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Why Did U.S. SDR Holdings Increase Five Fold In The Last Week Of August?
With everyone lately focused on China's foreign reserve position, analysts have forgotten that America also has an International Reserve account consisting of foreign currency positions, as well as gold reserves and equivalents. And while the total combined holdings as of the most recently reported period are a joke compared to China's $2+ trillion, the most recent number of $133.6 billion does raise red flags, particularly when one traces this number's level throughout the year.
We present a graphic representation of the US International Reserve Position over the past year:
The big question mark at the end of August is when the U.S. International Reserve Position increased by almost 50%. The reason for this: a near quintupling of S.D.R. holdings on the U.S. balance sheet in the span of one week - from August 21 to August 28.
Note the SDR position as disclosed on August 21:
And here is the comparable reserve asset balance on August 28:
The SDR balance increased by 500% practically overnight and has stayed that way ever since.
Now as many readers are aware SDRs have been the IMF's way to provide a super-reserve currency, formed in the post-Bretton Woods world. As the IMF itself discloses, the SDR value is determined based on a basket of currencies:
The value of the SDR was initially defined as equivalent to 0.888671
grams of fine gold—which, at the time, was also equivalent to one U.S.
dollar. After the collapse of the Bretton Woods system in 1973,
however, the SDR was redefined as a basket of currencies, today
consisting of the euro, Japanese yen, pound sterling, and U.S. dollar.
The U.S. dollar-value
of the SDR is posted daily on the IMF’s website. It is calculated as
the sum of specific amounts of the four currencies valued in U.S.
dollars, on the basis of exchange rates quoted at noon each day in the
London market.
The basket composition is reviewed every five years by the Executive
Board to ensure that it reflects the relative importance of currencies
in the world’s trading and financial systems. In the most recent review
(in November 2005), the weights of the currencies in the SDR basket
were revised based on the value of the exports of goods and services
and the amount of reserves denominated in the respective currencies
which were held by other members of the IMF. These changes became
effective on January 1, 2006. The next review will take place in late
2010.
By purchasing $40 billion in SDRs virtually overnight, what the Fed has done is to increase the value of the entire basket pro-rata, while in the process reducing the actual value of the dollar (which is a weighted constituent of the SDR basket). This was an operation to reduce the dollar's value: pure and simple. In many ways it explains why the DXY has continued its straight one way decline since the beginning of September, when many pundits assumed the market was finally going to tank on profit taking after Labor day. By performing this dollar adverse transaction, the Fed sent a loud and clear signal what the Fed was going to do going forward vis-a-vis the i) dollar and ii) its derivative, the stock market.
And what is worse, this is not a roundabout or circuitous way of devaluing the dollar: this is head on intervention. It is one thing to print trillions of MBS and Agencies and to monetize Treasuries, where one could say Tim Geithner's claim that the U.S. is for a strong dollar, and the dollar is only weak as a function of supporting housing prices. That could potentially fly as an explanation. However, when the Fed is actively and purposefully destroying the dollar's worth via transactions such as material SDR purchases, then it truly demonstrates Geithner's statement as a bold faced lie to the American public. When will Mr. Geithner be finally taken to task for his repeated fabrications of reality and intent?
Update:
The action seems to have been a portion of a global reallocation of SDR's by the IMF which made the SDR outstandings to increase by a massive amount: "With a general SDR allocation taking effect on August 28 and a
special allocation on September 9, 2009, the amount of SDRs will
increase from SDR 21.4 billion to SDR 204.1 billion (currently
equivalent to about $317 billion)."
And here is the explanation for the justification of the SDR expansion:
Q. Why was the 2009 general SDR allocation necessary?
A. The general allocation of US$250 billion implemented on August
28, 2009 was the response to the call by the G-20 Heads of State and
the IMF's International Monetary and Financial Committee (IMFC) at
their respective meetings in April 2009.• It is a prime example of a cooperative monetary response to the
global financial crisis: by providing significant unconditional
financial resources to liquidity constrained countries, it will smooth
the need for adjustment and add to the scope for expansionary policies,
where needed in the face of deflation risks.• This is particularly important for emerging market and low-income
countries that have been hit hard by the current global economic
crisis. Over the longer term, the allocation could also reduce the need
for pursuing destabilizing and costly reserve accumulation policies
that could contribute to global imbalances.
And some speculation on what this action will do to the global economy:
Q. Will the SDR allocation be inflationary?
A. Not likely.
• The size of the allocation is small relative to global GDP (? of 1
percent), trade (less than 1 percent), and reserves (3 percent).• With a global output gap projected to persist through 2014—by
which point any expansionary impact of early spending of the SDR
allocation should have dissipated—the allocation is unlikely to
generate significant inflationary pressure.
Last but not least, the US was of course expected to bear the brunt of this reallocation, responsible for purchasing three times as much (SDR30 billion) as the second largest quota allocated country: Japan (SDR11 billion). China is far in the distance at SDR 6 billion. In essence: the monetary community increased its global liquidity position, by assuming that the U.S. is still the defacto reserve currency, and forcing it to take the majority of the devaluation hit relative to all other IMF constituents.
Well done, Ben.
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By whom and why? Birds of a feather...
Gold sales
& another watch of Jim Rickards may be in order......
http://www.zerohedge.com/article/here-why-fed-needs-cut-dollar-half-over...
- yeah I'am drunk newby, but hickup u can someone de-cypher this for me ?
-- Posted Friday, 9 October 2009
By: Rob Kirby
Impeccably reliable sources have informed me that as recently as Sept. 30, 2009 – the last possible day of trade in the Sept. 09 gold futures – a number of well-heeled market participants “bought” substantial tonnage worth of gold futures on the London Bullion Market [LBMA] and immediately told their counterparties they wanted to take instantaneous delivery of the underlying physical bullion.
The unexpected immediate demand for substantial tonnage of gold bullion created utter panic in at least two banks who were counterparties to this trade – J.P. Morgan Chase and Deutsche Bank – because they simply did not posses the gold bullion which they had sold short [an illegal act which in trading parlance is referred to as a “naked short”].
Because these banks did not have the bullion to honor their contracted commitments, one or both of them approached the counterparties and asked if there was any way they could settle this embarrassing matter quietly on a “cash basis” to absolve the banks from fulfilling their physical bullion delivery obligations. The purchasers were not interested in a ‘cash settlement’ and demanded delivery of physical bullion giving these banks 5 business days to resolve the situation. A premium of as much as spot plus 25 % [that would be 1,250 – 1,300 per ounce of gold] was offered to settle this matter in fiat money instead of the embarrassment of a very public “failure to deliver” on the part of the London Bullion Market Association.
Earlier this week, no less than two Central Banks became involved in effecting the physical settlement of this situation. One of these Central Banks was British [that would be the Bank of England] – and reportedly, even they were only capable of providing less than pure, non-compliant gold bars that did not meet good delivery standards stipulated by the LBMA. Like it or not, this is a testament to lack of physical gold available, folks.
To summarize: Banks like J.P. Morgan Chase and Deutsche Bk. - who sold endless amounts of gold futures at prices of 950 – 1025 and then tried to make “side deals” with the folks they sold the futures to – offering them spot + 25 % [let’s say 1,275 per ounce] to settle in fiat – only after their counter parties demanded substantial tonnage of physical gold bullion.
Stunningly, if accurate [and there is absolutely no doubt in my mind that this is not accurate], this means that gold is already in SEVERE backwardation and this fact is being hidden from the public.
Then, to protect the “integrity” of the futures market as a ‘price discovery mechanism’ – Central Banks – aiding and abetting - plunder the sovereign assets of their respective countries to bail out their agents / friends in an attempt to ‘sweep the whole bloody mess under the carpet’.
To think that anyone wonders why our financial system and fiat money will soon to be TOAST?
What a disgraceful insult to humanity.
...nuke um.
Means a group of buyers purchased gold for future delivery at a certain price, and then demanded ACTUAL delivery of the physical gold they had bought. The banks who sold the gold (Deutsche and JPig) apparently expected these customers just to trade the paper or extend the delivery date or accept an assurance that 'Yes the gold is in our vaults' without ever seeing it.
So the banks panicked, b/c the paper sold to the customers was not supported by REAL gold holdings in the vault. ('Naked' short-selling.) Selling gold for future delivery, that in fact you can't produce for delivery, is illegal.
The banks offered to buy-out the contracts in fiat cash at a premium. When the buyers obstinately insisted on real gold, the banks turned to two central banks (one in England, the other it doesn't say which country).
The central banks obediently rushed in to fix it, somehow ensuring that the original investment banks got the gold to give the obstinate buyers.
And the gold which was finally delivered by the central banks was non-compliant to delivery standards.
Backwardation means there is not much EXISTING supply versus supply PROMISED or spoken for/purchased. (Or it can mean that buyers just don't trust that sellers can necessarily deliver the purchases.) So there is a phantom supply to an underlying demand, and prices don't necessarily reflect actual supply and demand fundamentals.
SEVERE backwardation means the price for gold should be much higher.
Kirby raises the questions of what the real price should be given this situation, AND why central banks seem to be rushing to help large banks out with their private (and illegal) contracts, AND what will become of the fiat money system when it is exposed that our currency is backed in fact by nothing.
U.S. Fort Knox gold is known to be coin melt gold that is not .999 purity and would not meet delivery standards.
LBMA delivery standard is 995.0 parts per thousand fine gold.
http://www.lbma.org.uk/delivery/definitn
http://www.lbma.org.uk/delivery/gdrules
Thought of a shorter way to say it.
Buyer paid for an asset and came to collect it.
Bank said, Sorry we don't have your asset, but here's a bunch of paper instead. You can buy a lot of things with it too, except of course that asset.
Buyer, unsurprisingly, demanded the asset they'd paid for.
So the central bank grabbed the asset from the country's treasury and gave it to the buyer.
The End.
Good Job. Did they all live happily ever after?
why, when it comes to gold reporting, it's always based upon 'reliable sources claim', 'I've heard', 'an unnamed Hong Kong broker said', etc etc. Alleged this, alleged that....
When will some real data emerge about gold, rather than utter sheer speculation...
Is this what drives the gold market?
hmmmm...maybe the recent NASA moon bomb wasn't looking for water...no, they were looking for GOLD! Yeah!
"we don't have your asset, but here's a bunch of paper instead"
Which is exactly what the RICO rife Depository Trust (DTC, DTCC, NSCC) cartel does for its broker dealer owner-participants via their fraud friendly “stock borrow” program which, when someone fails to deliver shares which they sold, creates vast unlimited supplies of electronic book entry placeholder IOU “securities entitlements” that are credited to the buyer’s broker’s account, rather than seeing to the “good form delivery” of actual shares authorized and issued by the company—(which statutory mandate and responsibility the DTC readily assumed (from the SEC) but then totally failed to uphold.
Except the average equities buyer has no idea that he’s not received the shares he thought he bought (but merely IOUs, the dividends on which btw, if any, are taxed at higher rates than dividends on real shares) because his trusty broker sends him a monthly statement grossly misrepresenting said IOUs as “shares held long.”
Nor does the innocent uninformed buyer even suspect that the DTC has corruptly incentivized his own broker not to insist on good delivery of the shares he thought he bought, or to buy-in those failed to be delivered shares, by allowing said broker to collect and retain for its own account all the interest earned on the buyer’s purchase funds, so long as the actual shares remain undelivered.
This doesn't ring true. No one opens a new futures short on the last day of trading without expecting to deliver. This is "futures trading 101." Give me a break.
Im going to send you a bill for my dry cleaning tomorrow.
I just soiled my underwear.
Great investigative work. Have you sent to Mssrs. Grayson and Paul?
got to echo this thought....nice work by TD and the ZH group.
sadly, this will not become evident to people until the books are written several years down the time line.
and even then, i doubt they will read them.
but season 42 of dancing with whores will be on!
Starring Michelle Bachmann and Sarah Palin on Segway legs?
"starring Michelle Bachmann and Sarah Palin"
Yes, because (hopefully) crooks like Rangel, Dodd and Frank will be in prison and unable to participate.
I hope Hollywood has been taking notes over the past 2 years because if nothing else I demand some really good movies come out of this mess.
It has continuously amazed me how creative these crooks (meaning Paulson, Baby Ben, Turbo Tax Timmy and the rest of the "crew") have been through this entire mess. Just when you think you've seen it all, you pick up the WSJ and there's another new chapter.
Ben deserves a nobel prize.
Actually he did something (not that I'm in favor), which is apparently not what the committee wants to see these days (ie. Barack Obama).
An explicit attack on the dollar. Wonder how the "Main Stream" will respond...or NOT.
-Michael
Mikey; you're a soldier; and i have a question for you my friend; when SHTF ( we all know it will ) and you are given the orders to shoot/arrest/detain US citizens; what will you do ? ( Although I have a good feeling that i already know you answer, but im asking the question nevertheless )
Cheeky:
http://oathkeepers.org
Thanks a million Anon, i have read a lot about oath keepers, but never bothered to go on their web site ( now bookmarked )
FYI, I like Oath Keepers too and know a lot of other Officer and Soldiers that like it as well...
-Michael
Cheeky, I am an OFFICER and if someone gave me "orders to shoot/arrest/detain US citizens" without those individuals posing an imminent threat to my men and I or to in some imminent manner (stealing a NUKE or chemical weapon per se) or having a very clear justification I would arrest or shoot that individual right in the head. I would also EXPECT any US Soldier to promptly arrest or shoot my ass for giving such an order as I would have lost my damn mind. My greatest challenge will be in determining when it is questionable and not. EX: People throwing rocks and shit at me won't freak me out as I have had a lot worse stuff happen to me in Afghanistan by far. However, if I am ordered to "round people up" to put them in detention camps or anything like that will face HUGE opposition by virtually all US Officers...not just me. I personally don't believe it would ever come to that point as such orders would be kiboshed way above me in the food chain.
-Michael
True enough.
S.A.M.C.
I want to believe ya mike but you sniff army or marine inteligence to me and intelligence communities seem a bit to prone to becoming intellectual and emotional distortion communities. If your a regular officer you're way up the chain or a freaking abberation of the education and socialization system.
Hephasteus, send me an e-mail at: mikeyv1970 at gmail.com Got some stories for you and Cheeky.... not appropriate for this forum.
mind you Mikey; GMail is not encrypted,and if the information which you send in your e-mail is confidential or liable to a suit if disclosed, they will give the content of the e-mail to which ever party that submits a court request in order to obtain the content of the e-mail. You're probably wondering how i know this; well, check out the case of the two Bear Sterns hedge fund managers. Again, i will get in touch with you, but be careful with the info.
Do you have a PGP key?
I am not concerned with a law suit. Farthest thing from my mind...
-Michael
-- ring any bells,
1983 Beirut barracks bombing.
Invasion of Grenada, codenamed Operation Urgent Fury
Terrific find, and A+ work on the whole article. Not an issue I would have ever thought to look at.
So don't hold your breath waiting for a dollar rally. Let's see some dollar free fall.
I'm also getting sick of the deflationists. I've been patient. So I'm going to make a check list.
Show me these before I beieve deflation.
1. HUGE major banks DUMPING houses, office buildings, any and all assets on their accounts to pay back depositors in a bankruptcy setting.
2. A graph of M0 that isn't completely and utterly DWARFED by M1 M2 and M3. There's absolutely NO chance of deflation. It'll be inflation or complete total utter collapse as there won't be enough real dollars to chase anything even entertainable by anything other than barter system.
Until you can show me these things. I have a hard time believing in ANYTHING other than a global synchronized inflation with NONE of it going into YOUR pocket unless you are a BANK or a TOO BIG TO FAIL industry.
i'm in the deflation camp for now but do believe we will see horrible inflation.
i can address your point number one. the banks are doing everything they can to avoid dumping the shadow inventory of housing (6, 7 million homes is the figure knocked around) because they will lose a fortune on it and it will massacre their their capital and capital ratios, which are already shit if done on a proper accounting basis,e.g. not fasb 157 mark to fantasy. additionally, FASB 166/167 comes into effect in 3 months (unless the ABA gets it upended) which forces the god only knows how much fecal matter of off balance sheet, siv sewage back on to the balance sheet...this will have significant impact on capital ratios. in a normal economy, the fdic, occ would have forced these assets to be accounted for and charged off, but the regulators are simply looking the other way and the rule of law is not being enforced. if you don't believe this, just look closely at the fdic and what they are doing with banks that even they have said are insolvent.
office buildings and other cre are a bit different, even worse in my opinion, in that many of these assets are still being carried at par, i.e. 100 cents on the dollar, even though no one (not even the dennis kneales of the world) believes strip malls, office bldgs, factories, warehouses, etc are worth anywhere near what they were collateralized for to obtain the initial mortgage(s). as we know, many of these properties can't even cash flow to service debt but the banks (again, assisted by regulators looking the other way) are doing what they can to extend the loans.
in a normal world where well established accounting rules prevailed and regulators were enforcing existing regulations as to insolvency, all of these assets would have been forced out and you can figure out what it would have done to pricing. hence, at least as to residential, the banks will slowly feed the housing stock out over months and years. this situation is why we haven't, and won't, see a bottom in housing for years. i won't get into the interest rate discussion now, but if the 10 y and 30y yields go up, the shit hits the fan.
The FDIC is currently all up in BB&T's business. Camped out at their offices. Which I find a little curious since they just acquired Colonial Bank. I know that every time BB&T goes back to look at their real estate loan portfolios the numbers get worse. I can only assume this is the case across the board for all banks.
So you totally agree. There can't be any deflation events because 2 steps into the marathon every bank in the USA folds, folds the fed, folds FHA, folds FDIC, folds the bond market. What's the yeild on a 30 percent treasury when you get no maturity? It's nothing because nobody buys it. Just like nobody stuck euro's in Icelandic banks when they offered 15 percent interest. Iceland has borrowed 16 times it's GDP to pay for debts that were not really it's debts because it got carry traded to death. Just because it wasn't sudden doesn't mean japan is not going to face hairy carry. And just let these banks carry back and forth for another freaking year and the USA's hairy carry will be assured.
No bank closings. Earnings are going to SUCK. I don't care how much emotional control and disconnection ability you have. The psychopaths are going to feel the fear and they are going to push forward with all the inadequcies that drive them to bold, daring, stupid action that you can come to expect from crazy people in charge.
This is going to be a fuck up. CHARGE!!! You know it's their battle cry.
In CRE figures, is anyone accounting for the fact that most multifamily properties with over 5-8 units are typically under commercial loans?
I think most people consider CRE as strip malls, and office space, but not larger residential properties like apartment complexes.
Just wondering.
I'm in the deflation camp too; but I'm warming to Faber's view.
Whereas I've expected deflation to drive the dollar higher, Faber says it's the other way around. The dollar will indicate whether inflation or deflation is happening, as he believes that the government has absolute control, and the currency will reflect it.
So if the dollar falls, expect inflation to follow, if the dollar rises, expect deflation to follow. I presume he's talking about prices, but I suppose this could apply to monetary definitions as well.
I say if rates stay low, inflation rules, dollar collapses...if rates rise, tax reciepts crater due to economic death...dollar collapses as we cannot fund our debt...
The tail wagging the dog from Faber.
If deflation persists, the rush for dollars would build.
The only reason deflation isn't noticed is due to doctored cpi figures and banks hiding writedowns with taxpayer money.
I remain strongly in the deflation camp due to the following:
1) The American public is TAPPED OUT, debt maxed out. No more purchasing slack to grow things, borrow/spend is dead. Therefore, demand ain't coming back anytime soon.
2) What do you think is easier to bear for a goverment:
a) Deflation, and a depression, but an economy that still functions, although severely damaged, probably 20-30million pissed off, possibly armed, people?
b) Currency crisis, hyperinflation where the spoil for our labor (the dollar) becomes near worthless, 300 million pissed off and armed people?
While they will bend every rule in the book to make the dollar buckle, they won't break it. They can't they know it is "end game" if they do.
I still don't think many people are getting it. You've just witnessed 15 percent drop in dollar value through the currency markets in the last few months. 9 months down the road you will see.
A. 15 percent rise in prices
B. huh?
People are not going to walk OFF their jobs. You don't take a 15 to 20 percent per year pay cut through inflation while simultaneously being stressed by crime, unemployed family members, futureless kids, etc.
You can pull that shit off in Japan which is conforming as fuck and duty and honor bound. You try that shit here it's going to lead to lead to epic fail
Your thoughts are solid Heph, but one thing I can't agree with is the "dollar devaluation/real estate appreciation" argument. Dollar devaluation won't do anything for home prices.
Home prices will not respond until the job situation improves (which it isn't), the credit markets become as loose as they were '02 - '07 (they won't, we have proven that this is a way to blow up the system), the market buys into "securitization" again (the Fed is 85% of the market, that ain't going to change anytime soon, the scam is already discovered, and if investors are to buy back into the securitization scam, they will demand much higher interest rates to comp for risk, which will further depress prices due to borrowing costs) and the supply situation is dealt with.
Regardless how much Ben trashes the dollar, the real estate situation just can't improve. I think we are having, and will continue to have, a deflationary depression, with inflation in certain items (fuel, gas, food, some commodities) until Ben is stopped by force or by the markets.
Thanks for bouncing back and forth with me. Now all i gotta figure out is how all the logical outcomes will get screwed up.
(Waiting for G_G weight in on this topic... It's right in his wheelhouse.)
as I said a few weeks ago...he who panics first...wins...
i remember that post. ive used your line several times since then.
clever.
agreed......problem is, the panic is on the buying end now in the equity markets, lol!
I am wondering when we finally devalue our currency, or create a new one, if everyone will wake up to find that we have been printing like crazy and just buying other currencies...
they wake up holding our crap dollars and we wake up long all their money...
Precursor to the Amero?
yea. because the central bankers of mexico and canada (state owned) are so eager to cede all power to the private fed. yea, thatll happen.
I am not saying the foreign powers will be willing participants, but one could argue with all of the confusion and lack of transparency on the fed along with so many spending plans (many only proposed at this point) that no one can track what is funded and where the money is going, it would be easy for us to be in the middle of the greatest rope a dope of all time...
Foreigners see all the spending (none of which is actually in place - C&T, healthcare, most of the stimulus money has yet to be spent, etc) and think we are retarded, programs going left and right...when in reality we are just putting on a show and the deficit is from us printing and buying everyone's foreign currencies...before we crater the whole thing
at least give me credit for being creative...gold star anyone? participation medal?
you could have a point. Message to the world, careful how you choose your bed partner or you could wake up feeling raped.
Why would Canada which has been running it's country right, want to get in bed with the US? You have to be joking. You use the amero as a way to provoke how bad the US dollar is. The fact is it is too bad for any one to join it.
"With a general SDR allocation taking effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs will increase from SDR 21.4 billion to SDR 204.1 billion (currently equivalent to about $317 billion)."
http://www.imf.org/external/np/exr/facts/sdr.htm
So, what was the US quota before this allocation? Does this explain the increase? It doesn't quite seem to, but I haven't been able to locate any details to explain exactly what this means.
I'd love to hear anyone's thoughts regarding this...
I must admit that I don't know enough about the topic to have on opinion on the justifiability of the increase. However, I don't believe that there is good reason for the inflammatory rhetoric in this article and the comments. It does not seem like a cut-and-dry devaluation of the US dollar.
Guys, they simply got cashed out from their portion of the IMF gold sale... The sale of the IMF gold was done as gold for SDR. So, that's it...
Shouldn't we of seen a change in gold inventory?
Government interference is alive and well.
This is one story that has to make headlines.
Or could there be some other logical explanation for this?
TD can't possibly keep batting a thousand when it comes to finding smoking guns.
Or can he?
People asked the same thing about Gretzky, Montana, Shumacher.
Get used to it.
GS trading desk begs to differ.
let's be honest here. only the peasants are going to be affected.....
the market has gone up dramatically >>> which means the upper class, and upper middle class has benefited. they have also probably moved their cash into other currencies and benefitted from the dollar decline.
folks who don't have any stock, well, they were left out. moreover, when the dollar sinks into the ground, they are going to be seriously and royally screwed....
but no one in power cares. they simply don't. its the peasantry...the old folks....the college kids...all irrelevant populations to the power elite.
plus, these groups have no access to the media bullhorn. So until we've got them starving in the streets, I don't think Tim has to worry about being confronted with a damn thing.
Barack is powerless, the banks are running the country, and this has all worked out great for them. Which is why its going to continue.
increible
imo this is the agreed mechanism - SDR's - to help all the quasi failing smaller countries of Eur zone..The ECB doesn't have the mandate for direct involvement PLUS .. to try to keep Ukraine (primed for state failure) which will have elections soon ..out of Russian dependance ... and as a failing Euro ...will not inspire market confidence ...most of Euro big hitters are way over budgetory guidelines and Spain and Italy only need a small push to leave ..which would allow them to monetize their staggering debts w no recourse
Lots of 'smaller' countries are going to be sold into slavery for accepting loans with this money.
I'll take Bernanke over Japan's Shizuka Kamei - that guy's a freaking lunatic. If Kamei gets canned, Obama will probably appoint him some czarship or the other. Mercy.
I wonder if the European Central Bank did similar around this time?
Yep, and right around the time of the magical unstoppable market rally to kick off September.
+1 for each
Amazing - and we all suspect that this is not the only
thing like this.
I see this differently. I think that the Fed was looking for a more fruitful place to put 'our' money than in the MBS black hole … Oh! Oh! and where better to put it than into ... 'We are the World'
Any connection to the unwinding of swap credits?
Is the gold sale explanation correct?
"Last but not least, the US was of course expected to bear the brunt of this reallocation"
Why?
Bernanke sucks worse than the KC Chiefs.
Potential Claim -- that is rich - of course no velocity implications here..moving along
"The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions. In addition to its role as a supplementary reserve asset, the SDR, serves as the unit of account of the IMF and some other international organizations"
The SDR issuance is the IMF's way to contribute to the ongoing worldwide efforts (excluding Australia) to inflate the world's economies back to health
Soon to be exluding china, russia, half the middle east and canada probably as well. The powers that be try to control the price of consumer goods through manipulation of commodities. Alll commodity heavy countries with a lick of sense will revolt against the IMF like the slave driver it is.
Steve Keen reckons the RBA raised rates only b/c they believe their own BS press about the 'Recession' being 'over'.
In other words, right result, wrong reason.
In other words, they're in fact the stupidest central bank in the world, not the smartest.
I prefer to take a more optimistic view, but admit it does feel a bit like choosing to still believe in Santa Claus at age six when your classmates are starting to snicker at you...
Does anyone here know the difference between the Treasury and the Fed?
Not that accuracy matters.
Yes. The Treasury prints money when it needs it. The Fed merely makes a couple of accounting entries, which is a lot cleaner and none of that ink on your hands. Although lately, they might be getting carpel tunnel syndrome from the key strokes.
The who, what, where and when become clear on that bit.
Thanks for the clarity
A direct attack on the well being of the citizens of this country as a result of loss of purchasing power related to a devalued currency. The Founders are rolling in their graves.
You can wrap this story in bacon and it wouldn't make it any more appetizing to my pallet.
You guys see how the SDR is converted into other currencies: http://www.imf.org/external/np/fin/data/rms_sdrv.aspx
Anyone know if the proportion currencies that go into 1SDR remains constant?
Tyler, is there any Senator that is really upset about this? So far, you have several members of Congress, but not one Senator I trust to really work on this (Schumer is a joke, and Kauman doesn't seem to be getting anywhere)
Rep Marcy Kaptur is your only hope -
http://www.youtube.com/watch?v=MeVY7JH_xVU
http://www.youtube.com/watch?v=luf4mt3hT88
Search all her clips on YouTube.
Give Shelby a shout-out.
What has Shelby done? Is he going along with Grayson and Paul's request to postpoen hearings on Ben?
give shelby a factory in his home state and he'll say anything.
Kaufman is SINO. A seat-warmer.
Zzzzzzzzzzzzzzzzzzzzzzzzz
further to the Nobel Economics prize
this from the newest Nobel laureate Williamson (at least we now know why he was selected)
Nobelist Williamson Sees No Easy Answer to ‘Too Big to Fail’
http://bloomberg.com/apps/news?pid=20601087&sid=aNQnoKKhfhCk
"When will Mr. Geithner be finally taken to task for his repeated fabrications of reality and intent?"
When will Timmy be pulled by his nostrals out into the streets for a beating?
I this what delivered Obama his Nobel prize?
I usually try to say something funny or sarcastic...but now I am just getting more and more pissed. Who is going to hold these liars accountable?
Thanks TD for posting this...and looking diligently to finding the truth!
SDRs are a stopgap at best.
1) Another fiat currency, or in fact a *collective* of rapidly falling fiats. Much like melding together a heap of falling rocks in the hope they'll quit falling if stuck together.
2) Issued by the IMF, well-loved and trusted by the world, if the word were made up of the US, UK, other OECD, and NOT Asian/South American/'third world' countries who presumably remember the hatchet job that group did on their economies.
3) And the IMF 'stands ready to' threaten/actually dump gold to the quickest bidder (hi there China) at any time the USD looks like toppling as world reserve, or JPig's shorts look set to be soiled.
What's not to love? It's the new boss same as the old boss.
China & Russia have pushed IMF SDRs for whatever reason, but it's likely NOT because they think they're trustworthy or their fiat more sustainable.
I think their press is just to wean us from the idea of the USD as world reserve. Kind of a baby-step, 'boiling the frog' approach to currency regime change.
agreed...China & Russia know very well the public perception of the IMF in many countries around the world.
and they know even more who 'runs' the IMF.
got to give them props...this is misdirection propaganda warfare at its finest.
the question one must ask is:
who are the gold vigilantes?
The gold inventory didn't change. No other inventory item changed. So they are lying about selling an asset, or as crazy as this sounds.... they borrowed it.
uk is out of gold...they have a few bricks of coin
gold we melted down during the 1930s and sent to
the uk during the 1960s as part of the london gold
pool program...the uk would have been required
to contribute to the imf gold sales....but they
couldn't backstop jpm and db on notice to deliver
which lbma failed at the end of september....
basically imf has no gold to sell because the
contributors have none....it was all sold during
this and last decade to suppress the gold price...
on the other hand i don't believe that the imf
sale has been conducted and i would be utterly
surprised if it ever were....
I'm still waiting for someone to explain how the reverse repos of money markets will play out.
I'm afraid to keep money in money markets because I may just wind up with nothing but a handful of worms.
I'm afraid to keep money in the banks because they are all insolvent as well as FDIC.
I'm afraid of the insane equity markets.
I'm afraid the only safe place to keep liquid dollars is buried in my back yard somewhere.
Is this what they mean when they talk about "shovel ready projects?"
Have any of you tried to start a run on a bank yet? I think that could be a fun project for a retiree in a small town.
Firstly, there's little need to be concerned about reverse repos at this time, as exhibiting fear in the face of events which are a remote possibility is a waste of your psychological reserves. The folks at the Federal Reserve have the inside track on the banks on- and off-balance sheet numbers. They know those excess reserves are not going to be chasing assets (inflation), they are going to be chasing losses (deflation), despite how promising Q3 reports may read.
Secondly, if your afraid of keeping money in a money market (and why the heck would you?! -pittance interest rates), place that money in a short government (AAA) or ultra-short bond fund with a >=AA overall credit rating. Such a fund with a ~4% yield, and very limited (and momentary) downside potential, would serve you much better.
Thirdly, on the issue of banks, all I can suggest is that you research your institution.
Fourthly, if you are uncomfortable about the equity markets, get out of equities, or find someone qualified whose expertise can put you at ease (emphasis on proven expertise, not gifted bullshitting). Or, if you are doing it on your own, set your own 'sell' signal. For instance, chart the S&P 500 index, and use a technical measure of, say, a 75-day Exponential Moving Average (EMA). If the Index moves below that 75-day EMA by some 'x' percentage you yourself establish, sell equities and put that into cash or your short bond fund. (I wouldn't necessarily be loading-up on equities at this point.)
Lastly, don't be so damned afraid. Or, as Meister Eckhardt once quipped, ". . . if you're frightened of dying and... and you're holding on, you'll see devils tearing your life away. But if you've made your peace, then the devils are really angels, freeing you from the earth." Eh, I suppose that phrase might be a little too heavy and imposing.
Thanks Anon for your concern. Like many posters here I am already long God, guns, gold and ammo.
I got out of all equities about three weeks ago. I now have only energy and commodity ETFs, and don't much care if they go up or down short term. I typically have a long term investment time horizon.
I'm also fortunate enough to have built a balance sheet heavy into land, timber, residential real estate and oil & gas royalties.
My only debt in this world is to my Creator for having blessed me and my family in more ways than I deserve. Oh yea, and I worked my ass off for forty years.
My "fear" comes not so much from losing what I have, but from losing it to the very people who promised me on Inaugeration Day 2009 that they would take it all from me. And that I would be powerless to stop them.
I am one of those evil "rich" people that must be punished for my success.
This has now become a game, and my temperment doesn't take losing very well.
I should be long on God and guns.
Maybe they let their gold price float--
Its been on the books at (i believe) $42/$44/oz forever--
just a thought
The holdings increased five fold because they had too. Stop looking at the fluff.
Q. Will the SDR allocation be inflationary?
A. Not likely.
Translation: Of course it will, but if we say "No" people will get really mad when it happens.
As someone here said, "it's all about excess liquidity". The Fed just handed you $5 billion to fix your $200 billion in bad debt, but you still invest that $5bil in SOMETHING.
I don't mean to go bringing up something that many of you may already be aware of and find a tiresome subject at best, but the webbots did say that the dollar death would occur around October 25th and it would be big. It would be a huge world shaking event bigger than 911. And they also said there would be tell tale stories precluding the event starting around October 10th.
So with all this talk of the death of the dollar starting right around October 10th...
The webbots have been strangely accurate , I've been following them for several years now.
I think it is possible that the collective subconscious of man knows what is going to happen in the future through precognition and that it comes out mainly through our word choices on a conscious level. That we tend to manifest whatever the subconscious is saying will happen by first talking about what will happen.
Whatever. I'm long guns, gold and Gold.
:)
hey anon,
the webbots, have you been following here?
http://halfpasthuman.com/
Long on gold, guns & liquor.
US Currency is not backed by Gold , it is backed by debt . The debt is backed by consumer labor . Hours of work owed to the masters (taxes). That makes us all slaves NOW today. Interesting huh ?
i figured the IMF gold sales would just be closing of previous short positions . . . would the balance sheet change if that was the case?
"by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions."
forgive me, i find this very difficult to follow - but it seems to me by the above, the US actually got a good deal and a little help via the SDRs?