After a subsidiary of the Chinese state purchased the J.P. Morgan HQ building directly across and connected to the New York Federal Reserve a few years ago, it was rumored that China not only held a large stake in the bank itself, but are also now a partial shareholder with ties directly to America’s central bank.
The significance of this had not been fully been seen in the public view yet, but something happened on May 27 that could change that scenario entirely.
Earlier this week, China devalued their currency on a scope not seen since 2011. And the primary reason behind this was that several Federal Reserve regional Presidents were going public to jawbone the dollar higher, and making vague promises of a rate hike next month at the June FOMC meeting. Like with the European Central Bank, Fed officials know they don’t actually have to institute actual policy to move the markets in a direction of their choosing, since the HFT Algo’s will do their work for them based on their language.
China’s Yuan currency remains pegged to the dollar for the time being, and this has been the one big secret that Wall Street, the mainstream media, bought and paid for tool economists, and the central banks have refrained from ever talking about… that because the dollar is the sole global reserve currency, monetary policies initiated by the Fed do not just affect the U.S. markets, but every other global currency, and with them, their own economic consequences.
Ie…. where do you think the Arab Spring came from? When the dollar became so strong that commodity prices shot up into bubble territory, it exported inflation across the globe and made it nearly impossibly for nations such as Egypt, Yemen, and others to afford to buy dollars so they could buy food stuffs on the open market.
Thus the Fed to the world is like the now defunct E.F. Hutton to investors… when they talk, sneeze, or initiate policies, the world not only listens, but runs for cover to deal with the aftermath of what those words and actions do within their own markets and economies.
And now it appears that because of the Fed’s blatant ignorance of what their words last week did to currencies such as the Yuan, China has finally decided to act and are now not only demanding up front notice before the Fed makes any future moves on interest rates on the dollar, but perhaps even to now become involved in helping to create these policies.
The Chinese government has already shown that they will no longer accept a future based on a singular global reserve currency, and especially one controlled solely by the United States. And over the past four years China has initiated their own duplicate financial infrastructures to counter dollar hegemony and have even forced their way into the IMF’s SDR currency program.
Until the past few years, no nation or economy was strong enough to stand up to Washington or the Fed to demand that they pay attention to the consequences of their monetary policies, and how they would come to affect economies in the rest of the world. But as dollar hegemony wanes in the global financial system, and nations once beholden to servitude under the dollar are finding new alternatives to divest themselves of the currency entirely, it is perhaps the perfect time for China to come to the table with sufficient power behind them to not only question the central bank’s future policies, but demand a seat at the table in creating them.