2013-11-21 Bloomberg: China will not increase dollar reserves anymore

deisik

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Quote from: StarfishPrime on November 26, 2013, 11:26:12 PM

Sorry but you clearly have no grasp of either of the processes or legalities of international trade. Nothing is "falsified" etc etc. You just agree to send the equivalent in BTC to settle an invoice in USD. Simple. Happens all the time, nothing remotely illegal about that!

Ok, I have no grasp of the processes of international trade. How would you then ask your bank to issue a bank guarantee on your behalf for the benefit of your foreign trade partner to guarantee the fulfilling of the contractual obligations if you are not actually going to pay the sum covered by the guarantee in the currency declared?

StarfishPrime

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Quote from: deisik on November 26, 2013, 04:34:56 AM

Quote from: StarfishPrime on November 25, 2013, 11:36:36 PM

Quote from: deisik on November 25, 2013, 10:16:07 PM

Between which contractors? If you read my posts carefully, you would have noticed that I was talking about international trade between China and the USA... If you tried to pay in BTC for USD orders but got caught what would happen?

"Got caught"? doing what?

Doing payments in BTC (or any other currency for that matter) for dollar-denominated orders while all your documents (contracts, invoices, customs declarations, bank guarantees, etc) are officially issued in dollars and you ultimately end up paying customs duties and taxes if applicable, selling currency to the state if required as well as falsifying your accounting and financial documents (e.g. bank statements) necessary for making corresponding accounting records...

I'm not talking here about you paying for a shirt you order from abroad but about multi-million contracts employing all available means of foreign trade...

Sorry but you clearly have no grasp of either of the processes or legalities of international trade. Nothing is "falsified" etc etc. You just agree to send the equivalent in BTC to settle an invoice in USD. Simple. Happens all the time, nothing remotely illegal about that!

StarfishPrime

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@qwerty555: great posts.

Thanks for your analysis, I think you're right about China's stance.

qwerty555

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Swings and roundabouts and simple maths ( which i hope I've got right from a back of the envelope calculation )

Although the full picture is not quite as simple as this, as there is an effect on exports etc ( LESS important if China now moving and focusing on a domestic consumer based growth.. which is widely KNOWN and stated that they are).. it does indicate that China DOES want the yuan to continue to appreciate against the dollar as its EASY MONEY

Chinas M2 money supply is 17.4 trillion dollars equivalent

http://www.tradingeconomics.com/china/money-supply-m2

China Money Supply M2
Money Supply M2 in China decreased to 107016.66 CNY Billion in October of 2013 from

divide by 6.15 to get $ amount

Chinas foreign reserves are

http://blogs.wsj.com/economics/2013/10/15/chinas-foreign-exchange-reserves-jump-again/

China’s mammoth foreign exchange reserves rose to a record $3.66 trillion in the third quarter, as the country continued to use massive FX purchases to hold down the value of its currency.

If the dollar loses 34% against the Yuan their reserves/ treasuries etc lose 34% of their value

34% of $3.66 trillion is 3.66x.34= loss of 1.244 trillion dollars

BUT

a 34% appreciation of its money supply = 17.4 x.34 = appreciation in dollar terms of $5.916 Trillion

Net gain in value to buy goods or increase reserves or distribute to the poor or..or...........$ 4.6 Trillion.

ShadowOfHarbringer

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Quote from: BTCLuke on November 25, 2013, 09:46:44 PM

Twelve Trillion USD invested in BTC with a 12 million BTC supply would be a $1 Million bitcoin.
...And that's without any user adoption by the people on the street; not even a single merchant accepting them.
WHAT IS STOPPING THIS AND HOW DO WE DESTROY THAT?

Nothing needs to be done really except improving Bitcoin clients & websites so Bitcoin becomes more scalable, easy to use, secure and anonymous.

If we do so, it will just happen. This is an unstoppable force of nature (or force of mathematics).

deisik

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Quote from: StarfishPrime on November 25, 2013, 11:36:36 PM

Quote from: deisik on November 25, 2013, 10:16:07 PM

Between which contractors? If you read my posts carefully, you would have noticed that I was talking about international trade between China and the USA... If you tried to pay in BTC for USD orders but got caught what would happen?

"Got caught"? doing what?

Doing payments in BTC (or any other currency for that matter) for dollar-denominated orders while all your documents (contracts, invoices, customs declarations, bank guarantees, etc) are officially issued in dollars and you ultimately end up paying customs duties and taxes if applicable, selling currency to the state if required as well as falsifying your accounting and financial documents (e.g. bank statements) necessary for making corresponding accounting records...

I'm not talking here about you paying for a shirt you order from abroad but about multi-million contracts employing all available means of foreign trade...

qwerty555

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Quote from: exstasie on November 25, 2013, 07:38:07 AM

Quote from: JackH on November 25, 2013, 06:49:34 AM

This could be big! Maybe China actually invented Bitcoin.... Fed up with the FED printing USD?

Makes sense to distance themselves from the USD. Maybe the chinese are so pissed that the USD is still considered the main currency for trade, that they invented BTC to takeover.

1 I believe Bitcoin is an entertaining side issue for China with a little (very) impact on the dollars status but LOTS of propaganda value

2 China is VERY active and vocal about CNY replacing the dollar as a ( eventually THE) reserve currency and pre emininent use in international trade transactions.

The answer is ....What is available in large quantities safe, less volatile, liquid and useful in your International trade as it is widely accepted.

Until recently that is $ Euro and Yen being top.

This is/will soon change to include CNY and as I have posted elsewhere the Chinese are active and vocal on this.

http://www.zerohedge.com/news/2013-10-18/9-signs-china-making-move-against-us-dollar

2 China has just entered into a very large currency swap agreement with the eurozone that is considered a huge step toward establishing the yuan as a major world currency. This agreement will result in a lot less U.S. dollars being used in trade between China and Europe...

Currency swap deals are a major part of China strategy to reduce reliance on the US dollar and replace with CNY. This will now further be enhanced by reforms on exchange of CNY (RMB) which will end up with NO restrictions and "FREE floating" the CNY ( as opposed to "managed floating")

China removed the yuan's peg to the greenback on July 21, 2005, and moved into a managed floating exchange rate mechanism based on market demand and supply, with reference to a basket of currencies.

Summary

CNY is the NEXT reserve currency ( not bitcoin which will be tolerated to show how "OPEN" China is)

They WILL achieve this by currency swaps ( in particular Petroldollar replacement) for international trade in the beginning .

https://www.google.com.ph/search?q=petro+yuan&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=616UUs6zFun9iAfG8YDgDQ

https://www.google.com.ph/search?q=value+of+curre4ncy+swap+deals+with+china&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=Z1qUUpmhHYTtiAfx3YGwBw#q=value+of+currency+swap+deals+with+china&rls=org.mozilla:en-US:official&spell=1

They will THEN remove ALL restrictions on holding and exchanging CNY (RMB)

https://www.google.com.ph/search?q=value+of+curre4ncy+swap+deals+with+china&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=Z1qUUpmhHYTtiAfx3YGwBw#q=restrictions+of+exchange+of+CNY+RMB+relaxed&rls=org.mozilla:en-US%3Aofficial

Finally they MAY fix the CNY to the GOLD standard to deliver the KILLER BLOW to US$

If you have $ bank deposits a MINIMUM 50% in CNY will be PRUDENT (or in bitcoin to be speculative). appreciation as of July 2013 from 2005 ..........34%

https://www.google.com.ph/search?q=petro+yuan&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=616UUs6zFun9iAfG8YDgDQ#q=appreciation+of+CNY+against+dollar&rls=org.mozilla:en-US%3Aofficial

Current exchange is around 6.15 to $1 I BET that the eventual mid term target (5yrs) is 5 to 1 coz humans LOVE round whole numbers

StarfishPrime

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Quote from: deisik on November 25, 2013, 10:16:07 PM

Quote from: StarfishPrime on November 25, 2013, 06:23:01 PM

It will be a long time before companies routinely invoice in BTC, but payments in BTC for USD orders are happening today.

Between which contractors? If you read my posts carefully, you would have noticed that I was talking about international trade between China and the USA... If you tried to pay in BTC for USD orders but got caught what would happen?

"Got caught"? doing what?

Nothing would "happen". There's nothing remotely questionable or unlawful about sending BTC to China. Happens all the time. Today. For everything from electronic parts to textiles.

notthematrix

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Quote from: deisik on November 25, 2013, 10:16:07 PM

Quote from: StarfishPrime on November 25, 2013, 06:23:01 PM

It will be a long time before companies routinely invoice in BTC, but payments in BTC for USD orders are happening today.

Between which contractors? If you read my posts carefully, you would have noticed that I was talking about international trade between China and the USA... If you tried to pay in BTC for USD orders but got caught what would happen?

Notting . why btc dont pass a bank . if you put the dollar price on the delivery you end up paying the tax in dollars why I know this?
well I've done it and it works , they can not see the transaction you payed to the camponey , you just put $ price on the box/container , but it does not matter if you payed your counterpart in BTC.
Dollar will be weaker and weaker , compony's will the start avoiding the USA , by making transactions outside the US.
The stuff can be send to the US but the bill can be payed outside the US with bitcoins.

deisik

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Quote from: StarfishPrime on November 25, 2013, 06:23:01 PM

It will be a long time before companies routinely invoice in BTC, but payments in BTC for USD orders are happening today.

Between which contractors? If you read my posts carefully, you would have noticed that I was talking about international trade between China and the USA... If you tried to pay in BTC for USD orders but got caught what would happen?

deisik

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Quote from: StarfishPrime on November 25, 2013, 06:23:01 PM

Quote from: deisik on November 25, 2013, 02:37:40 PM

It is not all that simple. If you import something (or export for that matter) you have to declare the goods at the customs with their corresponding price list. I doubt it strongly the contractors would show the price in BTCs and still more if they would try to deceive, i.e. write down the price in dollars but pay out in bitcoins...

This is not something that you could easily spit upon

It's actually very simple. Pricing, invoicing, customs documents etc are in USD, but payment is made in BTC. Buyers all over the world already buy USD in various local currencies to pay chinese suppliers (in USD) so this is nothing particularly new at all for those familiar with international trade.

You said that buyers buy USD to pay Chinese suppliers in USD. I agree that there is nothing particularly new in all this. But that was not my point...

BTCLuke

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Quote from: StarfishPrime on November 25, 2013, 08:40:16 PM

Customs has no real interest in what currency you've paid... But paying BTC for USD invoices - it happens all the time, already.

I just looked up some numbers and it appears that 'the USA' paid around 37.5 TRILLION bucks for Chinese imports last year.

Global trade of course would be a number much greater than this, probably 50x larger.

Obviously the officials in government aren't going to buy bitcoin to do trade with anyday soon, but businesses like walmart would save Billions every year if they started paying for imports in BTC.

If what you say is accurate, then the little guys already have an advantage over the bigger guys in paying for all of their shipments with BTC, which will either make them into the bigger guys, or at least make their competition use BTC to compete. Eventually, it can't help but to trickle up to the largest of corporations, pumping several tens of Trillions of USD's worth of wealth into bitcoin.

Twelve Trillion USD invested in BTC with a 12 million BTC supply would be a $1 Million bitcoin.

...And that's without any user adoption by the people on the street; not even a single merchant accepting them.

WHAT IS STOPPING THIS AND HOW DO WE DESTROY THAT?

StarfishPrime

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Quote from: BTCLuke on November 25, 2013, 08:12:33 PM

^I wanna know the real answer here. Does anyone know an actual importer/exporter?

If you can simply tell customs that you received $X when in fact you were paid in YBTC, then the game is all over... You can expect all internation business to be transacted in bitcoin coming soon... Period. They'll be forced to do so just to stay profitable.

I somehow doubt this is the case though... Seems to me like customs agents will check with banks to see if the amount paid is what was taken out of the payee's account... At least above a certain dollar limit.

Anyone know the rule here?

Yes. Many.

Customs has no real interest in what currency you've paid - and actually whether it's even been paid or not (net 30 terms are not uncommon among trusted trading partners, so merchandise often arrives before it is actually paid for). International business (even to the EU) is often conducted in USD - the only thing that really matters is accuracy of the customs documentation (i.e. value of the goods, more often than not in USD). That's the way it works.

Exchange rates for duty/taxes etc are just calculated by customs at time of import. A customs invoice in BTC (at least today) would likely cause all kinds of problems - what would customs agencies use for an "official" exchange rate? - No freight company would likely accept it without a USD declared value anyway. I wouldn't even want to try it.

But paying BTC for USD invoices - it happens all the time, already.

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^I wanna know the real answer here. Does anyone know an actual importer/exporter?

If you can simply tell customs that you received $X when in fact you were paid in YBTC, then the game is all over... You can expect all internation business to be transacted in bitcoin coming soon... Period. They'll be forced to do so just to stay profitable.

I somehow doubt this is the case though... Seems to me like customs agents will check with banks to see if the amount paid is what was taken out of the payee's account... At least above a certain dollar limit.

Anyone know the rule here?

StarfishPrime

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Quote from: deisik on November 25, 2013, 02:37:40 PM

Quote from: StarfishPrime on November 25, 2013, 01:54:26 PM

Once the benefits become apparent to more suppliers and buyers, I'd be surprised if this didn't catch on very quickly - replacing wire transfers for a significant percentage of US-Chinese commerce.

It is not all that simple. If you import something (or export for that matter) you have to declare the goods at the customs with their corresponding price list. I doubt it strongly the contractors would show the price in BTCs and still more if they would try to deceive, i.e. write down the price in dollars but pay out in bitcoins...

This is not something that you could easily spit upon

It's actually very simple. Pricing, invoicing, customs documents etc are in USD, but payment is made in BTC. Buyers all over the world already buy USD in various local currencies to pay chinese suppliers (in USD) so this is nothing particularly new at all for those familiar with international trade.

It will be a long time before companies routinely invoice in BTC, but payments in BTC for USD orders are happening today.

deisik

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Quote from: notthematrix on November 25, 2013, 04:16:12 PM

Price in BTC is no probklem , only thing they have to do is calculate the $ price....
with will be more and more , so in the end it will be cheaper and cheaper if you use BTC instead of dollar

Could you please provide actual facts that the price of the contract for delivery of goods from China to the USA was set in BTC and the goods were cleared through the U.S. Customs and Border Protection agency? Scan of a CBP declaration with price in it would do...

notthematrix

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Quote from: deisik on November 25, 2013, 02:37:40 PM

Quote from: StarfishPrime on November 25, 2013, 01:54:26 PM

Once the benefits become apparent to more suppliers and buyers, I'd be surprised if this didn't catch on very quickly - replacing wire transfers for a significant percentage of US-Chinese commerce.

It is not all that simple. If you import something (or export for that matter) you have to declare the goods at the customs with their corresponding price list. I doubt it strongly the contractors would show the price in BTCs and still more if they would try to deceive, i.e. write down the price in dollars but pay out in bitcoins...

This is not something that you could easily spit upon

Price in BTC is no probklem , only thing they have to do is calculate the $ price....
with will be more and more , so in the end it will be cheaper and cheaper if you use BTC instead of dollar

LiteCoinGuy

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heard about that some days ago. its big news Shocked

deisik

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Quote from: StarfishPrime on November 25, 2013, 01:54:26 PM

Once the benefits become apparent to more suppliers and buyers, I'd be surprised if this didn't catch on very quickly - replacing wire transfers for a significant percentage of US-Chinese commerce.

It is not all that simple. If you import something (or export for that matter) you have to declare the goods at the customs with their corresponding price list. I doubt it strongly the contractors would show the price in BTCs and still more if they would try to deceive, i.e. write down the price in dollars but pay out in bitcoins...

This is not something that you could easily spit upon

StarfishPrime

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Quote from: deisik on November 25, 2013, 01:45:50 PM

Quote from: zeroday on November 25, 2013, 08:53:15 AM

They should encourage their businesses to cease accepting USD in export operations and switch to bitcoin, which then to be exchanged for CNY.

Even if they wanted they just couldn't switch to anything but USD. The USA is the biggest trading partner of China, so they have no other choice actually but to accept dollars. Besides that, their recent economic success is primarily due to American companies investing into their economy (read, their businesses aren't really theirs), so still no alternative...

Some chinese manufacturers and distributors have quietly been accepting btc over this past year already, often preferring bitcoin due to the speed of payment, etc.

Once the benefits become apparent to more suppliers and buyers, I'd be surprised if this didn't catch on very quickly - replacing wire transfers for a significant percentage of US-Chinese commerce.

Topic: 2013-11-21 Bloomberg: China will not increase dollar reserves anymore (Read 1935 times)