China’s Nuclear Option & Bitcoin Halving – Mike Maloney

by birtanpublished on August 25, 2020

Our China and the u.s. about to go nuclear believe it or not there is talk by high-level officials on both sides about exactly that option but they're not talking about ICBMs they're talking about the nuclear debt bomb and they both have the launch codes now you don't

Have to get worried right now because it's not going to happen at least not yet in this article here China could cut US debt Holdings in response to this threat here that I don't even want to say on

YouTube anymore US news reports suggest White House officials have already considered the idea of canceling all or part of the 1.1 trillion dollar debt that the u.s. owes to China in response to the debate over the highly unlikely

Nuclear option China could cut its holdings as the u.s. ramps up borrowing to pay for related costs to this thing right here now I'm going to get into why they hold 1.1 trillion dollars why all of this currency was loaned to us Ben

Bernanke said they had a savings glut and has nothing to do with that he didn't know what he was talking about anyway China may move to reduce its vast holdings of US Treasury securities in the coming months in response to a

Resurgence in trade tensions and a war of words between the world's two largest economies over the origins and handling of the such and such thing analysts said US news reports indicated that White House officials have debated several

Measures to offset the cost of this thing that's happening including canceling some are all of the nearly one point one trillion dollar debt that the United States government owes China while analysts added that the US was

Highly unlikely to the nuclear option the mere fact that the idea has been discussed could well prompt Beijing to seek to insulate itself from the risk by reducing its government debt Holdings US government

Debt Holdings now they have a bunch of debt holdings and as they mature they get paid back and those holdings go down but there's a reason that you're going to see in a minute that they don't want that so they always have to buy new

Treasury bought US Treasury bonds notes or bills those are the different durations of maturity so they're constantly rolling them over to keep a certain level you're gonna learn why in just a minute

But it's crazy the it's such a crazy idea that anyone who has made it should really have their fitness for office reconsidered we view this as largely a political ploy for Donald Trump's reelection and a cynical one because it

Would destroy the finance financing of the US federal budget deficit and it would but any move to cancel the debt owed to China effectively defaulting on it would be counterproductive to the u.s. sent to the US interests because it

Would likely destroy investors faith in and in the trustworthiness of the US government to pay its bills analysts warned now and the current currency all all fiat currencies are a confidence game they require your faith

In them for them to work so require it requires your confidence a confidence game there's a you know a derivative of that called a con game that's a confidence game and that's exactly what all fiat currency systems are I'll show

You how part of that works in just a moment so it would likely destroy investors faith in the trustworthiness of the US government to pay its bills that means it's bonds which then means the US dollar it would undermine the

Faith in the US dollar this would send US interest rates soaring making borrowing more costly for the government as well as US companies and consumers and in turn would strike a sharp blow to the to

America's already very weak economy nevertheless the news that the idea was discussed by top US officials is likely to erase raised concerns among Chinese leaders about the growing risk of holding large amounts of US government

Debt at a time when relations appear to be deteriorating rapidly China could trigger a crash in the US dollar and the financial markets by flooding the markets with US Treasuries for sale that's their nuclear option our

Nuclear option is to say sorry we're not paying theirs is to just dump all of our IOUs on the market which would push down u.s. bond prices and cause yields to spikes of the interest rates that we have to pay on the national debt as the

Bonds that we've already sold become do we have to roll them over and we're always doing deficit spending so we have to issue more and all of those would be at much higher interest rates but that would also ignite a global financial

Catastrophe hurting China as well and it would in the coming months China could halt its treasury purchases and I said they have to constantly roll these bonds over so oh they don't have to dump any of the ones that are that

They currently have all they have to do is stop buying new ones from us stop supporting our deficit spending and stop buying pieces of our national debt you're going to see that in an upcoming video to send a clear signal of its

Intention so all they have to do is stop purchasing new ones if it decides to do that it could make the actual sale of its other holdings the ones it currently has at a later date so if they just stop and let their holdings start to slowly

Dwindle they can always decide to pull out the full new clear debt bomb option later David Chen founder of basis-point consulting said China could be forced to toughen up its act if it no longer earned US dollars

From its exports to the US because of a significant us-china decoupling this is why these trade wars that have been going on now for a couple of years this is so dangerous all of the trade wars that we're doing isolate us more and

More from China and how much stuff is actually made in the United States and of the stuff that is made in the United States how much of it has critical components that come from China this could be just absolutely disastrous I

Mean just in like an end of the US dollar and the end of the economy it's not going to happen at least not yet because we are both so reliant on each other if that were to happen China could sell its US Treasury

Holdings for yuan seeking to engineer a collapse in the US dollar to end its status as the ruling currency all these countries all over the world have been getting so sick of the u.s. using the dollar as a weapon and it has been now

For quite a while it's been the last decade and a half it's really we've really been using it as a weapon and so there's they've been seeking alternate eternity and setting up alternatives so the final bomb in this

Article the final line it's I die but you die harder I'm inserting but there it's I die but you die harder chin said with no US export market China would go the other way and rely on internal consumption trade with belt and road

Countries and the rest of the world in their local currencies and prepare to to eat bitter as local conditions worsen that's in China for the u.s. it would be unimaginable now the way all of this works here's China and the US and

The trade the way the trade works between them is if this is an old presentation I think we developed this in 2013 for some of my live presentations the last time it was updated I believe was 2016 but it still

Applies today I gave this presentation I don't know a couple of years ago online so it's out there somewhere in one of my videos but a US consumer wants to buy something wants to buy an Apple iPhone from Walmart the iPhone goes to the

Consumer walmart has dollars but needs more iPhones they need to replace their inventory they call up the manufacturer and order from Apple and the plant that's in China sends over an iPhone and now that Chinese manufacturer has

Dollars the dollars are supposed to go into that Chinese business man's bank account because he can't but he can't use dollars he needs yuan to do all it to pay all of his employees and do all of the expenditures so what is supposed

To happen is he's supposed to put those the bank is supposed to put those on the forex and exchange them for yuan so he's got you one in his bank account but if that happened the dollar goes down the one goes up and Chinese goods become

Much more expensive in the United States and trade goes back into balance China doesn't want that we want cheap goods from China China wants full employment so they don't do this mechanism that is supposed to be done that keeps things in

Balance now if we were using something like gold it wouldn't be impossible to do the following scenario gold balances all economies and you can run a trade surplus or deficit for a short period of time but then it's got to balance again

There's a reason for it I'm not going to explain it in this video now what is actually happening is the People's Bank of China buys the excess dollars that flow into China and then they print one that didn't exist

Before they're not buying them off the four and deposit him in that business man's bank account so now he's got the yuan he need needs people Bank People's Bank of China has this glut of dollars they go

To the US Treasury that issues a bond and which is an IOU and they swap that bond for the currency and everybody's happy the US Treasury Washington gets to do a bunch of deficit spending with the dollars that were just loaned back to

The US government so we get to run a deficit and spend those dollars that were loaned back to us they were the dollars that we use to buy this stuff but they get loaned back to us through this process and then we do

Deficit spending with them now this process continues and continues and continues and what you'll see here is there's a buildup of bonds in the People's Bank of China there's a buildup of dollars in the United States the

Deficit spending we get to do all of this deficit spending year after year China helps to fund it through this process but there's a buildup of you one in all in inside China which causes raging inflation and they have seen

Raging inflation over a number of years but they also get to keep everybody employed and we get a whole bunch of cheap stuff from China so that's the process of how we get cheap stuff but they to do that for us to get cheap

Stuff and China to for them to be able to keep everybody employed they have to build up this excess reserves of US Treasury bonds and other US assets as reserves at the People's Bank of China to suppress the yuan and keep the dollar

Up that's that's the process so moving on from that on the radar this is the Bitcoin having that's coming up by the way the thing that you've seen on China I'm doing another special report soon that's going to have the that'll show

You some of the implications of that because there's implications coming up very soon the the piper also always has to be paid some the bill always comes due and so when you cheat the system it just stores up

Energy this is Bitcoin having but this isn't a chart of like a price or anything this is the chart of the number of searches on Google for the term Bitcoin having so this was the first halving and this is the second halving

And I'm going to explain what that is in a minute but the searching for that term is has gone way way up and it's projected to go much higher now what the halving is is the Bitcoin miners are running these supercomputers called

Mining rigs and these are these are really powerful computers that have one function to guess a number so they're trying to solve a puzzle but the puzzle is of a very very long number that they have to guess and the chances of

Guessing this are extremely low with millions of these computers running guessing is this the number is this the number is this the number more than a trillion times every second millions of these doing trillions of guesses every

Second it still takes 10 minutes for one of them to come up with the right answer when it comes up with the right answer that computer which has also been busy building a block which has all of the Bitcoin transactions in it is rewarded

By getting to add its block to the blockchain it gets paid a certain number of bitcoins by the system as a reward that is how new bitcoins come into existence and then all of the other computers that are doing the mining have

To update to include the new block from the winning computer so that's the process of of doing that now the winnings this the number of bitcoins that you get paid every four years that gets cut in half but something has

Happened every time that happens the price runs up shortly thereafter there's been a big price run-up so what you see here is the price ran up and then there was this consolidation this level point and and then there was the halving and

Another big price rent run up and it exceeded its previous high got this big price and a high and then you've got this consolidation and then the halving and then it exceeds its previous high and

This price run up and these price run ups are spectacular I said a long time ago that it wouldn't surprise me to see in the next Bitcoin run-up for Bitcoin to top $50,000 per Bitcoin it is possible now here you have a price run

Up from the having so it was under $16 about 12 bucks here and the peak that it ran up to shortly thereafter was over $800 so from 12 to 800 then with this having the price at the having was under $800 and it ran up to $19,000 and so

This is very powerful who knows if it'll happen again it may not but we're seeing this consolidation and this is sort of an old chart Bitcoin is back up to just under $9,000 right now and so you know it's interesting a friend of mine tres

Mayor came to my house back in 2010 trying to get me into Bitcoin when it was pennies and when it could just plug your computer into the wall and my do mining and actually win bitcoins with just a regular old computer now it takes

A supercomputer that's dedicated solely to that and you've got to be in a country that has subsidized power or buy into a pool where they're they're investing in buying mining rigs and installing them in a country that has

Subsidized power and but I mean he came to me and tried to get me into this when it was pennies and then in 2011 he flew to California and came to my office twice to try and get me interested in it and I just didn't understand it and here

We're up at three four five six bucks and then I finally at at about it was 2014 it was about here so the price was about 600 no actually the first day that I bought Bitcoin was just under a thousand so it would have

Been here it was in 2014 but I bought bitcoins and I kept on buying all the way down to two hundred and fifty bucks and then turned off my accumulation as it started to rise so I do have Bitcoin and but I am NOT an expert so don't ask

Me anything about it I know how block chains work and I know how distributed wet Ledger's work go to somebody else trace mayor's a good source there's a guy named Chris Kony that runs crip diversity and there's

Several others where they know a lot about crypto currencies I really don't know that much so don't ask me it's just that if there's another one of these moves it could be powerful I want to welcome all of the new subscribers

Just the new subscribers hit go back and hit that notification bill we always appreciate a thumbs up and go to slash free book and download a free copy of my book viewer feedback Eric on tech says he's quoting

Janet Yellen there will never be another recession in our lifetime enough said actually he's not saying enough you know I've called these people sometimes economic morons that they just don't know what they're doing but a lot of

People believe they do know what they're doing that this is actually a plan well if so then you know that all the stuff that comes out there they're not only Liars but they're evil could it be that they're evil lying economic morons

Select all of the above I don't know I don't want to pick on them too much they could just be inept bumbling around wondering what to do next playing with all of our lifetimes which really pisses me off

So the meme of the day paper money is liable to be abused has been is and forever will be abused in every country in which it is permitted Thomas Jefferson thank you for watching

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