Reserve Currency

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Did The PBOC Just Exacerbate China's Credit & Currency Peg Time Bomb?





China as the global Bubble’s focal point – the weak link yet, at the same time, the key marginal source of Bubble finance. China’s policy course appears to focus on two facets: to stabilize the yuan versus the dollar and to resuscitate Credit expansion. For better than two decades, similar policy courses were followed by myriad EM policymakers in hopes of sustaining financial and economic booms. Many cases ended in abject failure – often spectacularly. Why? Because when officials resort to such measures to sustain faltering Bubbles it generally works to only exacerbate systemic fragilities. For one, late-stage reflationary measures compound Credit system vulnerability while compounding structural impairment to the real economy. Secondly, central bank and banking system Credit-bolstering measures create liquidity that invariably feeds destabilizing “capital” and “hot money” outflows.

 
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Who's Really Isolated? Iran Set To Join BRICS Bank, Strengthen Ties With Brazil





On the heels of the nuclear deal and Tehran's ground operation in Syria, Iran is stepping up efforts to prove that contrary to Western rhetoric, it is not in fact "isolated." According to the country's economy minister, Iran is now set to join the BRICS bank and step up its cooperation with Brazil. This is symptomatic of Washington's waning ability to exert American influence on global affairs both political and economic.

 
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As China 'Buys Low' To Build SPR, Washington Forced To Sell Strategic Crude To Meet Budget





The signs of regime change are everywhere. From embarrassment by Russia's success in Syria to China's creation of its own 'World Bank' and SWIFT alternative, the trend of de-empirization are growing, but tonight's news that Washington will sell oil from its strategic reserve in order to meet budget constraints and avoid default (as China takes advantage of low prices to build its own reserves) is simply stunning in its analogy of the shifting world order.

 
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Complacency Reigns At Epic Levels: "Few Are Ready For What Is Coming"





Accounting fraud remains at the heart of the fix instituted by Ben Bernanke and the ploy has been copied by authorities throughout the global financial system, including the central banks of China, Japan, and the European Community. That it seemed to work for the past seven years in propping up global finance has given too many people the dangerous conviction that reality is optional in economic relations. The recovery of equity markets from the disturbances of August has apparently convinced the market players that stocks are invincible. Complacency reigns at epic levels. Few are ready for what is coming.

 
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3 Questions They Should Have Asked Hillary About Benghazi, But Didn't (And Never Will)





The circus is back in town in Washington D.C. (actually, it’s part of a permanent residency), as a congressional panel spent Thursday peppering presidential candidate Hillary Clinton with questions about her role in the Benghazi consulate attack. It’s pure political theater, but sadly, no one on this congressional panel will ask the real questions to which Americans deserve answers. And this is because the real scandal presents questions that can’t be asked, because the answers indict the entire U.S. government.

 
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IMF Seen Approving Yuan As "Reserve Currency"





The bottom line is that the "internationalization" and an increasing free float of the Yuan is bearish. And since the currency urgently needs even more devaluation as today's PBOC rate cut confirmed, this may just be the IMF's way of greenlighting even more devaluation for China's currency. And since any devaluation would lead to a surge in capital outflows, what the IMF is doing is merely blessing the Yuan's weakness while pretending it is in a position of strength, in an attempt to slow down the capital outflow as much as possible.

 
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Goldman Is Getting Nervous: "There Are Significant Risks To Our Forecast For Gold Price Weakness"





The "very serious people" are starting to get nervous, because while most other "commodities" have seen their prices plummet in the biggest crash since Lehman, gold just went green for the year. Enter Goldman Sachs: "While our base case remains for higher US real rates and lower gold prices, there are significant risks that our forecast for gold price weakness is pushed out, should the Fed surprise us and remain on hold in December."

 
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Chinese Officials Say "Unnecessary To Be Anxious" About Economy As Margin Debt Rises Most Since June Bubble Peak





UPDATE: He's back - GEITHNER: YUAN CAN BE SIGNIFICANT RESERVE CURRENCY IN LONG TERM

As everyone opined on China's 'goldilocks' GDP data all day long, perhaps the biggest news this evening was US Treasury's softer stance towards China's currency 'manipulation', as we noted earlier, saying Yuan is merely "below appropriate medium-term valuation," and sure enough offshore Yuan has strengthened since the report. China's 'official' mouthpiece Xinhua told the people it is "unnecessary to be anxious about China's economic growth." And finally, for the 8th straight day, Chinese margin debt rose today to its highest in over a month. This is the longest stretch of releveraging in 4 months - since the peak of the bubble. "Will they never learn?"

 
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Dollar Moves Shake The World: "Federal Reserve Could Start A Currency War"





There is a war, a currency war, and the war is, ultimately, on Americans. Rather than living under a sound currency, modern Americans live under an economic despotism. There are monopoly men who tightly control the money, and are all the more insidious in their subtlety, and quietness in the shadows. In many respects, Americans have fallen far, and hard, from the liberty they once had.

 
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Guest Post: The False East/West Paradigm And The End Of Freedom





It was clear what was about to happen in Syria only because we understood one important fundamental – that there are no “sides” in any modern conflict, only proxies fighting on a global chessboard controlled by the same elitist interests. Syria represented a perfect catalyst for a planetary scale conflict triggered between East and West in a way that could divert attention from internationalists. Modern war, whether through kinetics or economics, is almost always theater designed to distract and terrorize the masses, which are the true target of any conflagration.

 
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Gold Jumps As China Devalues Yuan By Most In 2 Months, "Boosts Reforms" Of Corporate Bond Bubble





AsiaPac stocks are extending losses in early trading asit appears our fears about the Chinese coporate bond market bubble are also on the minds of Chinese regulators as they look to "boost reforms." After the PBOC has fixed the Yuan stronger for 8 straight days, the onshore and offshore Yuan has weakened appreciably in the last 24 hours and PBOC has devalued Yuan by 177pips  - the biggest in 2 months (as PBOC researchers push to "speed up Yuan internationalization" and implicitly inclusion in the SDR basket).

 

 
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Three Obvious Signs The Entire System Is Changing





The US is in decline. The US government is overloaded with debt. The US financial system is losing is dominance. And even the banking institutions themselves are losing relevance. This isn’t bad news. It’s tremendously exciting.

 

 
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Pentagon Will Pay "Condolence" Blood Money To Afghan Hospital Bombing Victims





According to the WSJ, the Pentagon is offering "condolence payments" to the civilians injured and the families of those killed by a U.S. airstrike that destroyed a hospital near Kunduz, Afghanistan. Because, the thinking probably goes, human lives are like any other commodity and can be measured in reserve notes. However, what is more disturbing is that since the US prints the world's reserve currency, should Obama proceed to exterminate countless other "collaterally damaged" civilians, all that the US will need to do is print a few more million to wash its - and that of the "free and democratic world" - conscience, and all shall be well in all future cases.

 
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The Death Of Cognitive Dollar Dissonance & The Remonetization Of Gold





“Capitalism is not primarily an incentive system but an information system.” Prices are the information. And the price of time itself is the single most valuable piece of information. Time, as we intuitively know, is money; they are two sides of the same coin. Mess with time and money, and you mess with everything else. Yet as with central planning in general, the central planning of either money, or time, cannot possibly work. Hayek warned the economics profession of precisely this in the 1970s. They didn’t listen, ensconced as they still remain within their interventionist Keynesian paradigm. Well that paradigm is about to be blown apart, time and money are about to return to the market, where they belong, and real, sustainable economic progress is about to restart once again.

 
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