Tectol, Thx for the discussion points, your comments

China will let the yuan appreciate in a control environment starting after the FED starts demoneytising

IMO, talk about demonetizing is cheap ... the impact of so doing will be to further exacerbate the foreclosure crisis (higher interest rates as contraction of the money supply occurs), which in turn will lead to reduced consumption. Prior to the unravelling, 70% of American GDP was courtesy of the American consumer. Congress will be killed next year and gridlock will reign ... there will not be any rational activity by the government to reduce the money supply until well after the second dip of the recession. Those who think "growth" spurred by cash for clunkers and inefficient gov't spending is real, need to take a closer look at shadow stats and start using unemployment rates prior to the Clinton adminstrations change in measurement. Liars figure so figures lie.

once they can figure where the US dollar and US economy is heading .

IMO the Chinese already know as evidenced by the stimulus of their worker's economy, increasing gold position and their relatively strong talk to the US regarding debt control. The US economy and worldwide reputation and influence is tanking faster than a 747 out of fuel.

Your other comments and analysis is IMO quite sound if you accept the premise that the US economy is improving and they can start to demonetize the debt (ie. reduce the money supply). I'm not buying the optimistic talk of a devalued government, although in fairness they can not go public about the wearisome state of affairs without creating panic.

It seems to me their policy might be to hope and pray that the bankers doing God's work can make the right gambles this time and thus withstand the next run on the system as the assets value (real property and derivatives) continue to meltdown.

I'm not banking on them, I am banking on gold and the continued devaluation of both currencies. Make no mistake China will get their way ... the US will no longer be the reserve currency of the world which will require them to dry up even more of the money supply.

USA hegemony is over.

Check this interesting article out about simultaneous devaluation ... I became a gold bug in 2002 after vehmently condemning it as arcane for most of my life .... the putrid smell of government corruption caught my nasal passage and the corruption of that time has risen a minimum of fivefold since.

http://www.cnbc.com/id/34038650

orgy