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Executive Summary – The Chinese government has ordered its money manager to get out of any debt instruments from the US that are not US government backed. A Communist Party directive said that dollar reserves should be limited to US Treasuries or agency mortgage debt like Freddie Mac. The directive covers the China State Administration of Foreign Exchange (SAFE) and China’s state controlled commercial banks. The amount of foreign asset investments these entities control is about $1,000,000,000,000 (one trillion dollars). These entities will probably be liquidating state bonds (think California) and muni bonds as well.
Effects – This will have the effect of boosting the value of the USD. We believe this move will enable China to get a better return when they start dumping the dollar altogether which is their next move in our opinion. China seems to be making good on its threats to the USA.
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*Offshore Legal Associates Law Firm.We have no legal ties or associations with any other law firm or corporation with similar or like sounding names anywhere and should not be so confused with any other entity having a similar or like sounding name.





