China’s Plan to Destroy the Dollar (And It’s Kind of Working)
Published: 2025-04-14
Status:
Available
|
Analyzed
Published: 2025-04-14
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 20
Prediction
Topic
Status
The actions taken from this point forward will be critical in determining the future of global economic systems and reserve currencies.
"And that's how you get two separate economic systems or two world reserve currencies. Now, we're not there yet, but every move we make from here on out matters a lot."
Pending
The Federal Reserve may need to intervene by purchasing US treasuries, initiating a QE 2.0 program to stabilize the bond market.
"So, the Federal Reserve might have to step in and start buying US treasuries to stabilize the bond market. It's basically quantitative easing all over again, QE 2.0."
Correct
There is a question about the sustainability of China's currency defense strategy and how long they can continue to use their dollar reserves for support.
"The real question is how long can China sustain defending its currency before they run out of dollars to support themselves?"
Correct
The US will need to refinance $9 trillion of debt in 2025 at potentially very high interest rates.
"And they have to refinance $9 trillion worth of debt in 2025 at this super high interest rate."
Incorrect
China is currently prioritizing strengthening and defending the yuan by selling US dollar reserves to purchase its own currency.
"But that is what China is choosing to do instead right now, and that is to keep the yuan strong and to defend the value of their currency by selling their US dollar reserves to buy up the yuan."
Correct
A capital flight is occurring, with money exiting China and being invested in foreign assets such as gold and Bitcoin.
"It's called a flight of capital, which is money leaving that country and being invested into other foreign assets like gold, Bitcoin, and things like that."
Correct
China faces a critical decision: either devalue its currency or maintain its strength and defend the yuan.
"China is forced to choose between weakening their currency or defending the yuan."
Correct
Continued selling of US treasuries by China could lead to negative outcomes.
"So the next big question is what happens if China keeps selling US treasuries and a few things could happen and none of them are really good."
Pending
Rapidly increasing interest rates pose a risk of damaging the US economy and forcing deleveraging.
"And if interest rates get too high too fast, it can break parts of the US economy and force it to delever."
Correct
In early April 2025, a significant and unusual sell-off of US treasuries occurred in the bond market.
"In early April 2025, something happened to the bond market that usually never happens, which was the sell-off of US treasuries."
Correct
Japan and China, the largest holders of US debt, are reportedly selling their US Treasury holdings in response to President Trump's tariffs.
"Investors believe that right now foreign countries, especially Japan and China, which are the two biggest holders of US debt, are dumping US Treasury holdings as a way to fight back against President Trump's tariffs."
Correct
By the end of 2024, China's holdings of US debt had fallen to approximately $760 billion, the lowest point since 2009.
"In fact, by the end of 2024, they were already down to about $760 billion in US debt, which is the lowest level since 2009."
Correct
A significant tariff war escalated in April 2025, with the US imposing 104% tariffs on Chinese imports, followed by China's 50% retaliation, then the US raising tariffs to 145%, and China responding with 125%.
"On April 9th, 2025, President Donald Trump hit China with 104% tariffs on all Chinese imports. China then responded immediately with a 50% retaliatory tariff on all US goods. That raised China's total tariff on American imports to 84%. If you think that's crazy, President Trump came back again and raised the US tariff to 145%. And then China responded with their own 125%."
Incorrect
Scott Besson's strategy might involve creating significant pressure on China, where each of their actions generates further complications, ultimately aiming for a mutually beneficial negotiation between the two countries.
"So, if this is really Scott Besson's strategy, he's trying to engineer a situation where China is under so much pressure. every move they make just creates more problems with the goal that both countries come together to negotiate something more favorable for both of them."
Correct
A potential worst-case scenario involves a complete financial decoupling between the US and China, leading to the establishment of two distinct economic systems and potentially two world reserve currencies.
"And the worst case scenario is a full-blown financial decoupling where the US and China stop trusting each other's money completely. And that's how you get two separate economic systems or two world reserve currencies."
Incorrect
The Federal Reserve may implement quantitative easing (QE 2.0) to stabilize the bond market if China continues to sell US treasuries.
"So, the Federal Reserve might have to step in and start buying US treasuries to stabilize the bond market. It's basically quantitative easing all over again, QE 2.0."
Incorrect
A complete financial decoupling between the US and China could lead to the emergence of two distinct global economic systems and reserve currencies.
"And that's how you get two separate economic systems or two world reserve currencies."
Correct
The US may need to refinance $9 trillion of debt in 2025 at significantly higher interest rates.
"and they have to refinance $9 trillion worth of debt in 2025 at this super high interest rate."
Correct
There is a question about how long China can continue to defend its currency before depleting its dollar reserves.
"The real question is how long can China sustain defending its currency before they run out of dollars to support themselves?"
Pending
The US bond market faces pressure from China's treasury sales, potentially leading to higher yields and interest rates.
"The US and China are in a race against time, with China's treasury sales impacting US yields and interest rates."
Correct
The speaker suggests that Scott Besson's strategy might be to put China under immense pressure through financial maneuvers, aiming for a negotiated outcome favorable to both countries.
"So, if this is really Scott Besson's strategy, he's trying to engineer a situation where China is under so much pressure. every move they make just creates more problems with the goal that both countries come together to negotiate something more favorable for both of them."
Pending
If China weakens the yuan, it could boost exports and offset tariffs, but it also risks triggering domestic panic, inflation, and capital flight.
"Now, if China weakens the yuan, that would be good because it would make exports cheaper and help offset the impact of President Trump's tariffs, but it could also trigger a panic inside of China because that would create inflation and investors might rush to move their money out of the country."
Correct
Long-term interest rates, specifically those on the 10-year Treasury, are determined by market forces of buyers and sellers, not solely by the Federal Reserve.
"But long-term rates like the 10-year Treasury are controlled by the market, by buyers and sellers."
Correct
The bond market possesses significant influence over interest rates, the central bank, the stock market, and even presidential decisions.
"The bond market is so important that it can control interest rates. It can control the central bank, the stock market, and even the president's actions."
Correct
China's holdings of US debt had fallen to approximately $760 billion by the end of 2024, a level not seen since 2009.
"In fact, by the end of 2024, they were already down to about $760 billion in US debt, which is the lowest level since 2009."
Correct
Yields on the 10-year US Treasury are increasing due to countries like China selling off US debt, creating a widespread impact.
"Now, right now, the yields on what's called the 10-year Treasury are going up. And that's because when countries like China start to sell off US debt, which are their Treasury bonds, it creates a ripple effect that hits everyone."
Incorrect
The speaker is moving Bitcoin holdings off exchanges and into cold storage.
"Then I'm immediately moving my Bitcoin out of the exchanges and onto cold storage."
Pending
The speaker intends to continue dollar-cost averaging into Bitcoin.
"I'll keep dollar cost averaging into Bitcoin."
Correct
The speaker plans to continue dollar-cost averaging into the stock market, specifically by buying VTI (Vanguard's ETF).
"I'll keep doing the only thing I know how to do, which is to dollar cost average into the stock market and keep buying VTI, Vanguard's ETF, which is what I have been doing."
Correct
The Federal Reserve may intervene by purchasing US treasuries, initiating a quantitative easing program (QE 2.0) to stabilize the bond market.
"So, the Federal Reserve might have to step in and start buying US treasuries to stabilize the bond market. It's basically quantitative easing all over again, QE 2.0."
Correct
China is currently opting to defend the yuan's value by selling US dollar reserves to purchase its own currency.
"Or there's option number two, which is what China is choosing to do instead right now, and that is to keep the yuan strong and to defend the value of their currency by selling their US dollar reserves to buy up the yuan."
Correct
An increase in US interest rates will lead to higher costs for mortgages, credit cards, and car loans.
"US interest rates could go up making mortgages, credit cards and of course car loans a lot more expensive."
Correct
Capital is flowing out of the US stock market as investors adopt a wait-and-see approach regarding the current economic situation.
"That's why there's a capital flight in the US as well. Money leaving the US stock market because investors are saying, 'We're just going to wait and see how this all plays out.'"
Incorrect
China has begun selling US Treasury bonds as a significant strategic move.
"And the biggest move, they started selling US treasuries."
Correct
Japan and China, major holders of US debt, are reportedly selling US Treasury holdings to counter President Trump's tariffs.
"Investors believe that right now foreign countries, especially Japan and China, which are the two biggest holders of US debt, are dumping US Treasury holdings as a way to fight back against President Trump's tariffs."
Correct
A rapid escalation of tariffs occurred between the US and China in the week of April 9th, 2025, starting with a 104% US tariff on Chinese imports, followed by retaliatory tariffs from China and further escalations from both sides.
"On April 9th, 2025, President Donald Trump hit China with 104% tariffs on all Chinese imports. China then responded immediately with a 50% retaliatory tariff on all US goods. That raised China's total tariff on American imports to 84%. If you think that's crazy, President Trump came back again and raised the US tariff to 145%. And then China responded with their own 125%. All of this, by the way, happened in just one week."
Incorrect
The current situation in the bond market might be part of a strategy to corner China, mirroring the tactics used against the British pound in the 1990s.
"So, I want to help explain exactly what's going on because this might actually be part of a strategy not to crash the markets, but to corner China the same way we cornered the British pound in the 1990s."
Pending
The speaker plans to continue dollar-cost averaging into Bitcoin.
"I'll keep dollar cost averaging into Bitcoin."
Incorrect
The speaker will buy extra Bitcoin at a discount during volatile weeks.
"And on weeks like the one we just had, I'll buy a little bit of extra, which is what I just did, at a discount."
Incorrect
The speaker will continue dollar-cost averaging into the stock market by buying Vanguard's VTI ETF.
"I'll keep doing the only thing I know how to do, which is to dollar cost average into the stock market and keep buying VTI, Vanguard's ETF, which is what I have been doing."
Correct
The Federal Reserve may implement quantitative easing (QE 2.0) to stabilize the bond market due to rising interest rates.
"So, the Federal Reserve might have to step in and start buying US treasuries to stabilize the bond market. It's basically quantitative easing all over again, QE 2.0."
Incorrect
The US economy risks unwinding and entering a recession in 2025 if interest rates remain high, forcing a refinance of $9 trillion in debt at elevated rates.
"And the US is thinking the exact same thing. How long can the US allow their bond market to be so high and to have this high interest rate before their own economy unwinds, goes into a recession, and they have to refinance $9 trillion worth of debt in 2025 at this super high interest rate."
Incorrect
A complete financial decoupling could lead to the emergence of two separate economic systems and potentially two world reserve currencies.
"And that's how you get two separate economic systems or two world reserve currencies."
Incorrect
China faces a critical decision: either weaken its currency (the yuan) or defend its value.
"China is forced to choose between weakening their currency or defending the yuan."
Correct
Weakening the yuan would make Chinese exports cheaper, offsetting tariffs, but could lead to inflation, capital flight, and financial system instability within China.
"Now, if China weakens the yuan, that would be good because it would make exports cheaper and help offset the impact of President Trump's tariffs, but it could also trigger a panic inside of China because that would create inflation and investors might rush to move their money out of the country."
Correct
China is currently choosing to defend the yuan's strength by selling US dollar reserves to purchase yuan.
"Or there's option number two, which is what China is choosing to do instead right now, and that is to keep the yuan strong and to defend the value of their currency by selling their US dollar reserves to buy up the yuan."
Correct
By the end of 2024, China's holdings of US debt had fallen to approximately $760 billion, a level not seen since 2009.
"By the end of 2024, they were already down to about $760 billion in US debt, which is the lowest level since 2009."
Correct
Interest rates are currently rising.
"So, interest rates go up. And that's exactly what we're seeing right now."
Correct
When countries like China sell US debt, interest rates must increase to attract new investors.
"And that's because when countries like China start to sell off US debt, which are their Treasury bonds, it creates a ripple effect that hits everyone. Which means to get new investors to buy US debt, interest rates have to go up, not down."
Correct
If China continues to sell US treasuries, US interest rates will rise, making loans like mortgages, credit cards, and car loans more expensive.
"First, US interest rates could go up making mortgages, credit cards and of course car loans a lot more expensive."
Correct
The bond market has significant influence, controlling interest rates, central bank actions, the stock market, and even presidential decisions.
"The bond market is so important that it can control interest rates. It can control the central bank, the stock market, and even the president's actions."
Correct
The US must refinance $9 trillion in debt in 2025 at potentially very high interest rates.
"And they have to refinance $9 trillion worth of debt in 2025 at this super high interest rate."
Incorrect
Selling US Treasury bonds is referred to as a 'nuclear option'.
"The nuclear option that is selling US treasuries, US bonds."
Pending
China has begun selling US treasuries.
"And the biggest move, they started selling US treasuries."
Correct
Tariffs initiated the current sequence of events.
"And all of this was started by just one move, tariffs."
Pending
On April 9, 2025, Trump imposed 104% tariffs on Chinese imports. China retaliated with 50% tariffs on US goods, bringing their total to 84%. Trump then raised tariffs to 145%, and China responded with 125%.
"On April 9th, 2025, President Donald Trump hit China with 104% tariffs on all Chinese imports. China then responded immediately with a 50% retalatory tariff on all US goods. That raised China's total tariff on American imports to 84%. If you think that's crazy, President Trump came back again and raised the US tariff to 145%. And then China responded with their own 125%."
Incorrect
In the past, the UK participated in the ERM, an agreement to stabilize currency values against the Deutsche mark.
"Back then, the UK was part of what's called the ERM, the exchange rate mechanism, which was a European agreement to keep currency values relatively stable against the Deutsche mark."
Pending
Scott Bessant and George Soros predicted the UK would be forced to devalue the pound or leave the ERM due to its overvaluation and weak economy.
"So Scott Bessant and George Soros realized the UK couldn't keep it up. They believed the pound was overvalued. The UK couldn't defend itself forever and eventually they'd be forced to make a choice. Either devalue the pound or leave the ERM."
Correct
Bessant and Soros shorted the British pound by borrowing and selling it, anticipating a price drop.
"They shorted the British pound. That means they borrowed pounds and sold them, betting that they could buy them back later for a lot cheaper."
Pending
On September 16, 1992, the UK exited the ERM due to overwhelming market pressure.
"Eventually, the pressure was too much and on September 16th, 1992, the UK withdrew from the ERM."
Correct
If China continues selling US treasuries, interest rates will rise. The Fed might initiate QE 2.0. The worst-case scenario is a complete financial decoupling between the US and China, leading to separate economic systems and potentially multiple reserve currencies.
"First, US interest rates could go up making mortgages, credit cards and of course car loans a lot more expensive. So, the Federal Reserve might have to step in and start buying US treasuries to stabilize the bond market. It's basically quantitative easing all over again, QE 2.0. And we've seen what happens when the Fed prints money. Any day now, we could see the Fed step in to do this. But the worst case scenario is a full-blown financial decoupling where the US and China stop trusting each other's money completely. And that's how you get two separate economic systems or two world reserve currencies."
Correct
The bond market's significance lies in its ability to dictate interest rates, influence the central bank, the stock market, and presidential actions.
"And this is why the bond market is so important. It can control interest rates. It can control the central bank, the stock market, and even the president's actions."
Correct
When bonds are sold off, interest rates rise because bond prices and yields move inversely; a drop in price leads to an increase in yield.
"So, what happens then to interest rates when bonds get sold off? Their rates adjust upward. And that's because bond prices and their interest rates move in opposite directions. If the price of a bond drops, the yield goes up."
Correct
Massive bond sales by China and other foreign governments are forcing US yields higher, leading to increased interest rates, which is currently happening.
"If hundreds of billions of dollars of bonds being sold at the same time by China and by other foreign governments that are watching this play out. That forces US yields even higher. So interest rates go up. And that's exactly what we're seeing right now."
Correct
High and rapidly increasing interest rates pose a significant risk to the US economy, especially given its $30 trillion national debt, potentially causing economic breakdown and deleveraging.
"And with over $30 trillion in national debt, that's not good. And if interest rates get too high too fast, it can break parts of the US economy and force it to delever."
Correct
The bond market has the power to compel presidential actions, such as pausing tariffs for 90 days to prevent further economic damage.
"Bond markets can also force the president to do exactly what he just did, to back off the tariffs for 90 days so we don't break even more parts of the US economy."
Correct
Scott Besson's strategy may be to create intense pressure on China, where each action exacerbates its problems, ultimately leading both countries to negotiate a more favorable agreement.
"So, if this is really Scott Besson's strategy, he's trying to engineer a situation where China is under so much pressure. every move they make just creates more problems with the goal that both countries come together to negotiate something more favorable for both of them."
Pending
There is a capital flight from the US stock market as investors adopt a wait-and-see approach regarding the ongoing economic situation.
"And that's why there's a capital flight in the US as well. Money leaving the US stock market because investors are saying, 'We're just going to wait and see how this all plays out.'"
Incorrect
China's most significant action has been the sale of US treasuries.
"And the biggest move, they started selling US treasuries."
Correct
The Federal Reserve may intervene by purchasing US treasuries to stabilize the bond market, a move resembling quantitative easing (QE 2.0).
"So, the Federal Reserve might have to step in and start buying US treasuries to stabilize the bond market. It's basically quantitative easing all over again, QE 2.0."
Correct
Capital flight refers to money leaving a country to be invested in foreign assets such as gold and Bitcoin.
"It's called a flight of capital, which is money leaving that country and being invested into other foreign assets like gold, Bitcoin, and things like that."
Pending
Scott Bessant and George Soros believed the pound was overvalued and that the UK, facing economic weakness, could not indefinitely defend its currency, forcing a decision between devaluation or leaving the ERM.
"So Scott Bessant and George Soros realized the UK couldn't keep it up. They believed the pound was overvalued. The UK couldn't defend itself forever and eventually they'd be forced to make a choice. Either devalue the pound or leave the ERM."
Correct
Scott Bessant is replicating a scenario designed to force China into making a difficult choice between two options.
"So the question is how does all of this relate to China and what's happening right now? And why this all relates is because Scott Bessant is recreating a situation where a country is forced to make one of two very hard decisions."
Pending
The current market situation might be a strategy to corner China, similar to how the British pound was cornered in the 1990s, rather than to crash the markets.
"So, I want to help explain exactly what's going on because this might actually be part of a strategy not to crash the markets, but to corner China the same way we cornered the British pound in the 1990s."
Pending
Yields on the 10-year Treasury are increasing because China's sale of US debt creates a widespread ripple effect.
"Now, right now, the yields on what's called the 10-year Treasury are going up. And that's because when countries like China start to sell off US debt, which are their Treasury bonds, it creates a ripple effect that hits everyone."
Incorrect
The yield on the 10-year US Treasury is currently increasing.
"Now, right now, the yields on what's called the 10-year Treasury are going up."
Correct
While the Fed manages short-term interest rates, long-term rates, such as the 10-year Treasury yield, are determined by market forces of buyers and sellers.
"The Fed controls short-term rates like what's called the overnight lending rate between banks and the federal fund interest rate. But long-term rates like the 10-year Treasury are controlled by the market, by buyers and sellers."
Correct
Foreign countries, particularly China and Japan, are reportedly selling US Treasury holdings to retaliate against President Trump's tariffs.
"And all signs point to China and Japan. Investors believe that right now foreign countries, especially Japan and China, which are the two biggest holders of US debt, are dumping US Treasury holdings as a way to fight back against President Trump's tariffs."
Incorrect
There is an inverse relationship between bond prices and their yields; when bond prices fall, yields rise.
"If the price of a bond drops, the yield goes up."
Correct
The interest rate on the 10-year Treasury bond has recently risen significantly, which is considered an undesirable outcome.
"Now, the most important one of these treasuries is the 10-year Treasury bond and its interest rate. And the 10-year interest rate or yield went way up recently, which is completely the opposite of what we want to happen."
Correct
In early April 2025, an unusual sell-off of US treasuries occurred in the bond market.
"In early April 2025, something happened to the bond market that usually never happens, which was the sell-off of US treasuries."
Correct
China's strategy of selling US treasuries increases interest rates, potentially damaging the US economy and compelling the Fed to lower rates.
"And that's how China is fighting back. It's dumping US treasuries, which forces interest rates upward and breaks part of the US economy. That's why the Fed might have no choice but to drop rates."
Correct
Rapidly escalating interest rates pose a risk of breaking segments of the US economy and forcing deleveraging.
"And if interest rates get too high too fast, it can break parts of the US economy and force it to delever."
Correct
The most significant action taken was China's commencement of selling US treasuries.
"And the biggest move, they started selling US treasuries."
Correct
China responded to US tariffs with a 50% retaliatory tariff on US goods, bringing their total import tariff to 84%.
"China then responded immediately with a 50% retalatory tariff on all US goods. That raised China's total tariff on American imports to 84%."
Incorrect
On April 9, 2025, President Donald Trump imposed a 104% tariff on all Chinese imports.
"On April 9th, 2025, President Donald Trump hit China with 104% tariffs on all Chinese imports."
Incorrect
China has been gradually reducing its US debt holdings, reaching approximately $760 billion by the end of 2024, a level not seen since 2009.
"China's been slowly pulling out for years. In fact, by the end of 2024, they were already down to about $760 billion in US debt, which is the lowest level since 2009."
Correct
The 10-year Treasury bond's interest rate has recently surged, which is viewed as an undesirable development.
"Now, the most important one of these treasuries is the 10-year Treasury bond and its interest rate. And the 10-year interest rate or yield went way up recently, which is completely the opposite of what we want to happen."
Incorrect
The current events might be a strategy to corner China, mirroring the approach used against the British pound in the 1990s, rather than intending to crash markets.
"So, I want to help explain exactly what's going on because this might actually be part of a strategy not to crash the markets, but to corner China the same way we cornered the British pound in the 1990s."
Pending
China is selling US Treasury bonds, an action described as a 'nuclear option'.
"So, China is selling off US Treasury bonds. The nuclear option that is selling US treasuries, US bonds."
Correct
The bond market and its interest rates are identified as the most crucial indicators to watch currently, surpassing the stock market in importance.
"And what I learned this week is that the most important thing to look at right now is not the stock market. It's the bond market and their interest rates."
Correct