China to Diversify Out of U.S. Dollars 01.05.06

China Announces It will Diversify Away from U.S. Dollars and Treasury Bonds.

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China indicated today that it could begin diversifying out of both US dollars and Treasury bonds

China indicated today that it could begin diversifying out of both US dollars and Treasury bonds. Economists estimated that more than 70% of China's reserves are in dollars. China's willingness to buy U.S. debt allows the U.S. to sustain a great debt and deficit spending.

For the week ending Dec. 19, M-3, the U.S. broad money supply, jumped $35.7 billion. The week before M-3 had risen $27.3 billion, for a combined two week increase of $63 billion. At this rate, M-3 would rise by a mind-blowing $1.6 trillion over a 12 months period! The M-3 broad money supply rose $40.7 billion for the latest week. This creation of fiat money is what depends upon China and other major creditors buying the U.S. debt. Without significant continuing foreign purchases of U.S. debt, the American financial integrity will be in deep trouble.

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