- Todd Strandberg – http://www.raptureready.com/rap16.html
The economic policy of China has long been harmful to the U.S. economy. Cheap imports from our communist trading partner have devastated huge areas of our manufacturing base. It was initially done to save on the cost of production. This dependency on low wages in Asia has progressed to the point where we now lack the ability to produce some of the most common items we have around our houses.
We’ve also run up a huge tab from decades of one-sided imports. The U.S. now owes the rest of the world $5 trillion. With money comes power, so to keep our economic system afloat, we increasingly need to do things to please our debt holders.
One sign of how dependent we’ve become on China was an offer we recently made that would allow the Chinese to buy bonds directly from the Treasury. Currently, only primary dealers can buy bonds. The Chinese didn’t seem to show any interest in the plan. They have actually gone cold turkey on us. After being the biggest buyers of U.S. debt for years, Beijing has suddenly decreased its holdings, dropping from $1.31 trillion in June 2011 to $1.16 trillion a year later.
In the past few years, there have been growing signs that China is seeking to undermine America‘s financial dominance in the world. Beijing has made a host of trade agreements that would erode the dollar’s role as the international reserve currency.
In 2009 and 2010, China signed a host of bilateral currency swap agreements with Indonesia to Belarus and Argentina. Last year, it signed an agreement with Russia to use the ruble and yuan to settle trade. A few months later, it signed a similar pact with Japan. This year, China has agreed with Germany to use euros and the yuan for trade.
Probably the greatest indication that China intends to replace the dollar with a currency it controls is its ongoing accumulation of gold. A cable released by Wikileaks had a title that couldn’t be more blunt: “China increases its gold reserves in order to kill two birds with one stone.” The cable was a warning sent to Washington by the U.S. embassy in Beijing.
China’s central bank has become a major buyer on physical gold on exchanges. In just the past six months, it has imported over 400 tons of gold. This amount is greater than the gold held by Portugal. All the gold mined in China goes directly to the national treasury. The citizens of that nation are highly encouraged to buy gold as part of their savings.
If China introduced a gold-backed yuan, it would give the dollar major competition. Since we just passed the $16 trillion mark in our national debt, there is a growing possibility that the world will suddenly realize the greenback is greatly overvalued.
I think it is possible that China may initiate a nightmare scenario by suddenly dumping its dollar reserves on the market. If we woke up some morning to the news that China had sold a huge chunk of its reserves, there would be a massive panic that could cause the dollar to implode.
This scenario would be an insane move for your average investor, but China’s interests are not just about making more money. Just like with any totalitarian state, its top priority is to achieve global dominance. If Beijing could destroy the dollar, it would replace America as the key military power in the Asian theater.
Our military might is directly linked to the value of our currency. It costs us $100 billion a year to maintain a presence in Afghanistan. If the dollar collapsed, the cost of deploying our troops to a major campaign would become prohibitively expensive.
Bible prophecy seems to imply that there is going to be a return to the gold standard during the Tribulation hour. The prophet Daniel said the Antichrist will have his trust in gold and silver. James warns that it will do him no good.
“But in his estate shall he honour the God of forces: and a god whom his fathers knew not shall he honour with gold, and silver, and with precious stones, and pleasant things” (Daniel 11:38).
“But he shall have power over the treasures of gold and of silver” (Daniel 11:43).
“Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days” (James 5:3).