments of even basic things required to live. I am afraid the same thing will eventually happen to the rest of the world as the fiat scam dies through hyperinflation. 

I think the USD will be the last major one to go as US still has the highest GDP, biggest businesses and the largest gold reserves. I think 4x China gold reserves. 

 

[barn]

6 hours ago, J.L.W said:

I saw that BPS video as well and thought about posting it here. I agree that the situation is in general far more complex. The idea of finding anything in politics which is actually significant as a stand alone piece of data is... a rookie mistake IMO.

Fair enough + agreed,.. you're good. As long as we are honest about these things and maintain a constructive heading, we'll be able to advance, avoid getting stuck or devolve.

6 hours ago, J.L.W said:

I literally can't read the Q posts and understand anything. I need to read others who understand the area more and even then I know so little.

Same experience here, on maaany topics, I admit. Even then, those people (open minded ones) do the same, so it just shows me it's the right approach and worth emulating.

I think, it's ok to have an opinion on subjects you are less versed in as long as you are using reason & evidence in conversations... but I repeat myself.

Thanks for the op heads-up!

[J.L.W]

The history of this is that before World War 2, Gold was in every country but after it, through invasions/ looting etc. all the gold was in America... Like every single shred of it.

In 1974 when the US came off the gold standard the US effectively created the greatest magic trick of all time... Translating paper into real wealth. The US being the reserve currency means it cannot devalue.

If someone now creates a currency that is based on gold it is more valuable and finite. If gold is the currency then all the speculative investments and banking cannot be done. War costs, the US will be less likely able to go to war.

[vandoren]

As if you need US to get dollars. You can as well get dollars on the eurodollar market. And oil market isn't that big anyway. Dollar nominated oil market is ca. $400B/a. Throw in velocity of money and the demand is what, $100B? It's nothing. Especially if you sell your oil and quickly invest your dollars. Then the demand is stable. So, we are speaking about 100-150 billion dollars, much of which are eurodollar. Nothing to see here.

[barn]

33 minutes ago, vandoren said:

As if you need US to get dollars. You can as well get dollars on the eurodollar market. And oil market isn't that big anyway. Dollar nominated oil market is ca. $400B/a. Throw in velocity of money and the demand is what, $100B? It's nothing. Especially if you sell your oil and quickly invest your dollars. Then the demand is stable. So, we are speaking about 100-150 billion dollars, much of which are eurodollar. Nothing to see here.

Are you implying it's rather inconsequential? (the dollar market)

[vandoren]

I'm saying it's not important what you trade in. I agree with Dylan here.

[barn]

6 minutes ago, vandoren said:

I'm saying it's not important what you trade in. I agree with Dylan here.

I see.

[barn]

But isn't it easier to use dollars for trading as opposed to others for its better integration on the global market? (a layman's query)

p. s. ('but' as in 'doesn't it makes sense... ')

[ofd]

The Petrodollar is of importance, because it gives the US seniorage. Furthermore, they can print money a part of which is then re-invested in the US. In short, it's a form of Rehypothecation, that's beneficial for financial institutions but bad for the average shmuck, since inflation is increased while the interest level is artificially decreased. Without that artificial demand for Dollars, the US couldn't enjoy the living standard it has today while running enormous deficits at the same time.

[vandoren]

What seigniorage would you'll have in the modern financial system? And, as I said before, you don't even need the FED - you can always borrow dollars in the eurodollar market. What many also do. As barn has written above - it's simply easier to use dollars.