November 30, 2013 Former US Treasury Official – China To Dominate US
Dr. Roberts: “The United States economy is very ill. They (central planners) don’t have a solution. They are locked into printing money. If they try to stop quantitative easing they have to worry about the bond and the stock markets collapsing, and they have to worry about the balance sheet of the banks….
“The main purpose of quantitative easing is to support the prices of the debt-related derivatives that are on the banks’ balance sheets. So, the higher the bond prices, the more solvent the banks appear. How do you get out of that policy? You are really trapped in it. If you stop it you’ve got a financial panic.
If you (the Fed) continue it you will eventually destroy the dollar. My view has always been that they will continue it because they would rather have a crisis in the future than one at the present time. So this is not an optimistic outlook for American economic policy or the success of the United States economy.
Already the Chinese currency has appreciated remarkably against the dollar. In 2006, the exchange rate was 8 Chinese yuan for one dollar. Now it’s (down to) 6. That’s a decline of 25% in the dollar (vs the yuan) in (just) 7 years. Now, this is during the period that the Chinese are buying dollars to support the dollar’s value.
And now they’ve announced they (China) are not going to do that anymore (support the dollar). So, what then happens to the appreciation of the Chinese currency if they simply no longer hold their own currency down by using it to purchase dollars in order to keep the dollar up? What happens when they stop that?
It looks like the currency in China would have to more rapidly appreciate vs the dollar. This would be another indication that economic power is shifting to China. If it’s a substantial increase in appreciation of the Chinese currency, it could actually result in a run on the dollar. Of course the United States has no way to stop that.
So I think the 21st century for the Americans has been wasted and squandered by totally incompetent governments. They were fixated on enriching the military security complex, and they haven’t paid any attention to any of the real things that were screaming for attention. They (the problems) have now mounted and built to the level that I think they are unmanageable.”
Eric King: “What do you say to the discouraged people out there that are waiting for the next leg higher in gold and silver to kick in?”
Dr. Roberts: “I would just hold my position, and if I could I would add to it because I can’t see how there can be any value in the dollar. The (US) economy is in shambles. They are printing dollars at a faster rate than the demand for dollars is growing. What is really holding the dollar up (at this point) is tradition.
Reality hasn’t caught up with people who are sitting there holding dollars. But let’s see what happens when the Chinese let their currency move to be freely convertible. As I said, it (the yuan) has already appreciated when they were controlling it and trying to keep it down. So when they cease trying to control the exchange rate of their currency to the dollar, and step out of the picture, where will that exchange rate go? It will now be 4 yuan to the dollar, or perhaps 3.
When will it become parity? I can remember some decades ago, the question was, ‘When will the Swiss franc move to parity with the dollar?’ Well, a couple of years ago it (the Swiss franc) moved beyond that. One (US) dollar would only buy 70 Swiss cents. It wouldn’t even buy a Swiss franc. I think the same thing is now going to happen to the exchange rate between China’s currency and the US dollar. That’s just a indication of further weakening of the American economic position and presence in the world.”
***IMPORTANT – This is an incredibly powerful interview with Dr. Roberts. He spoke about the coming collapse the U.S. faces, why Western central planners are so desperate, and what to expect from gold. The KWN audio interview with Dr. Paul Craig Roberts is available now and you can listen to it by CLICKING HERE.
IMPORTANT – Due to recent events, KWN will be releasing interviews all day today and this weekend.
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