Richard Russell, author of the Dow Theory Letters, thinks he’s figured out how China will climb to the top of the world.
He spoke with Eric King of King World News:
As the dollar declines in purchasing power, it will begin to lose its international reserve status. Foreigners will begin to avoid the US dollar. At around that time I believe the dollar will face growing competition from the Chinese yuan. To make matters more difficult, I believe the yuan will ultimately be partly backed by gold. This will be part of China’s plan to take over leadership of the world.
Throughout history, the nation with the reserve currency was also the nation with the most powerful military. This was true of Holland, Spain and most recently, Britain. When Britain lost its power and military (navy) leadership during World War II, the US moved to the fore, and, in turn (Bretton Woods), the US dollar became the world’s reserve currency.
The US’s Pentagon is now worried about the build-up of China’s military, particularly its navy. China knows what it is doing. China knows that if it becomes the world’s leading military power and it possesses the world’s reserve currency, it will be the new leader of the world.
Russell believes that initieal dollar decline will be the result of the Federal Reserves’ easy monetary policy.
His interview with King includes discussion of his ongoing bullish thesis on gold.
Read the whole interview at KingWorldNews.com.