http://www.zerohedge.com/news/2015-08-27/its-official-china-confirms-it-has-begun-liquidating-treasuries-warns-washington


China is definitely punishing the west ... their exclusions from SDR's with the IMF appears to be the last straw.

Without the Chinese buying US treasurys ... (which now they have officially announced) in order to support the falling yuan (I believe their recent market woes, which incidentally coincided with that rejection, is being orchestrated by the Chinese government to justify the moves) will destroy the US economically.

As these treasury's mature ... they must be repaid and the Chinese are making it clear they are now ready to drop purchasing them ... Since the US has no excess money they must issue more treasuries.

If there are no buyers ... the US must default on the treasuries (which can not be allowed) or have to raise rates in order to attract sufficient interest to support new demand to be able to sell the treasuries needed to not default or print money making the dollar less valuable and triggering inflation. If interest rates were to rise (remember interest payments in 2014 currently account for 1.32% of GDP ... about 230 billion .... with a 10 year T-bull rate of 3% .... for every .1% increase in interest rates ... the government will have to pay 7 billion more in interest or a 1% rate of increase means 75 billion. Also as interest rates rise there ... they rise in the bond market and companies enjoying extremely rates will have to pay more ... mortgages will be more expensive ... in other words pain for the economy. Most of all in the derivative gambling game a major player will die by such an increase and that means Lehman on steroids.

Printing money will be the only way to avoid this which means lower dollar value ... higher inflation ... and with the money printing reduced confidence in the US dollar and a further decline in T-bill demand ( a vicious negative circle) because who wants to buy debt which be devalued when it is paid back by the newly printed money.

September will likely be the deciding month like Sinclair said

Hang on to your hats and stock up on food, water and fuel.

orgy