China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings

Zero hedge is a blog all of you interested in all things financial should be following. Tyler Durden the guy who runs the blog came up with this whopper and if he is right and so far he’s been pretty on the mark, we are in for very interesting times indeed. How about the US collapsing into a third world Nation within the year. The dollar disappearing as the reserve currency and all of us having to learn Mandarin for starters.

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All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait. Instead, China has decided to serve the world another surprise. Following last week’s announcement by PBoC Governor Zhou (Where’s Waldo) Xiaochuan that the country’s excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the “buy US debt” Nash equilibrium will be. Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trillion or so.

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