Paul Volcker Proposes A New Bretton Woods System To Prevent "Frequent, Destructive" Financial CrisesSubmitted by Tyler Durden on 06/01/2014 19:32 -0400
We found it surprising that it was none other than Paul Volcker himself who, on May 21 at the annual meeting of the Bretton Woods Committee, said that "by now I think we can agree that the absence of an official, rules-based cooperatively managed, monetary system has not been a great success. In fact, international financial crises seem at least as frequent and more destructive in impeding economic stability and growth." We can, indeed, agree. However, we certainly disagree with Volcker's proposal for a solution to this far more brittle monetary system: a new Bretton Woods.
Financial expert, Pentagon insider and bestselling author James Rickards has warned that “typical investors” may not be able to acquire physical gold when prices begin to surge hundreds of dollars a day as “massive shortages” will take place. In another fascinating interview,, Rickards said that gold will become the preserve of the “big guy” in the form of sovereign wealth funds and central banks.
As we discussed previously, delinquent loans in China are a problem... and a growing one. It seems that news is finally starting to filter to a mainstream audience as Bloomberg reports that China’s biggest banks are poised to report the highest proportion of bad debts since 2009 after late payments on loans surged to a five-year high, indicating borrowers are struggling amid an economic slowdown.As S&P warns,"overdue loans are a leading indicator of asset-quality deterioration and show the rising liquidity constraints among borrowers... and the disturbing thing is the end is nowhere in sight." CNY has pluned almost 150 pips to new 19-month lows on the news.
Unrestricted flow of capital is the most effective way to encourage reforms, and North Korea is no exception. History has proven time and again that regime change does not occur when conditions are at their worst, but when circumstances begin to improve and the people grow impatient for further progress.
China and Russia signed an historic agreement in Shanghai this week - the ramifications of which have yet to be appreciated ... Reserve currency status does not last forever. Empires rise and fall. The world is constantly changing and evolving. Nothing lasts forever …
One of the most intellectually disingenuous statements made by western policymakers is that inflation is tame… nonexistent. However the actions of the World Bank this beggars belief as 'poverty' is re-defined (just like GDP) to ensure the planners can conjure hundreds of billions of dollars out of thin air without any consequences whatsoever. Zero risk.
With de-dollarization escalating and Chinese officials now openly calling for "a new and more efficient system," specifically on which is not dominated by the US and the dollar, it appears the day of a rebalancing is approaching more rapidly than most would like to believe. On the heels of the vice president of China's central bank commenting that "renminbi will become the reserve currency" we thought it time to look at the long-run history of the Chinese currency and its rapidly rising internalization efforts.
The easing of the Indian import rules is bullish for gold and the gold sector. Shares of jewellery companies surged after the RBI allowed banks to provide gold loans to the sector. The moves by the RBI, is likely to increase demand for gold. Curiously, gold prices saw little gains after the announcement.
On the surface, the economic atmosphere of the U.S. has appeared rather calm and uneventful. Stocks are up, employment isn’t great but jobs aren’t collapsing into the void (at least not openly), and the U.S. dollar seems to be going strong. Peel away the thin veneer, however, and a different financial horror show is revealed. With the Ukraine crisis now escalating to fever pitch, BRIC nations are openly discussing the probability of “de-dollarization” in international summits, and the ultimate dumping of the dollar as the world reserve currency. The U.S. is in desperate need of a benefactor to purchase its ever rising debt and keep the system running. Strangely, a buyer with apparently bottomless pockets has arrived to pick up the slack that the Fed and the BRICS are leaving behind. But, who is this buyer? At first glance, it appears to be the tiny nation of Belgium. Clearly, this is impossible, and someone, somewhere, is using Belgium as a proxy in order to prop up the U.S. But who?
There was some trepidation yesterday when after the first day of Putin's visit to China the two countries did not announce the completion of the long-awaited "holy grail" gas dead, and fears that it may get scuttled over price negotiations. It wasn't: moments ago Russia's Gazprom and China's CNPC announced, that after a decade of negotiations, the two nations signed a 30 year gas contract amounting to around $400 billion. And with the west doing all it can to alienate Russia and to force it into China's embrace, this is merely the beginning of what will be a far closer commercial (and political) relationship between China and Russia.
A specter is haunting Washington, an unnerving vision of a Sino-Russian alliance wedded to an expansive symbiosis of trade and commerce across much of the Eurasian land mass - at the expense of the United States.
Another important caveat to the figures is the ‘elephant in the room’ that is demand from the People’s Bank of China (PBOC). The PBOC does not declare their monetary gold purchases to the IMF or release the data. However, most market participants accept that they have and are quietly buying significant amounts of gold as part of their foreign exchange diversification programme and as part of their strategic goal to position the yuan as a rival global reserve currency ...
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We have previously profiled the "holy grail" gas deal between Russia and China on several occasions, and noted last week how it is expected to be signed this week - pending some final price negotiations. It appears that was spot on as Reuters reports, Russian state-run Gazprom said it was still "one digit" away from finalising a 30-year gas supply deal with Beijing which is expected to crown Russian President Vladimir Putin's visit to China next week. On the heels of Russia's de-dollarization meetings, the coming week appears a crucial one for the history books of the US Dollar as reserve currency (or will China leverage Russia's need to diversify from Europe and stall the deal once again?)
Underappreciated risks to electronic bitcoin and all forms of investments and savings today, including gold, that are held electronically come in the form of modern warfare - involving as it does cyberwarfare and electromagnetic warfare. No electricity and no computer or internet access and you cannot access your savings, investments and money ...