… by F. William Engdahl, … with New Eastern Outlook, Moscow
___
The seven golden domes of St. Petersburg[ Editor’s note: The West, especially the US, is now seeing the strategic folly of using banking sanctions as the weapon of choice in its New Cold War quiver of arrows. But do not expect to see any admission or the showing of remorse publicly. The banksters and gangsters are not looking for that from their political minions.
What they want is to proceed forward with plan B, which is to use our military forces as cannon fodder so they can make their money one way or the other. And don’t expect any block to form in Congress looking for a real solution. The special interest hooks are deep and unmerciful there.
It was these same banksters who, when they saw all the development fortunes to be made opening up to China, with the geopolitical bonus of splitting them away from the hard-line Soviets at that time, adjusted their anti-communist positions to suit their business interests. They were a natural constituency for Nixon at the time.
The unknown story in the opening West up to China is that it was not really Nixon’s or Kissinger’s idea, but that of our top Soviet spy, Agent 58, Morris Childs, the long time Secretary of State for the US Communist Party (CPUSA). Because he went back to the old Bolshevik days, he always got the red carpet treatment during the annual May Day celebrations in Moscow, where he would be the guest of honor for the Politburo.
It was Morris who wrote the concept paper when he saw the deep suspicions the Soviets had about the Chinese, which created an opening to capitalize on that split, if bold action were taken. Morris was only able to have this information partially due to the Soviets not knowing that he was fluent in Russian.
So when the Soviet leaders switched from their conversational English to discuss secret topics around Morris, he was catching every word. Neither Nixon nor Kissinger even knew who Morris Childs was at the time. He was not retired until the Church committee CIA hearings became a threat to exposing him. Morris never took money for his work.
Morris and his second wife Eva were decorated by Ronald Reagan at a quiet White House ceremony with his long time FBI handlers, and were allowed later in the 1990’s to write a book about their experiences — Operation Solo, a virtually unknown book and a fascinating read.
But as often happens, the successful field work of those on the tip of the spear is put on the resumes of political appointees and elected officials, who expect that the classifications will hold until after they die.
VT has worked to buffer this injustice by helping the public learn some of the Cold War stories, as it educates the readers to be more wary of their government. This is especially the case in the abuse of classifications to hide special interests’ motivations that are controlling many events and geopolitical strategies, which affect us all. But we are undemocratically kept out of the process by keeping us dumb and uninformed.
I share the Morris Childs story because things are being hidden from us now on a similar broad scale, as to the justification of our New Cold War, and this tie in with China now. China’s economic economic success is related to the work of Morris Childs and Nixon and his cronies, who launched China on its road to being a new reserve currency.
This is something that Washington’s handlers have indicated the US military will be used to prevent for their benefit, with the cost of the military going onto the taxpayers’ debt burden. Brother Engdahl covers the emergence of the Chinese wanting to move off the Federal Reserve plantation well in his tightly-written article below.
This was all bound to happen anyway, but at a much slower pace, where the US and Europe would have had more time to adjust. But the West’s “doubling down” on using the sanctions tool as a major economic warfare weapon sped up the process by a decade and maybe two. And it increased the temptation to use our military to enforce our will on commercial competitors — something which is not in anybody’s oath of office… Jim W. Dean ]
_________________________________
– First published … June 6, 2015 –
Russia is about to take another major step towards liberating the Ruble from the Dollar System. Its Finance Ministry just revealed it is considering issuing Russian state debt in Chinese Yuan.
That would be an elegant way to decouple from the dependence and blackmail pressures from the US Treasury financial terrorism operations while at the same time strengthening the bonds between China and Russia – Washington’s worst geopolitical nightmare.
Russian Deputy Minister of Finance, Sergei Storchak, announced that his ministry is making a careful study of what would be required to issue Russian bonds denominated in Chinese Yuan. The latest news is part of a long-term strategy between Russia and China that goes at the heart of American hegemony—the role of the dollar as the leading world central bank reserve currency.
The dollar is used in some 60% of central bank reserves today. The second largest is the Euro. Now clearly China is carefully moving, as the world’s largest trading nation, to create its Renminbi or Chinese Yuan as another major reserve currency. That has huge geopolitical implications. So long as the US dollar is leading reserve currency, the world must de facto buy US dollar Treasury bonds for its reserves.
That has allowed Washington to have budget deficits since 1971 when the dollar left the gold exchange standard. In effect, China, Japan, Russia, Germany—all trade surplus countries, finance Washington’s deficits that allow her to make wars around the world. It is a paradox that Russia and China at least, are determined to end as soon as possible.
Last year Russia and China signed enormous 30-year energy deals for delivery of Russian oil and gas to China. The payments will be in local currencies not in dollars. Already in 2014 settlement in national currencies between China and Russia in bilateral trade increased nine times over 2013.
Lin Zhi, head of the Europe and Central Asia Department of the Chinese Ministry of Economic Development announced last November that,
“About 100 Russian commercial banks are now opening corresponding accounts for settlements in yuan. The list of commercial banks where ordinary depositors can open an account in yuan is also growing.” Last November 18 Russia’s largest bank, Sberbank became the first Russian bank to begin financing letters of credit in Chinese yuan.
____________________________
Long-term strategy
What all this indicates is that Russia and China are carefully planning a long-term strategy of getting out from dependence on the US currency, something that, as the US sanctions last year revealed, make both countries vulnerable to US currency wars of devastating impact.
China has just been accepted “in principle” by the Group of 7 finance ministers to have its yuan included in the International Monetary Fund basket of currencies making up IMF Special Drawing Rights.
Today only the US dollar, Euro and Japanese Yen are included in the basket. Including the yuan would be a huge step towards making the yuan a recognized international reserve currency, and at the same time would weaken the dollar share.
China’s foreign reserves consist overwhelmingly of US dollar claims, mainly US Treasury bonds, which is a strategic weakness, because in case of war, these can be frozen, as Iran knows too well. It is imperative for China to increase the gold content of the reserves and to diversify the rest into other currencies.
China has also agreed with Russia to unify the new Silk Road high-speed rail project with Russia and Russia’s Eurasian Economic Union. At the same time Beijing has announced it is creating a huge $16 billion fund to develop gold mines along the rail route linking Russia and China and Central Asia. That suggests plans to greatly build up gold as central bank reserve share.
China’s central bank has greatly increased its gold holdings in recent years, though whether it is now greater than the alleged Federal Reserve gold holdings of 8000 tons is not yet public. It is expected China must reveal its gold reserves on being formally accepted into the IMF SDR basket perhaps later this year.
Last year, 2014, Song Xin, president of the China Gold Association stated, “We need to establish our gold bank as soon as possible…It can further help us acquire reserves and give us more say and control in the gold market.” A gold sector fund involving countries along the Silk Road has been set up in northwest China’s Xi’an City this May, led by Shanghai Gold Exchange (SGE), part of China’s national bank, PBOC. China is the world’s largest gold producer.
Among the 65 countries along the routes of the Silk Road Economic Belt, there are numerous Asian countries identified as important reserve bases and consumers of gold. Xinhua reports that 60 countries have invested in the fund, which will facilitate central banks of member states to increase their holdings of gold.
Dr. Diedrick Goedhuys, former economic adviser to the Reserve Bank of South Africa in an interview told me, “I want to emphasize the unique quality of gold, when viewed as a financial asset, of being an asset that is no-one’s liability. A treasury bond, for instance, is an asset in my hands, but a liability, or debt to be repaid, in the books of the treasury. Gold is a pure asset. The Chinese gold mining plan is of vast importance. It’s a long-term plan; it may take ten years before it has a significant effect.”
Now with Washington and Wall Street increasingly frustrated at how to weaken the ruble and China’s renminbi, those two powers are making giant strides to break free from their dollar chains, a move that could liberate much of mankind if done in a good way.
F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.
Jim W. Dean was an active editor on VT from 2010-2022. He was involved in operations, development, and writing, plus an active schedule of TV and radio interviews.
ATTENTION READERS
We See The World From All Sides and Want YOU To Be Fully InformedIn fact, intentional disinformation is a disgraceful scourge in media today. So to assuage any possible errant incorrect information posted herein, we strongly encourage you to seek corroboration from other non-VT sources before forming an educated opinion.
About VT - Policies & Disclosures - Comment Policy
