by Pepe Escobar – cross.posted with Strategic Culture Foundation
A new, radical paradigm shift is in progress. The U.S. economy may shrink as much as 40% in the first semester of 2020. China, already the world’s largest economy by PPP for a few years now, may soon become the world’s largest economy even in exchange rate terms.
The post-Planet Lockdown world – still a hazy mirage – may well need a post-Planet Lockdown currency. And that’s where a serious candidate steps into the fray: the fiat digital yuan.
Last month, the People’s Bank of China (PBOC) confirmed that a group of top banks started trials in electronic payment in four different Chinese regions using the new digital yuan. Yet there’s no timetable yet for the official launch of what is called the Digital Currency Electronic Payment (DCEP).
The man with the plan is PBOC governor Yi Gang. He has confirmed that apart from the trials in Suzhou, Xiong’an, Chengdu and Shenzhen, the PBOC is also testing hypothetical scenarios for the 2022 Winter Olympics.
While DCEP, according to Yi, “has made very good progress,” he insists the PBOC will be “cautious in terms of risk control, especially to study anti money-laundering and ‘know your customer’ requirements to incorporate in the design and system of DCEP.”
DCEP should be interpreted as the road map for China leading to an eventual, even more groundbreaking replacement of the U.S. dollar as the world’s reserve currency. China is already ahead in the digital currency sweepstakes: the sooner DCEP is launched the better to convince the world, especially the Global South, to tag along.
The PBOC is developing the system with four top state-owned banks as well as payment behemoths Tencent and Ant Financial.
A mobile app developed by the Agricultural Bank of China (ABC) is already circulating on WeChat. This is in effect an interface linked to DCEP. Moreover, 19 restaurants and retail establishments including Starbucks, McDonald’s and Subway are part of the pilot testing.
China is advancing fast on the whole digital spectrum. A Blockchain Service Network (BSN) was launched not only for domestic but also for global trade purposes. A large committee is supervising BSN, including executives from the PBOC, Baidu and Tencent, according to the Ministry of Industry and Information Technology (MIIT).
Backed by gold
So what does this all mean?
Well connected banking sources in Hong Kong have told me Beijing is not interested for the yuan to replace the U.S. dollar – for all the interest across the Global South in bypassing it, especially now that the petrodollar is in a coma.
The official Beijing position is that the U.S. dollar should be replaced by an IMF-approved Special Drawing Rights (SDR) basket of currencies (dollar, euro, yuan, yen). That would eliminate the heavy burden of the yuan as the sole reserve currency.
But that may be just a diversionist tactic in an environment of all-out information war. A basket of currencies under the IMF still implies U.S. control – not exactly what China wants.
The meat of the matter is that a digital, sovereign yuan may be backed by gold. That’s not confirmed – yet. Gold could serve as a direct back up; to back bonds; or just lay there as collateral. What’s certain is that once Beijing announces a digital currency backed by gold, it will be like the U.S. dollar being struck by lightning.
Under this new framework, nations won’t need to export more to China than they import so they have enough yuan to trade. And Beijing won’t have to keep printing yuan electronically – and artificially, as in the case of the U.S. dollar – to meet trade demands.
The digital yuan will be effectively backed up by the massive amount of Made in China goods and services – and not by a transoceanic Empire of 800 Bases. And the value of the digital yuan will be decided by the market – as it happens with bitcoin.
This whole process has been years in the making, part of serious discussions started already in the late 2000s inside BRICS summit meetings, especially by Russia and China – the core strategic partnership inside the BRICS.
Considering multiple strategies to progressively bypass the U.S. dollar, starting with bilateral trade in their own currencies, Russia and China, for instance, set up a Russia-Chian RMB Cooperation Fund three years ago.
Beijing’s strategy is carefully calibrated, like playing go long-term. Apart from methodically stockpiling gold in massive quantities (just like Russia) for seven years now, Beijing has been campaigning for a wider use of SDR while making sure to not position the yuan as a strategic competitor.
But now the post-Planet Lockdown environment is shaping up as ideal for Beijing to make a move. Even before the onset of the Covid-19 crisis the predominant feeling among the leadership was that China is under a full spectrum attack by the United States government. Hybrid War already reaching fever pitch implies bilateral relations will only get worse, not better.
So when we have China as the world’s largest economy by both PPP and exchange rate; still the strongest growing major economy, barring the first semester of 2020; productive, innovative, efficient and on track to reach a higher technological level with the Made in China 2025 program; and capable of winning the “people’s war” against Covid-19 in record time, all the necessary elements seem to be in place.
But then, there’s soft power. Beijing needs to have the Global South on its side. The United States government knows it very well; no wonder the current hysteria is all about demonizing China as “guilty” on all – unproved – counts of fostering and lying about Covid-19.
An “impeding arrival”
A key advantage of a sovereign digital yuan is that Beijing does not need to float a paper yuan – which by the way is being sidelined all across China itself, as virtually everyone is switching to electronic payment.
The digital yuan, using blockchain technology, will automatically float – thus bypassing the U.S.-controlled global financialized casino.
The amount of sovereign digital currency is fixed. That in itself eliminates a plague: quantitative easing (QE), as in helicopter money. And that leaves the sovereign digital currency as the preferred medium for trade, with currency transfers unimpeded by geography and, the icing on the cake, without banks charging outrageous fees as intermediaries.
Of course there will be pushback. As in non-stop demonization of neo-Orwellian China for straying away from the whole purpose of bitcoin and cryptocurrencies – which is to have freedom from a centralized structure via decentralized ownership. There will be howls of horror at the PBOC potentially capable of seizing anyone’s digital funds or turning off a wallet if the owner displeases the CCP.
China is on it, but the U.S., UK, Russia and India are also on their way to launch their own crypto-currencies. For obvious reasons, the Bank of International Settlements (BIS), the Central Bank of Central Banks, is very much aware that the future is now. Their research with over 50 Central Banks is unmistakable: we are facing an “impeding arrival”. But who will take the Biggest Prize?
Now, this is really interesting.
I have always thought that the Empire’s power rests on three things.
One, the military, which is rapidly decaying.
Two, its propaganda network, which is becoming widely disbelieved outside and (to some extent) inside the United States.
Three, reserve currency status, which the Empire is abusing left and right by debauching the currency while weaponizing it at the same time.
I would really like to know more about how this digital yuan would work? Would it be for international trade only, with the yuan reserved for intra-national trade? Would the yuan be abandoned altogether? If the yuan was kept could you convert digital yuan into paper yuan?
Mike from Jersey
At the moment we do not have a complete picture of what is going on. However, we do have something close to it. As the article has confirmed, both Russia and China have for years been stockpiling gold, the intent being to introduce gold backed yuans and rubles. According to one analyst, both Russia and China have more than 30.000 tonnes of gold each, the Russians using their oil profits to purchase gold. This, of course, does not include gold mined in Russia. The paper rubles and yuans would be backed by gold, while silver would be used to back their digital currencies. Wall Street knows this. And US gold ? Any left, or has the bulk of it been embezzled by the bankers, who stashed it somewhere in a safe place ?
It is unlikely that paper money will be replaced by digital currencies. For example, Germany has years ago been covertly printing their marks, waiting for the time the euro will collapse.
Finally, I cannot agree that China is not interested in having the US dollar replaced as a reserve currency, nor can I agree that China is interested in having a basket of currencies being introduced, including the US dollar. Why should it, bearing in mind how many billions of dollars have been introduced backed by nothing. What in due course we are going to see are gold backed rubles and yuans, which we can call a mini basket of gold backed currencies, representing Euro-Asia. The famous English geographer Halford MacKinder must be turning in his grave, as his worst nightmare is coming to life.
B.F.,
The thing that really amazes me here in the United States is the apparent indifference to what is going on. I am not talking about the average citizen.The average citizen has been propagandized into a total fantasy world. I am talking about the so-called elite.
I have following China’s and Russia’s stockpiling of gold, the development of Eurasian trade deals, the belt road initiative, the development of the Petroyuan, Russia’s surpassing the United States in military technology, China’s advances in fields like quantum encryption and fifth generation wireless and so on.
I have also followed the destruction of the middle class in America and Europe, the debauchment of the currency, the de-industrialization of the West, de-democratization in the West, the destruction of the social safety net, the disintegration of Western journalism to the point of pure farce, the staggeringly unpayable debts, the decline of education, healthcare and so on.
It is obvious what is happening. The entire system in West is declining rapidly and about to be replaced. The West’s so-called elites don’t seem to care one bit.
More and more I get the impression that the West has turned into one huge “bust out” scheme. The so-called elites are just milking the system for all it is worth knowing full well that it is headed towards collapse. It seems like their motto is “get all you can while the getting is good.”
I just can’t come to any other conclusion.
Mike from Jersey
Your conclusion is 100 $ correct. Makes you wonder what really is going on, both in the US and Western Europe. Mass immigration from third world countries under false excuses, the so-called “refugees” pouring in and de-industrialization. When it comes to Western Europe, I don’t have all the facts pertaining to de-industrialization, nor to what extent it has gone on. However, when it comes to the US, Trump mentioned that 70.000 factories have been closed down, while analysts use the figure of 60.000. Remarkable. And the excuse ? Big business shifted their manufacturing plants to China, India and other places because expenditures were lower and profits higher. I wonder. You don’t have to be an economist to see where all of this is going when you break up the manufacturing base of a country. You produce less, you sell less, your work force starts forgetting it’s skills, and you become dependent on foreign countries. Now the famous Military Industrial Complex in the US has become dependent on China and Mexico, with Trump demanding that Mexico restart production at closed plants. Makes you wonder if all of this has happened by accident or design. Obviously by design. And the motive ? We shall see in due course.
It happened by design and the execution of the plan has been in operation for centuries. More recently we have seen the British empire being used, hollowed out and discarded. After that it was the turn of the USA. It too has been used, hollowed out and will very soon be discarded. However China’s rise did not happen overnight and it has a very interesting history which includes many seemingly bizarre decisions by the USA which ultimately have given China ascendancy over the USA and indeed the world.
The following link provides some interesting ideas about modern China’s creation and the people involved.
https://www.deathofcommunism.com/jews-created-communist-china/
As always, a big thanks to Pepe for providing a very interesting insight into our future
@BF
Chinese investment in tons of gold ingots comes about due to their huge positive international trade balance accumulated as US dollars, that have limited opportunities for spending or investment outside the United States. They have bought US Treasury Bills to $2.3 trillion since they pay interest, and they have used US dollars to buy crude oil imports that they need. Gold is just another investment alternative to rid themselves of unwanted US dollars. The Chinese know full well that they do not need to back their domestic currency the yuan with anything, since their government owned central bank can create yuan or delete it back out of existence at will.
“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”
-President Abraham Lincoln
And then, surprise, surprise he was assassinated using the lone gunman strategy.
Kapricorn4
Just to point out that Russia and China have begun to trade in domestic currencies, and both are doing their best to reduce their dollar holdings.
Mike from Jersey
I’d suggest clicking on the link in the article that leads to the survey done by the Bank of International Settlements (BIS). It is the most recent survey and while it has some ‘politics’ in it, which is largely unavoidable (with the IMF denoting which national economies count as Emerging Market Economies and which are Advanced Economies) it does cite other articles.
Specifics are not given in the report as to which central banks will use central bank digital currencies (CBDCs) for wholesale settlements (bank to bank or securities payments) and which will use them for general purpose (available to the general public essentially replacing cash).
From the BIS report’s citations it appears Canada, England and Singapore are investigating the use of CBDCs for wholesale settlements. The Bank of Thailand has a press release on Project Inthanon outcomes and what comes next. The scope of Phase II included 2 key areas: Delivery-versus-Payment (DvP) for interbank bond trading and repurchase transactions, and regulatory compliance and data reconciliation for third party funds transfer. So looks like they are also going wholesale as well as investigating the regulatory benefits of such a system. ( https://www.bot.or.th/English/PressandSpeeches/Press/2019/Pages/n3962.aspx )
Project Sand Dollar from the Central Bank of Bahamas and The Eastern Caribbean Central Bank (ECCB) in conjunction with Bitt Inc. appear to be going for general purpose. The ECCB is actually pilot testing and looks to be rolling out in 2021. ( https://www.eccb-centralbank.org/news/view/eccb-to-issue-worldas-first-blockchain-based-digital-currency )
I would encourage you to read over the survey report. It’s light on specifics but once you’ve read it you can go to the reference section and all the citations are hyperlinked. So it is very easy to follow the information train. I’m a big believer in chasing down the information personally and not replying solely on an overview. One of the reasons I’ve been a fan of Pepe’s since he was writing in the ‘old’ Asia Times. Not that I bother reading it much anymore, new owners, new agenda.
I’ve included a link to the 2019 BIS survey as well just in case your interest leads you that far.
https://www.bis.org/publ/bppdf/bispap101.pdf
Kind regards,
Ad from Australia.
What, exactly, is fair value on the open market for an electron these days? By weight? By volume? By some measure which is actually physically verifiable, perhaps?
The first value of digital yuan is the end of corruption using USD/HKD/RMB. It won’t end corruption per se, but will starve it of easy flight currencies. And flight of currency has robbed the Chinese economy of many Trillions, sent to the West, laundered and invested in Western real estate and equities. London, New York, Toronto, Vancouver, Seattle, San Francisco, Los Angeles, Orange County have benefited by money that flew to safety by the crooked and the turncoats.
As for acceptance by the general public of China, they already do 95% of their financial and consumer transactions by smartphone digital apps. Backed by facial recognition, the smartphone is the primary interface for all Chinese services and product purchases.
The notion of gold backing would be the key to overriding reluctance to a digital yuan as new currency.
Already, a very hot investment item is the gold-backed Chinese bonds. Gold backing is extremely enticing especially if it is blockchained. That’s the transparent lock that assures ownership.
Clearly, the US doesn’t even have a horse in this race. Like 5G.
While the US shrinks the world to a size it can dominate, the Chinese are liberating the world and inviting all comers to join in a common destiny to which each nation can contribute.
We have seen this evolution in the SCO, BRICS and the AIIB/BRI. What looked like the domination of China has evolved to coordination and cooperation in a multi-lateral process.
The games are changing.
There is no special baking here Larchmonter445. They say : “The central bank’s digital currency program is called DC/EP, Digital Currency and Electronic Payment (DCEP), and has exactly the same functional attributes as paper money, except that it is in digital form.”
If you pop this into deepl.com translator, it does not read too bad.
http://www.nbd.com.cn/articles/2020-04-16/1425918.html
Would gold backed mean the digital currency could be exchanged for physical gold at a bank of either the gvts choosing or the customers choosing? If not does the integrity of gold backed suffer, I wonder.
Alabama, They could not “gold back it” and simultaneously keep the peg to the dollar. If they did that, there would be a mad rush to sell increasingly worthless dollars and buy digital yuan at the peg rate. Then the owners would redeem the digital yuan for gold. The gold would soon be gone. China would end up holding more worthless dollars but no gold. That is not a good deal for China.
I expect China to eventually remove the peg to the dollar as a consequence of re-orienting trade away from the US and towards Eurasia. Once that transition is complete then they could conceivably back up the yuan with gold but I am not sure that they have near enough gold to do that without devaluing the yuan. And devaluing the yuan would disrupt the very Eurasian trade relationships that China is trying to establish. Again, not a good deal for China.
On the other hand even if China 1) had removed the peg to the dollar, 2) had reoriented trade away from the US and 3) did have much, much more gold (and I mean much, much, much more) than people estimate them to have, they still could not back yuan by gold. If they did that, people would start dumping dollars like crazy. Who would hold dollars (flying off of the fed’s printing press and backed by nothing) when you could hold yuan backed by gold? There would be panic selling of the dollar. Once panic selling of the dollar started, the dollar would devalue by about ninety per cent or more. At that point China’s 1.2 trillion of US treasuries would lose ninety per cent (or more) of their value. Again, a bad deal for China.
China has to slowly re-orient trade to Eurasia and get rid of their treasuries without causing a panic in the treasury market (which would collapse the value of the treasuries China still hold). Only then could they back the yuan by gold.
Perhaps we do not see the ‘slow reorientation’. With Trump’s latest threats the Chinese are threatening right back.
Coronavirus: China could cut US debt holdings in response to White House Covid-19 compensation threats, analysts say
https://www.scmp.com/economy/china-economy/article/3083100/coronavirus-china-could-cut-us-debt-holdings-response-white
amarynth,
That is the problem with the United States. They have gotten way with acting crazy for so long, they think that they can do or say anything and never have to face any consequences. The article you posted is the very type of logical consequence that flows from American actions.
Honestly, if I were running China, I would start selling as many treasuries as possible without starting a value-killing-panic in the treasury market.
At this point, they have no choice. The US is destroying its currency and threatening to steal 1.2 trillion dollars China has built up in treasuries over the last few decades. What choice does China have at this point?
None but to get rid of treasuries as quickly but quietly as possible.
But at the same time, if China does sell out of treasuries, meaning they have no dollars to trade with, isnt that a depeg?ing.
I can see selling any excess reserves as the investment mechanism is running its course, but the interest wasn’t bringing back that much money anyhow and the excess could now be used to finance bri.
@Alabama
When anyone sells their holdings of US Treasury Bills, they receive US Federal Reserve Notes aka US dollars in exchange.
There are only limited ways to spend US dollars, since they are not legal tender anywhere else outside the US.
However, they can buy crude oil on the international market, real estate in the US, or gold ingots.
De pegging is key, but to bring that relationship first to a gold backed currency does seem risky, you would have to see the reaction of people holding dollars, and right now, over in parts of Asia, they are not exchanging dollars for local currency, so how would the amount of dollars held anywhere affect the digital yuan even if they were to try to back it with gold, plus who would test the gold for purity to give it acceptance among the skeptics who might want to buy into the system while it is still young.
Pepe indicated they told him they want it to float. So no peg to USD.
Gold backing is an option if there appears to be International resistant sentiment. Not needed for domestic use.
It could be less than a full value. And not readily redeemable.
The backing is like a standard. Vaulted gold as assurance so it doesn’t become fiat money.
What they are saying now is a limited amount produced, like Bitcoin is limited.
When the US had gold as a standard did anyone get gold for their dollars?
Or Silver Certificates redeemed for dollars?
Virtually impossible. But it was there.
#Alabama and Larchmonter445,
They can’t de-peg until they disconnect from the American economy.
If the yuan rose in value, it would kill American consumption of Chinese goods. China would immediately lose American buyers before they had replaced them with Eurasian buyers.
If the yuan fell, China would be selling products cheap for depreciating dollars.
They have to disconnect from the American economy and I think that Xi Jinping is working on this.
Larchmonter445,
Two points.
I agree that having non-redeemable gold is a value in and of itself. It shows that the country’s economy is sound.
However, I disagree with your suggestion:
Yes, they most certainly did.
Nixon went off the gold standard in 1971 because European countries (mainly France) were redeeming gold by the ton. Europeans were selling dollars and taking gold. American gold reserves were falling so fast Nixon had no choice but to go off of the gold standard.
https://study.com/academy/lesson/nixon-shock-definition-effects.html
That is what would happen to China if they went to a gold standard now.
Thanks for that info.
You see, that’s the thing, right now all i’m seeing are price increases out of China, you could de peg at the rate of 2 yuan per dollar but only as long as you can recoup your exports/imports enough to satisfy the Chinese consumer (and bri might be trying to do this). And right now I’m believing China is going to have a difficult time feeding its citizens if no pork imports are coming from the U.S. Which they probably arent.
Now if china went to a gold std at the tune of say $25,000 an ounce, they could soak up a lot of dollars with not as much gold. But as we see, they are shifting away from wanting to deal with dollars at home and only use them as a trade exchange.
I dont see an easy way out of this for any country any time soon, its all a roll of the dice as to which commodity is worth more and when to time it, some will win, some will lose.
Hi Mike,
Not sure they need US or EU consumers…A significant rise in the yuan will release an explosion of purchasing power in China. The Chinese will then become their own greatest market. The current “managed float” is a baby step in that direction.
Also re gold standard, If they fix the price too low then this could drain their reserves but its doable if they fix the price high enough.
Serbian girl,
I am not sure they need US consumers either. But they do want to extend the belt road into Europe. That is clearly the plan.
Setting a high gold price is a two edged sword. Yes, it would prevent a run on gold. But the Chinese may not want a high price on gold right now. They may even be manipulating the gold market in order to keep prices low.
It appears that the gold price has been manipulated for a long time. It is clearly at a very low price considering all the money printing that has going on throughout the world. And some people suggest that the Chinese and the Americans are both manipulating the market to achieve that low price, but doing that but for different reasons.
The Americans are supposedly manipulating the price in order to maintain confidence in the dollar. For instance, if the dollar fell to a price of $5000 to an ounce of gold, it would cast doubt on the value of the dollar as an international reserve.
The Chinese are supposedly manipulating the price in order to enable them to buy more and more gold from the west at low prices. This allows them to diversify away from the dollar. They also believe that the value of gold is going to skyrocket in the future and that they want to get as much as they can at as low a price as possible.
Accordingly, at the present that Chinese may not want to set a price of gold.
@Serbian Girl,
I just found an interesting article on what we were talking about. The de-emphasis of trade with the United State but the continuation of trade with Eurasia. The article reviews the first four months of 2020 trade data and notes:
https://news.cgtn.com/news/2020-05-07/China-s-foreign-trade-balance-in-April-amid-global-lockdown–QifgUOCuGI/index.html
Yes but even before 1971, the gold exchange standard only applied if you were a central bank…
Already in the 1950s, the US was having difficulties with the discipline imposed by a gold standard. (There was also a war in Korea..?)
So they created the “London Gold Pool” in 1961, a cartel of US, GB, France and other European central banks to keep the gold price down (under USD 35). The demand for gold continued to be very strong. Then Charles de Gaulle refused to be part of it and repatriated France’s gold. Interestingly, he was the target several assasination attempts during this time and was then ousted in a sort of regime change/ colour revolution in 1968.
In 1968, the London Gold Pool collapsed.
In 1971 Nixon took the USD officially off the gold standard. Price of gold approx USD 45 .
In 1974 the Comex was created in order to handle paper gold derivatives, ETFs. Price of gold approx USD 184.
2020 A few weeks ago, Comex defaulted on physical gold delivery ..They blamed it on the virus and disrupted supply chains..But there are many questions now….. some numbers don’t add up..
More than some #’s not adding up, its based on a 0hedge article that is drawn up to communicate w/interested parties moore than providing any actual evidence that a default, did in fact occur.
This can be proved when those $100/day moves up and down dont occur in a timely fashion, or dont occur at all. Which will then be blamed on manipulation but it wasnt the gold mkt that was being manipulated, it was the readers, who were being tricked, or fooled, that it was. This is not the first time the hedge has pulled a move similar to this.
Not sure I follow, Alabama?
March 24th of this year Comex definitely failed delivery:
https://mobile.twitter.com/roysebag/status/1242577515782209540
https://www.numismaticnews.net/article/did-the-london-new-york-markets-default-on-gold-deliveries
The numbers that don’t add up are the inventory numbers both at Comex and LBMA.
@Mike from Jersey. If you are thinking about a gold-backed paper Yuan then you are right about people possible dumping Yuan for gold like what France did in 1971.
But a sovereign digital Yuan is an entirely different creature.
Being backed by gold may actually prevent the dumping of the digital Yuan.
With all the advantages of a digital currency as spelt out by Pepe above, the price of the digital Yuan may actually rise far above the fixed amount of gold backing each digital Yuan.
Therefore if each digital Yuan is backed by 1 paper Yuan worth of gold and if the price of the digital Yuan rose above the value of 1 paper Yuan worth of gold because of market demand and supply, say to a price of 1 digital Yuan is worth 10 paper Yuan, no one in his right mind will dump the digital Yuan for the value of 1 paper Yuan worth of gold.
The rise of the digital Yuan above the paper yuan is all the more likely since besides being gold-backed, it is also backed by ALL the exportable goods and services of the ultra modern, productive and efficient Chinese economy.
And if the digital Yuan rise in value, the prices of Chinese exports need not rise in tandem and be priced out of the market. This is because the prices of Chinese exports will still be priced in paper Yuan to be paid in digital Yuan based on the market exchange rate of the digital Yuan to the paper Yuan.
The paper Yuan will not be traded and will remain for internal circulation only.
This way, all nations could each produce and export to their own strengths and not be blighted by ‘market forces’ (read currency speculators) distorting the exchange rates of their currencies.
The value of their digital currencies will be backed by the vale of the goods and services generated by their economies alone.
A further point to note: The market price of 1 digital Yuan may rise to say, 20 paper yuan. It would still be backed by 1 paper Yuan worth of gold representing an amount of gold based on the market price of gold at the time of issuance of the digital Yuan. So if the price of gold rises, the quantity of gold represented by each paper Yuan will decrease and vice versa.
But the amount of gold represented by each paper Yuan for backing each digital Yuan is for expressio of value only It does not mean that the paper Yuan is backed by gold. The paper Yuan will remain backed by fiat.
So if a trader exchange 1 digital Yuan for the market price of 20 paper Yuan, the trader cannot use the paper Yuan to buy 20 Yuan worth of gold since the paper Yuan is backed by fiat and not by gold.
But the trader can exchange the 20 paper Yuan for 20 paper Yuan worth of Chinese produced goods and services at the market price prevailing in the Chinese economy. Or he can trade for Chinese goods and services at international markets using the digital Yuan.
Simon, markets will of course do what they will do, but I don’t think it is the intention that a difference in price appears between the digital yuan and the non-digital yuan. Do you think this may happen?
I have little doubt that the digital Yuan will rise in value more than the ‘paper’ Yuan. The demand for trade with China will see to that. Also the digital Yuan if backed by gold will also be backed by the entire economy of China. What more guarantee of value would any trader hopes to get from other countries?
@Simon Chow,
You advance some very interesting ideas which had not occurred to me. The digital yuan could become an investment asset as did bitcoin.
That is interesting.
I have always stayed away from bitcoin since – although I like the blockchain concept – I did not want to invest in bitcoin while it was still subject to price fluctuations. Too risky for me. I was going to wait until it stabilized. Of course, considering how the West is ruining their currencies, bitcoin continues to appreciate. There is no stabilization in sight. The same could happen to the digital yuan.
I still think that it might be too risky for China to bet its considerable gold resources on, but you have made a very astute observation that I totally missed.
No need to commit the entire gold holdings of China to back the digital Yuan. Just enough gold to back-stop any (unlikely) slide in the market price of the digital Yuan.
China can calculate the amount of digital Yuan to support world trade for the next 20 years or so and issues accordingly. And commit a portion of her gold holdings to back it up. And the amount of gold committed for each digital Yuan may be just a fraction of the market traded value of the digital Yuan.
The remainder of China’s gold holdings will act to diversify China’s reserves and strengthen China’s financial position and by extension, the real economy.
So China’s digital Yuan will be more than fully backed at issue.
I predict that there will be a stampede to buy the digital Yuan when China issue it. Such shall be the need and attractiveness to and of trading with China. Such that they will (stampede to) dump the US dollar in exchange for digital Yuan. And continue to dump the US dollar after that as countries bid up the value of the digital Yuan. And for as long as holders of the digital Yuan will consent to sell for increasingly worthless US dollars.
After they cease to accept, those still holding US dollar will have to sell them as tobacco wrappings!
@Simon Chow,
Here is the problem I see with using even a portion of the gold to backstop the digital yuan.
If there is a run on that gold, then China faces a dilemma. Either commit more gold to backstop the digital yuan or refuse to commit more gold. Either option is difficult for China. If they commit more gold, they could lose it. If they refuse to commit more, they lose credibility. Specifically, if they refuse to commit people will say, “see, it was not really gold backed at all.” And that could hurt the digital yuan acceptance despite its merit.
I would think that the better strategy would be to issue the digital yuan and see what happens. If it starts to become an increasingly valuable commodity (and it just might), then you back it with gold.
There are two advantages to this.
First, it gives China more time to accumulate more gold. The more gold China has, the more stable the digital yuan will appear, with or without “gold backing.” People will simply see China as “asset rich” and thus reliable. The same way that the United States used to be viewed.
Second, if the digital yuan strengthens after issuance and becomes an accepted unit of trade, the later addition of “gold backing” could amplify and solidify its position. In that way, the death of the dollar and ascendence of the “digital yuan” occurs in stages so as to allow all international actors time to adjust international trade to the realities of the emerging change in the world order. That would prevent a disastrous, sudden jolt to the international economy. China still holds over a trillion in treasuries, they do not want to see the dollar collapse overnight. They would lose too much. They must reduce treasury holdings before this happens. Delaying “gold backing” is not just prudent but it gives China time to de-dollarize.
Additionally, by slowly changing the international order, China would be viewed as a responsible actor on the international scene rather than a disruptive force. Again, this is the same way that the United States used to be viewed and for a long time that contributed to American success. .
We can only hope.
The pendulum does swing over time, but as always, power corrupts.
The only way that a digital Yuan will become the preferred currency in a multi-polar monetary and financial world is to guarantee a free market in gold.
By this, I mean that the Shanghai Gold Market cannot engage in derivative trading. Essentially, this means gold cannot be fractionalized. Strangely most people miss this important point. So much so that prior gold standards instead pegged currencies to a fixed amount per weight of gold. That too is problematic, but at least it insures that the price of gold is not being “discovered” by wildly hypothecated 536:1 ratio in a futures arena (I cite this ratio as per a recent publication stating that this has been COMEX’s latest calculated standard).
Can the CCP be trusted to run a clean game in gold? Or will they run a series of transparent “fixes” that have credible free markets behind them? These are complex questions, but they must be asked.
In summary, we have to define gold backing. We cannot simply say: “What’s certain is that once Beijing announces a digital currency backed by gold, it will be like the U.S. dollar being struck by lightning.”
That is an outrageous statement to make, without any understanding of just how Beijing backs it’s digital currency with gold. Remember, if a truly free market in Gold causes the dollar price to rise dramatically, that creates certain problems as well.
We have lived under the dollar system for so long, that any change from it springs many traps. But we are at a moment when a change from it makes sense, as it has now sprung its final trap upon itself.
What I am getting at is this,
What real actual tangible thing is being offered here, which actually exists, in trade. Apparently, an electron. Or, a patterned series of electrons. Or, whatever. Sortta like slightly used, and rather well decorated (by way of whatever pattented scrawlings) pieces of paper.
It is like they really have convinced themselves that they are within their rights to no longer so much as be bothered by writing out actual reciepts, even on paper.
Are they joking?
Really?
There is nothing new about digital currency. 98% of US dollars are created by private banks as data entries on their computers whenever they make a loan. Just 2% are printed on paper by the US Treasury.
The key difference concerning the Chinese digital yuan is that the government owned Chinese central bank creates them without incurring any debt. What China is doing, is using money as a medium of exchange rather than a store of wealth.
The backing of any currency with gold ingots went out of the window in 1972 and quite frankly it is not needed except as an investment or hedge against inflation. However, it is a simple matter to control the rate of inflation of the digital yuan by the taxation of excess money and then deleting it back out of existence with a computer keystroke by the taxing authority as necessary. The US government does not have this luxury, since all US money is created by private banks.
You certainly have the nothing new part right.
O jogo está apenas começando. É muito prematuro prever a ascensão da China. É bom lembrar que os ocidentais criaram o jogo financeiro e suas regras. Isso me faz lembrar as palavras de um diplomata japonês no pré Segunda Guerra Mundial.
“Os ocidentais nos ensinaram a jogar criket e quando ficamos avançados no jogo simplesmente mudaram as regras e passaram a jogar beisebol”.
Não sei ao certo se essa foi a frase de fato já que fui vasculhar minha estante de livros e o referido livro com a citação está fora de ordem. O jogo está sendo jogado e é ingenuidade afirmar que as melhores mentes anglo-sionistas estão prostrados a espera do dragão chinês em sua locomotiva de bugigangas.
Translation. Mod:
The game is just beginning. It is very premature to predict the rise of China. It is good to remember that the Westerners created the financial game and its rules. It reminds me of the words of a Japanese diplomat in the pre-Second World War.
“Westerners taught us how to play cricket and when we got advanced in the game they just changed the rules and started playing baseball.”
I do not know for sure if this was the phrase in fact since I went through my bookshelf and said book with the quote is out of order. The game is being played and it is naivety to state that the best anglo-Zionist minds are prostrate waiting for the Chinese dragon in their trinkets locomotive.
“Hitler and the National Socialists, who came to power in 1933, thwarted the international banking cartel by issuing their own money. In this they took their cue from Abraham Lincoln, who funded the American Civil War with government-issued paper money called “Greenbacks.” Hitler began his national credit program by devising a plan of public works. Projects earmarked for funding included flood control, repair of public buildings and private residences, and construction of new buildings, roads, bridges, canals, and port facilities. The projected cost of the various programs was fixed at one billion units of the national currency. One billion non-inflationary bills of exchange, called Labor Treasury Certificates, were then issued against this cost. Millions of people were put to work on these projects, and the workers were paid with the Treasury Certificates. This government-issued money wasn’t backed by gold, but it was backed by something of real value. It was essentially a receipt for labor and materials delivered to the government. Hitler said, “for every mark that was issued we required the equivalent of a mark’s worth of work done or goods produced.” The workers then spent the Certificates on other goods and services, creating more jobs for more people.
Within two years, the unemployment problem had been solved and the country was back on its feet. It had a solid, stable currency, no debt, and no inflation, at a time when millions of people in the United States and other Western countries were still out of work and living on welfare. Germany even managed to restore foreign trade, although it was denied foreign credit and was faced with an economic boycott abroad. It did this by using a barter system: equipment and commodities were exchanged directly with other countries, circumventing the international banks. This system of direct exchange occurred without debt and without trade deficits. Germany’s economic experiment, like Lincoln’s, was short-lived; but it left some lasting monuments to its success, including the famous Autobahn, the world’s first extensive superhighway.”
Excerpted from the Web of Debt by Dr Ellen Brown
If I were designing it there would be a built in fee to enter and to leave the currency, say 2.5% with the fees to buy more gold.
Digging up gold from the ground, refining, casting it into ingots and then burying it again in underground vaults is an exercise in futility.
Impossível qualquer dinheiro digital (Yuan ou outros) “prosperar” sendo dependente da internet. Qualquer tempestade solar mais forte pode levar o homem e suas economias para a idade da pedra !!!
Translation Mod:
Impossible any digital money (Yuan or others) “thrive ” being dependent on the internet. Any strongest solar storm can lead man and his savings into the Stone Age !
Someone is paying attention, in covo with my 27 yr old I said, ‘big war, little war, what happens if all the Sats are taken out, not net, no data, no Wifi, he said, no problem ‘we’ll just do what you did when you were a kid’ (I had to supress my laughter)……..we had land line phones, how many people still have a land line? And his news, he’d get from the tv and radio……..like BBC, ABC, NBC………..oy vey!
When my mother visited China last June, she noticed cash being used less and less. I do not want China to become a cashless society like Sweden. Will the introduction of this ‘digital yuan’ still allow cash to be used?
Josep,
China is already becoming a cashless society.
I was just over there a few months ago. Even small retail vendors don’t like cash. Everyone uses the WeChat app to pay bills.
I share your concerns about “cashless” societies. In my opinion, it gives governments too much power.
But it is happening everywhere.
What is profound about Chinese people and Chinese society and Chinese values is clear in the rapid, complete acceptance of nearly all transactions (92-95%) are made on their smartphones.
Additionally, the same acceptance and value of facial recognition as a benefit, not a limitation.
The two processes give them a sense of security in a society that thinks of itself as easy to go unstable. The number one demand of Chinese of their government is to deliver stability. Once that is understood, then you have comprehended their lack of concern of loss of individual freedom (which in any society is relative, never absolute).
So, they have millions of CCTV cameras and other kinds of sensors everywhere, but the Chinese people value this as stabilizing, preventing crime, guaranteeing safety 24/7.
To live in a society of 1.3 billion people, packed tightly together most everywhere, with a history of social disruption, war, revolution, imperialist oppression and staggering hunger at times, generates a psychology few of us can easily understand.
They also have an internet that we see as censored totally, but in fact, criticism of aspects of social rule is common on Weibo and other platforms. And the authorities know, if hundreds of thousands of people agree on some topic, they better pay attention and correct what is wrong. The government has to react and fast or instability can erupt in a riot or disruption of social order.
We put the individual first. They put family first.
This isn’t ideology. This is a social psychology.
Whatever makes the society work better is the benefit of any process or system. It’s not “it works, therefore it’s good”, the American standard. In China,”it’s good for family, it’s good for all”. And, of course, it will work or it will be gone or fixed very fast.
My only explanation is they want to be #1 in the world. Whatever it costs. Whatever it takes. The CCP says it can get it done for them. Once they’re there, we’ll see what happens in 10-20 yrs.
Correction, Larchmonter445 :
The American standard is “It works _for_me_, therefore it is good.”.
The Chinese standard is “It works _for_us_, therefore it is good.”.
Although “us” starts at family and village, it clearly includes more, and more. How much more? What more? I try to learn more.
It is also clearly a reciprocal relationship … the family, village, whatever, takes care of the individual.
Otter,
You wrote:
What you have described is true. You are describing Confucianism. Confucianism is a system of mutual obligations – individual to family, family to community, community to State and State to individual, family and community.
Larchmonter445,
I get what you’re saying, but let’s not overstate the number of CCTV cameras in China. Per capita, the UK has more CCTV cameras than China does… China is not the all-seeing surveillance state that the Western media makes it out to be.
Larchmonter445,
You have a good understanding of China.
Have you traveled there?
You wrote:
From my own travels in China, I actually see little difference in availability of information.
Both China and the West do censor.
In the West, they just outsource censorship to the private sector, that is, social media banning, pay platform de-authorization, search engine algorithms adjustments and so on.
Censorship is really no different as far as I can see. It is just done in different ways.
And in each venue you can get around censorship, if you wish.
For instance, in China (contrary to popular belief) it is easy to access just about any western source you wish. I do it all the time when I am there. And a lot of Chinese can read english.
In the United States, I simply don’t use Google for searches or Facebook for political information.
So, in each venue, you can get a full spectrum of information if you make the effort.
That is my overall impression.
Not saying that I disagree, but my mother would often complain of not being able to access Google News or publications like the New York Times every time she would visit China (“it’s too controlled”, she’d say). She also told me that VPNs are illegal. There’s even a site that checks if a site is accessible in China or not.
What’s your experience?
China does indeed ban Google since they are affiliated with the American intelligence community. Since YouTube is affiliated with Google, I cannot watch Google TV in China, either.
When I am in China I just switch to Yahoo for searching and I have no problems at all.
I see.
Last time I was in China (September 2015), I had to use Bing for English-language surfing, and it wasn’t even blocked back then. I’d be surprised if Bing weren’t part of the American intelligence community, because Microsoft.
But I digress.
Josep,
The way I see it, both sides censor.
For instance, China blocks Google outright. However, when I am there I can get around it. It may take a bit more work, but I can do it.
The US censors differently. They marginalize views they don’t like by banning them from Facebook, Twitter and YouTube, not reporting them in the mainstream news and making them hard to find with search engines.
Again, I can get around that. And, again, it may take a bit more work, but I can do it.
But in both cases, it is the same thing. It is censorship. It is just done in different ways.
By the way, I checked out that link listing sites supposedly banned in China.
The browser on my IPhone is bookmarked so I can check my favorite sites, there are about a dozen such sites.
I checked some of the sites that I visited when I was last in China (that was this January). According to the link in your post, I would not have been able to visit those sites. However, I clearly was able to visit those sites. I visited all of them every morning.
YouTube TV was blocked and that was frustrating. But that was the only problem I had.
I don’t use Google for searches even in the US, so that was not a problem for me.
Don’t they have a secondary mkt, like one where some people cant afford these phones and must use cash as the mechanism to buy the few goods they can afford, almost like a flea mkt environment.
They must still have a drug problem, even if it is a small one, how do those folks complete transactions. You have to about keep everyone happy to be able to run a total digital economy, and w/1.3 billion people, thats quite a task.
Yes, I use cash when I am three but vendors like WeChat since it is so quick and secure.
Yeah I would hate to be married to a 100% crypto system, first I would have to sue said country’s so as to not break any laws that might jeopardize the advancement of the human race, as fragile as the race has become lately.
Well, dang. I was really hoping that China, as a barrier to Anglo-American hegemony, would know better than to deprive its users of the choice to use cash.
Not only would a cashless society give governments too much power, but would also make it impossible to do transactions in situations without electricity, especially after natural disasters like earthquakes and tsunamis; with cash, you can just hand over the coins and notes, and that’s it.
*anime sigh* Oh well, if that’s the way China is going, then so be it. I don’t live in China, so it’s not like I can change the situation.
Attributed 1865 Quote from the Bank of England.
“If this mischievous financial policy, which has its origin in North America, shall become indurated down to a fixture, then that Government will furnish its own money without cost. … The brains, and wealth of all countries will go to North America.”
China now has this figured out, but the US monetary system was privatized in 1913.
That may be so, yet the Fed was creating its own mechanism to combat, or reverse, the trend it saw which could control them.
It was two fold, one was authors wanting to leave their money to a person whom had mysteriously been created on paper, not yet been born into reality, and secondly was gods riches that the fed wanted to take, but compromised and instead back their full faith and credit (grade A style) against it, so as use it as collateral when needing to monetize the nations finances.
They were able to hold out initially by inflating their way out with no cost of living increases, and then once nixon ran out of resources to bargain with, used interest rates and monetizing that debt starting in 08.
They have been able to controlled both so far to date, but the fraudulent methods could soon end, do they risk doubling down to remain hidden, or get played like the fools they don’t believe they are? Only time will tell.
“Hundreds of years ago, bankers began to specialize, with the richer and more influential ones associated increasingly with foreign trade and foreign-exchange transactions. Since these were richer and more cosmopolitan and increasingly concerned with questions of political significance, such as stability and debasement of currencies, war and peace, dynastic marriages, and worldwide trading monopolies, they became the financiers and financial advisers of governments. Moreover, since their relationships with governments were always in monetary terms and not real terms, and since they were always obsessed with the stability of monetary exchanges between one country’s money and another, they used their power and influence to do two things:
(1) to get all money and debts expressed in terms of a strictly limited commodity—ultimately gold; and
(2) to get all monetary matters out of the control of governments and political authority, on the ground that they would be handled better by private banking interests in terms of such a stable value as gold.”
Excerpted from “Tragedy and Hope” by Carroll Quigley
I’ve no doubt that the zionazi-gays who inflicted this pandemic on the world were expecting much more damage done to China by it. Conversely they expected their colonies in the west would be able to absorb the damage better than China and resume zpc/nwo world domination business as usual. The also planned the double whammy of biowarfaring China and then claiming China biowarfared the world to make sure China got checked.
Well, it isn’t working. The Chinese anticipated these zionazi-nazi moves and managed to defeat them. Now China is on the rebound. The zionazis and their colonies? The heavy hitters are still in freefall. Their choice of action now being outright stealing of Chinese assets in the zionazi run colonies. They have reduced themselves in public now to low brow banditry.
DCEP as in deception? Who came up with this poor acronym? : )
About using cash – our money and financial systems are out of Noah’s ark. Of course they will have to develop into different forms or do people still want to drive a black Model T Ford?
Digital currency is the way to go. Expensive to develop but once done, on a sturdy blockchain the cost becomes much lower than the current cost to maintain old legacy financial systems. The speed that one can use a digital currency is also an issue here. So, the cost of using that currency (credit cards, bank accounts, etc) is much lower for the normal person.
Unlike many, I don’t think we’re going to see any currency ‘backed by gold’ or ‘backed by silver’. I think what we are going to see is gold/silver used as collateral for huge state initiative projects, specifically space type projects. Usually a blockchain itself serves as a proof or a backing for a crypto currency, and I can reason that the same mechanism will be in play here with the DC/EP.
This next piece needs to be understood because it is devastating to the dollar:
“Guo Sheng Securities Research Report analysis pointed out that the service provider with payment experience and license is expected to become a DC/EP wallet operator. According to the central bank’s patent, we found that the “wallet” where the DC/EP is stored may not be directly dependent on the bank account for the transfer of funds, payments, etc. In our view, service providers with payment experience and licenses are expected to intervene in the DC/EP industry chain and are expected to charge payment service fees. In addition, Guosheng Securities also believes that DC/EP may be loaded with smart contract features for targeted issuance and monitoring; DC/EP carriers may include chip smart cards; and DC/EP opportunities in transaction security, application development, etc. cannot be ignored.”
So, they are looking to a wallet that is not too dependent on any specific bank and it looks like any bank can get their own DC/EP wallet. (If we still need banks).
So what does this mean? (and I am a cryptotard so this stuff is easier to understand). So, I can get myself a DC/EP wallet. Then if there is anyone that would like to accept digital Yuan, say the Chinese food store on the corner, I can pay them with digital Yuan right out of my wallet, and into their wallet (no bank needed and the only cost is that of the wallet operator and most of all, the transaction cannot be slammed with sanctions), and they can already have their money to go on holiday to China, right here from the Latin Americas.
In other words the Yuan can spread across the world into the hands of just everyday people, fast.
It is unclear whether there will be any swops with current cryptocurrencies, but it has to come. If not directly, then through smart contracts.
Smart contracts on the same blockchain leads to a level of transparency in finance never seen before. One creates a smart contract and the financials flow on that smart contract, because once it starts working, it is a fixed highway for financial flow for a specific initiative. So contracts will move to the blockchain.
It is not too far fetched to expect that all crypto currencies will start being expressed against the digital Yuan and not against the Dollar, as they currently are.
I would like to see this thing working.
I can for see a situation where digital currency’s cause interference with the laws of nature, thus just another mechanism to ruin the human race as if there are enough of these mechanism already built into the system.
The human race is doomed, but just when will god admit to this theory.
“That, if there is anyone that would like to accept digital Yuan, say the Chinese food store on the corner, I can pay them with digital Yuan right out of my wallet, and into their wallet (no bank needed and the only cost is that of the wallet operator and most of all, the transaction cannot be slammed with sanctions), and they can already have their money to go on holiday to China, right here from the Latin Americas.”
Two points:
1. I can already take a $10 bill out of my wallet and place it into their (shop’s) wallet (no bank needed and zero cost of a non-existent intermediary wallet operator …” — I and the shopkeeper operate our own wallets without a 3rd-party’s fingers in our pockets. What’s more, when it comes to tax time the gov will take their $10 bill as payment etc. Tried and tested over 5,000 years.
2. “the transaction cannot be slammed with sanctions” — really? Read up on China’s social credit system and the possibility of an “Access Denied” at any point in an electronic transaction chain. Try spending over your credit card limit or being overdue on your latest payment and see what Visa, Mastercard, Amex etc do at the point of sale. Or if your name was Julian Assange and the State of (5 Eyes) wanted you grounded.
Anonymous on your point 1 – all I can say, and this is not criticism, it is just the only thing that makes sense to me, is that you must not travel a lot. We don’t use dollars but our own local currency. And, if I wanted to cross a border and have more than 10,000 dollars, they stuff me in jail before asking any questions. This is the legal limit but I won’t cross a border with more than 1,000 dollars on me, otherwise I have to explain where it comes from, where I got it from and so on. The dollar is highly controlled. Even in the US if you get stopped, and you have ‘too many’ dollars on you, it gets taken in a type of eminent domain deal and you must work to get it back, if ever.
On point 2 – one needs to go and study the Chinese social credit system through ‘Chinese eyes’, and not through US eyes. Again, look at everything that Larchmonter has posted here, and you will get it why this system (which is not fully rolled out as yet) works for the civilizational and social norms and mores of the people.
The ancillary goal of the Digital Yuan is for use by the million visitors to the Winter Olympics.
Because China is almost totally a Digital Economy, digital money is on smart phones and that is going to be true for visitors. Therefore, because a Chinese bank account is cumbersome for a visitor to establish, the Chinese will have the Digital Yuan and quick wallet for visitors. No bank account necessary.
So they have a big reason to issue this countrywide by 2022.
Note that Starbucks, McDonalds and KFC are part of this early testing. It all ties back into the Olympics.
I did not truly connect the Olympics date with the rollout of DC/EP. Makes sense what you say. So, we will see it live well before the Olympics and out of test.
In terms of components of Empire, I would not mourn the disappearance (gradually, with healthier options both in terms of alimentary intake and political influence) of ALL 3 of those corporations:
Starbucks, Especially McDonalds.an empire Symbol if there ever was one….lol...and KFC.
But it just goes to show the complexity of all of this in a shrinking, faster world transitioning to a solar system civilization…rather than so much of an earthbound one.
“The powers of governments over the quantity of money are of various kinds, and include (a) control over a central bank, (b) control over public taxation, and (c) control over public spending. The control of governments over central banks varies greatly from one country to another, but on the whole has been increasing. Since most central banks have been (technically) private institutions, this control is frequently based on custom rather than on law. In any case, the control over the supply of money which governments have through centra! banks is exercised by the regular banking procedures we have discussed. The powers of the government over the quantity of money in the community exercised through taxation and public spending are largely independent of banking control. Taxation tends to reduce the amount of money in a community and is usually a deflationary force; government spending tends to increase the amount of money in a community and is usually an inflationary force. The total effects of a government’s policy will depend on which item is greater. An unbalanced budget will be inflationary; a budget with a surplus will be deflationary.”
From “Tragedy and Hope” by Carroll Quigley
I’d kind of like to see the Evil IMF die along with WHO and the Gates and Clinton Foundations.
However some structure is needed during any transition.
The overriding question here is whether cooperation among the Great Powers is ultimately possible in a non Empire mode…or One Dominator will just get replaced by another.
MONEY….both an enormously beneficial facilitator of trade and a Great Corruptor simultaneously, must clearly play a key role in determining the above outcome, for better or for worse…and the important question in that regard…in terms of the title of this article is: Will “Bitcoin” (either one of the many pretenders to “the ticker”
BTC, BCH, BSV principally…..or as a shortcut term for “crypto-currency” whether new (Chinese, Russia, American, Venezuelan, etc) or already existent) be a positive evolution in such a process….or a Big Brother Horror Show as many fear.
In that regard “timing is everything” and over in the Cafe, since about two weeks ago I have been commenting on the Great Countdown toward “The Halvening”…the once in every 4 years halving of the “block reward” for solving blocks of transactions on any “Bitcoin” network. It may be “ho-hum” business as usual …OR NOT!
Vigilance is recommended in this Period of Great Change, so I link my last comment over there and invite a little attention until at least the BTC Halvenning Monday May 11………is History:
/moveable-feast-cafe-2020-05-03/#comment-799481
And there ARE reasons for optimism! As well as plenty of cautionary tales and examples.
In terms of “bitcoin” word comprehension:
That catch all term (that means many diverse things to hundreds of millions of different persons, and simply a big ? Question Mark to billions of other persons..)..I recommend that one start their journey (Confucius say, “Longest journey starts with a single step.”) with the etymology or original reason for the construction of the term….because that’s where the Great Majority lose half the meaning, right out of the gate.
So go back!
Bit = DATA coin = value
And data can be worth a great deal. Just think of that CIA cyborg/bot with tombstones in his eyes…Mark Zuckerberg.
The majority of people skip right past the “bit” part and chase the “bright and shiny” coin distraction!
This video…….by Jeff Chen, a Chinese person with his own company, MAXTHON, active both in Beijing and Singapore ..may be a big help wrapping minds around this important distinction:
https://youtu.be/N49fMs8mtj0
“In 2003, Jeff Chen single-handedly built his own web browser, Maxthon. With its customizable interface, the fast, secure and ad-free web browser drew the attention of investors and Jeff turned it into a profitable business. Today it serves 670 million users in over 240 countries………………”
In other words, besides payments…..”bitcoin” can literally transform the PLATFORM….that we are connecting on from all around the world….at this very moment.
The Internet. Which WILL evolve!
Like everything else, including “the measuring stick of value” Money…..which is a measuring stick only…..and not intrinsically “value” itself.
These distinctions matter! A lot.
I note a contradiction in my above comment and correct it:
COIN = measure of value or tokenized measuring stick of value…..NOT pure value in and of itself.
Right now the “coin” part of “bitcoin” is too wildly volatile to serve as a relatively stable measuring stick..or “money” for transactions .
Only with vastly increased adoption and utility of bitcoin (yes, but which???) in secured, more private data storage than exists at this moment is the “measuring stick” or “coin” component likely to plateau at a much higher level …and stabilize not as a replacement for gold, silver or national currencies…..but as an immutable public ledger that makes those national currencies far, far more honest and free of private central banker manipulation. Side by Side. Or many “on top” of one public, immutable ledger.
Just like the internet, “one” (old or newer) has power of global connection……….”many” results in fragmentation and great weakening:
Thus, “One or None”.
This is completely off-topic. This topic is about the Chinese Digital Yuan which is not a cryptocurrency. The mods cannot conceivably stop this as it becomes an expert topic.
This topic is not about cryptocurrency. Bro is advertising yet again.
Bitcoin, the word, is like the word vacuum cleaner – and then you get the different brands. So, if you find anyone that says Bitcoin (even if it is in quotes), instead of BSV, or BCH or BTC, you know you are being led by the nose, or someone is pretending knowledge. Somebody wants you to think that BSV is Bitcoin while it is just another vacuum cleaner and someone wants you to think that vacuum cleaner refers only to their vacuum cleaner and that there is no other vacuum cleaner on the market.
Off topic infomercials.
Can we please get back to the very good discussion on China’s Digital Yuan.
Actually, amarynth, one of the videos that I had planned on looking for from my last 2 weeks viewings specifically went into the question of China’s Digital Yuan.
But it was necessary to lay some conceptual ground work first for people to have any sort of context for digesting it. In the meantime, I answered this comment of yours suppressing of such background, but your interference evidently had it blocked. Who suffers from this???
Pepe mentions “Bitcoin”..however……does one person reading out of 100 even realize how fragmented even that “ticker” is????
What are you accomplishing in explaining that absurd situation in “the space” by suppressing such necessary background to get ANY sort of focus whatsoever on that dysfunctional fragmentation, retardation of utility and adoption and so forth???
No freedom of discussion means no progress in cognition….and..such caution by nice people not wanting to bruise your feelings…means the comprehension of the whole “space” we have both taken unusual interest in….being of little to virtually negligible interest by anyone else here.
OR, if they are out there, they sure aren’t saying much!
Good work! LOL.
The question arises as to whether, post covid-19, China needs to trade with anyone at all? Or would it be that everyone else needs to trade with China, with the current rush for medical supplies from China serving as an example?
Could China revert to the time of the Qing Dynasty in 1800 – representing 40% of the world’s economy at the time and self-sufficient in everything?
There is a good chance she could. China has oil and gas in abundance in Xinjiang and in the South China Sea, especially flammable ice which China has now mastered the technology of mining. With the use of new energy technology, China can actually stop importing oil and gas which is now cheap and for the taking and storage, hitting negative value in the US market.
China is now virtually self-sufficient in technology and innovation. Also in food, bar the occasional shortage like pork as a result of swine flu – another likely US bio-weapon attack.
So what can the rest of the world still sell to China which China still needs? That was the dilemma of the Brits when they first came to a very prosperous China in the late 18th Century. They found the answer in opium and their gun-boat ‘diplomacy’ forced opium onto China for over 100 years.
Trump is now trying to repeat what the Brits did. But that is another story.
The question remains: Does China still need to trade with the world or is it really that the world needs to trade with China?
I think it is the latter. China conducts overseas trade to uplift the rest of the world bar the West and its allies. Countries like in Africa, Central and Southern Europe and the Muslim world. That is one of the reasons for the BRI.
We had a short chat on the Saker telegram channel and it is clear that those that think about these things are buying from aliexpress instead of amazon.
China needs plenty of things to remain the worlds manufacture, it needs energy in the form of hydrocarbons, probably some coal, it needs food to feed the workforce, it need some raw materials to convert to products. All these things have to come from outside the country. So China’s ability to develop good relations with all these different places becomes a challenge into its self, especially if country’s like the U.S. run interference to prevent these relations from developing.
I still hear people blasting China and talk of bringing home the manufacturing jobs, but these are Grade A dreamers who really haven’t thought out the logicistals but still have to keep the dream alive and talk positive or dont talk at all.
Why is China afraid of pegging the Yuan to Gold? Is the Yamashita Gold anything to do with it? Because once the Yuen is pegged do real gold there will be nothing CIA presstituta midia can do about.
Get ready for a trade war with China, and no trade deal ever between China and the US:
McConnell says the Senate will likely take up the Hong Kong Human Rights and Democracy Act
https://www.scmp.com/news/hong-kong/politics/article/3038484/us-senate-support-hong-kong-democracy-bill-hits-49pc-amid
I don t see any chinese political will or short term desire of reaction to the imperial attacks or offenses, whatever.
They are no doubt tightening the rope but the chinese way.
the pacific, east and southeast asian nations will be secured first, using the Navy (dozens of new warships) and trade, investment agreements.