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Guest Post: Will The Dollar Lose Its Reserve Currency Status To An SDR Currency?
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Since the SDR is just an aggregate of fiat currencies, it cannot really change the fundamentals of the current status quo.
Many observers believe the U.S. dollar (USD) will lose its status as the world's reserve currency sooner rather than later. Proponents of this view often mention China's agreements with various trading partners to settle trade in their own currencies rather than the dollar as evidence of this trend.
More substantial evidence can be found in the diversification of reserves held by many nations. The euro now makes up about a fourth of all currency reserves:
Here is the IMF (international Monetary Fund) page on voluntarily reported currency reserves: Currency Composition of Official Foreign Exchange Reserves (COFER). Note the large amount of reserves that are not "allocated," i.e. the currency being held is not specified.
Some see the replacement of the U.S. dollar by some other currency as a welcome development, not just for the world economy but for the U.S., as the reserve currency has substantial burdens. Regardless of whether such a replacement would be positive or negative, many analysts see no plausible alternative to the USD as the primary reserve currency for a host of reasons.
Another camp sees China's purchases of gold as paving the way for China's currency (renminbi a.k.a. yuan) to replace the dollar as the global reserve currency. Those who have studied China's policy makers doubt this is the goal; rather, they see China as most likely pursuing a multi-polar world in which no one nation issues the reserve currency.
One set of observers has long held that the ideal replacement for the dollar is a hybrid currency issued by the IMF called SDRs (Special Drawing Rights). The IMF describes the SDR thusly:
"The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies."
The four currencies are the U.S. dollar, the euro, the Japanese yen and the British pound. China is widely seen as working toward floating the renminbi (that is, no longer pegging it to the dollar) so it could be included in the SDR currency.
The SDR seems to many to be the ideal replacement of the USD as the reserve currency, especially if China's currency joins the basket of currencies that make up the SDR.
Though the advantages of a multi-currency basket are fairly self-evident, questions remain if the SDRs are a realistic or practical option. These questions come to mind:
1. Since the SDR is just a basket of currencies, doesn't it simply aggregate the weaknesses of all fiat currencies? In other words, what happens to the value of the SDR when priced in gold, oil or other commodity if every nation in the basket prints its currency with abandon? The SDR will lose value just like any any fiat currency, because it is simply a composite fiat currency.
2. Couldn't a nation simply hold all currencies in the SDR in the same percentages as in the SDR basket? Clearly, this is possible: a nation could acquire the same basket of currencies held by the SDR and in the same weighting. In that case, what is the purpose of the SDR?
3. What happens to the relative value of one of the constituent currencies in the SDR if the issuing nation experiences a currency crisis or devalues its currency by one means or another? Clearly, the relative weighting of that currency would decline within the SDR basket.
The SDR, then, does nothing to impede currency crises or devaluations; it is simply a risk-management tool that works by diversifying the risk of holding too much of any one currency. But since any nation can pursue the same risk-management strategy directly by diversifying its reserves with multiple currencies, what's the point of holding SDRs as a risk-management tool?
4. Since the SDR is just an aggregate of existing currencies, it is not an independent currency. An independent currency would need to be supported by either enforceable taxation rights or some commodity or basket of commodities: gold, for example, or a "bancor"-type basket of commodities (gold, oil, grain, etc.) owned by the issuing nation/entity.
(Another potential independent currency that could serve as a reserve currency is a non-state issued digital currency such as Bitcoin: Could Bitcoin (or equivalent) Become a Global Reserve Currency? (November 7, 2013). Digital currencies' valuation is based not on taxation or gold but carefully managed scarcity.)
Since the SDR is just an aggregate of fiat currencies, it cannot really change the fundamentals of the current status quo.
Boiled down to its essence, the SDR is presented as a shortcut solution to deeply seated problems. The reserve currency problem cannot be fixed by a basket of fiat currencies, as fiat currencies (and the trade imbalances they generate) are the problem.
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Chaos will prevail, but first Bitcoin, and then physical gold.
invisable coins........yes thats the answer!!
ANOTHER NAIL IN THE $ COFFIN!
http://rt.com/business/russian-lawmaker-dollar-ban-663/
That was hashed out here yesterday....
SDRs are not going to handle the Japanese collapse very well.
Agreed. I do not see too much improvement going forward, only damage control measures as countries hit the wall one by one...
The SDR are nothing but Fiat by another name.
Don't tell anyone but many powerhouse economies around the world
have been surreptitiously weening themselves off of the Almighty Dollar.
.
"The Almighty Dollar seemed to possess an invincible power, and so it became the object of great worship and deference by the vast majority of people on Earth, as well as by most of the aforementioned collectives. This hapless majority chose to give up their power to this illusory King of Commerce by hitching their wagons to this Almighty Dollar’s wagon train. Now that all the wagons in front have gone over the cliff, those faithfully following are guaranteed the same fateful destiny."
http://cosmicconvergence.org/?p=2127
All Four Wheels Come Off The Anglo-American JuggernautSDR = Safe Haven
They are makiing it so.
Gold Epoch Approaches: http://twoshortplanksunplugged.blogspot.com.au/2013/11/gold-epoch-approaches.html
I've got a great idea! Just let people choose what currency they want to use!
Bitcoin? Fine!
Gold? Fine!
Piggy roasted by the IMF & World Bank? Fine!
People are free to use whatever they want, that doesn't mean people have to accept it...
Bitcoin, unfortunately will become a money laundering racket for the Cartels...I may be proven wrong, but I doubt it...
From what I can tell SDR's are only going to help a very small minority of politically connected "elites" that have been on their knees garnering favors from the financial houses around the world.
Pretty much everyone else will be priced out of the economy or forced into what amounts to slavery. Either you obey or die will be the trend.
Not saying it's written in stone, just saying what the likely outcome of the SDR system going live. An entire generation of humanity will essentially be lost because of it, if not more.
This SDR circle jerk leaves out a biggie. They depend on globalization and the whole group hug of the participating basket members and yet the SDR will do nothing but panic people into isolation of their economies to avoid inflationary shocks. This SDR is just another globalist intellectual exercise that is destined to fail.
The problem is with the retarded elites who won't admit that they've failed -- let's stop listening to them. The USD and all the other fiats are just symptoms of the dysfunction in the ranks of the "chosen ones".
Fiat currencies don't kill people, the self-annointed intellectual elite do. Two words sum up the fucking nonsense of this idea -- Chritine Lagarde. This is who the world wants at the reins. Jeebus.
And as far as the "Chinese gambit" of the bilateral trade agreements -- seriously? So instead of forcing settlement in USD with all it's warts and current short bus riding fiduciaries, I will instead take an IOU into a USD short bus riding fiduciary crew. They always leave out that China HAS NO CURRENCY. It's an IOU into a pegged USD(yeah, yeah, it's a basket now with 99+% weight in USD -- BFD). All this supposition that they're going to whack the world with a gold backed currency is BS. Their economic model is not meant to share.
There is no need for a SDR if China would hold to their WTO agreements and float their currency. Yup, it would still kill the USD -- that's inevitable now that Dipshit Yellen is taking the con, but the trade imbalances China is forcing on everyone with their currency manipulation would go away pretty quickly.
"China is forcing on everyone with their currency manipulation would go away pretty quickly." - Yes. China is to the 21st century what Germany was to the 20th century. Replacing one fiat with another changes nothing.
Its no small coincidence that China is leading Bitcoin adoption rates. I wouldn't be surprised if they don't make any announcement regarding it, and just start allowing people to use it for different things. Its a pefect hedge, in addition to the tons of gold they've been hoarding.
At the April 2009 G20 meeting in London, both China and Russia called for a new reserve currency given the mess in New York. Both were keen on expanding the use of the IMF Special Drawing Rights (SDR). In August 2005, China revealed the Renminbi currency (CNY) is fixed against a basket of world currencies that comprise the US$, Euro, Yen, Korean Won, with smaller weightings of Sterling, Baht, Rubles and the Canadian, Australian and Singaporean dollars. The weightings of the components within the basket are undisclosed, but analysis reveals the Yen, Euro and Won have a greater influence than the US$. It is apparent that China has quite deliberately replicated the SDR and has been slowly working to replace the dollar as global reserve currency.
This has been going on for over 20 years and given Washington's addiction to spending on borrowing the process should be completed within the next 5 years when the central bank systemic collapse finally follows the 2008 banking/insurance/corporate systemic collapse.
Yellen has short legs and that can needs kicking down the road forever
Agreed, and yet, the US Postal Service does have a means of dealing with this:
http://pe.usps.com/text/imm/immc3_006.htm#ep319517
Certainly, the lackeys or dogs of the Elites (see second signature sheet, please) support the SDRs, as explained in this letter from the Bretton Woods Committee, the lobbyist group for the international super-rich, to the Senate Majority leader and Speaker of the House (the ONLY people they deal with in the US Congress) several years back.
[Disclaimer: After searching bin sites, I found it below at a private citizen's site --- immediate next link --- it had long since been removed from its original Bretton Woods site page?]
http://s1012.photobucket.com/user/james_m_woolley/media/page-alpha.jpg.html?t=1269389787#/user/james_m_woolley/media/page-un-1.jpg.html?t=1269389787&_suid=1384459067547013604113164921894
(Former Bretton Woods address)
http://www.brettonwoods.org/uploads/pages/224/Former%20Secretaries%20Letter%20on%20IMF%20Approval-5.26.09.pdf
Pulitzer's Law: Whenever a headline is phrased as a question, the answer to that question is ALWAYS NO.
SDRs: Because a basket of assorted shit is always better than a single piece of shit.
A nutritional wholesome balance of fiber.....
Looking at the pie chart, the way the Fed is printing pretty soon USD will be at 99%!
Some ppl may not get your sarcasm. :-) Seriously though, the percentages are achieved via negotiations/haggling and formal/official Agreements.
The real problem is, that the BRIC+ currencies are not represented in the current form of the SDR. If they (or the G20) don't get their "just & rightful place at the SDR table", then all bets will be off and they will set up a series of bilateral agreements for direct currency exchanges.
This is the way China is going now. Either because this is what they truly want, or because it forces the West to give them their due share of the SDR. I think that the former is Plan A, and the latter is Plan B.
Check out how the SDR is controlled relative to voting rights of its member countries. The US will have a controlling block of votes. It's based on total currency in the "basket." SDR........just a "rose" by another name.
The SDR was already used to replace gold in the early 1970's as the primary trade mechanism for larger nation to nation transactions. It's not just an "aggregate" as the article claims, but an active form of currency used by treasuries and central banks. I think far more research needs to be done here. Also, I don't really see an argument here as to why a basket currency mechanism couldn't replace the dollar, especially if that mechanism is also backed partially by gold, which the SDR is. Everything the IMF and the BRICS are doing now indicates that the SDR is the ultimate replacement for the dollar. The IMF has openly stated on numerous occasions that they plan to introduce the SDR as a reserve currency. China has called for the SDR to replace the dollar. How much evidence has to be piled up before people accept that this is going to happen?
It does seem they'll try the SDR until it fails and then gold will not be able to be ignored any longer. Who the hell knows really.
rm18,
if the SDR is partially backed by gold, does it follow that if the SDR becomes the RC that gold will rise? thank you.
"especially if that mechanism is also backed partially by gold, which the SDR is."
How is the SDR backed by gold? What formula?
The SDR is backed by the IMF's gold reserves and has actually been called "paper gold" since the 70's. I suppose you would have to calculate the IMF's gold reserve to SDR ratio yourself.
And in what vault does the IMF keep the gold that supposedly backs the SDRs?
(and more importantly who else has claims on "gold" in said vault(s)?)
Hey China!
Do you want in the club?
The Yuan is welcome but you got to pony up the gold...
----
It is is really simple, the details and names may change, but not the game....
There isn't any, it's imaginary gold, for imaginary power, with an imaginary currency. Legarde's been actively and repeatedly lobbying countries for major cash injections for two years now, the annoying mole came to Australia and literally stated we had a responsibility to give something back ... to the IMF! Stinking global parasite.
You might want to consider the standing reality that China wants the US currency gone so will undermine it in any way they so chose. Merely calling for an SDR, to kill the dollar's status, and eliminate a major US advantage, does not mean Beijing for one second actually believes an IMF SDR has any future in the role of the dollar. You seriously don't see that?
The world will not accept SDRs and that's the end of it, and the IMF has no future, it is the FED's bitch, and it also is being debased to nothing.
XBT/BTC is the next step, the sovereign morons just don't know it yet.
Keep dreaming... if a virtual currency were to be adopted, it would likely be their own specially designed currency, if nothing else just to be their currency, not some wanabee's hack of a currency...
yes...back the paper dollar with more paper.......yes that should work
Many CB's around the world Hold SDR's as thier reserves.
So it has already happend, the thing is with the SDR's is when the CB's have run out of room to expand the IMF will just print more SDR's
AND BY THE WAY I BELIEVE THE SDR IS REVISED EVERY 5 YEARS AND IS DUE TO BE REVISED IN 2014!
Watch for changes in % of make up of SDR and Component currencies!
Then we need to invade and relieve them of their SDRs
My question is: What would the face of the worlds economies look like if the Chinese yuan wer to become the worlds reserve currency?
It is a process, not an event...
Historically such changes play out over decades...
And do take notice that the GBP is still part of the SDR, former hegemony does not die easily...
Flakmeister You are correct. Reserve currency/ petro dollar is all we have left here in Amerika...cuz we DON'T produce anything but BS. That is why we have been able to maintain our ritzy economy and way of life. TPTB better bring back manufacturing real quick if they pull the reserve currency plug. When all of those petro dollars flood back to the USSA a gallon of petrol will be $30.00.
I went through this before, there will be no flood of dollars as most of the those dollars will vanish when the bond market craters. They are virtual being brought into existence only by the creation of debt...
Your prediction of $30 gas is quite possibly correct but not for the reasons you suppose...
Well for one, the US could not buy tons of cheap "stuff" from China. We would nolonger be able to afford it.
Could actually be bullish for the US economy - it'd have to start producing rather than just "buying", for a change.
The Yuan will never become the reserve currency. Being the erserve currency requires that you buy stuff and lots of it. China is an exporting nation and doesn't want to go down the route the US did of getting rid of all its manufacturing in order to become a net importer.
It seems doubtful that was a conscious decision.
More likely it was a matter of many years of abuse, graft, and fraud.
Fuck you IMF.
the frn is being undermined on purpose and has been for 100 years. the term loss implies an accident while it is no accident.
the system of the federal reserve is to confisgate the wealth of a free people and enslave
them to debt while it captures all assets using boom and bust cycles it creates using debt it creates out of thin air.
one day the system will be seen for what it is, high treason.
It is all about convertability of dollars into oil...
oil is gold and dollar guarantees it stays under Sauds and likewise princely kingdoms, all allies to US all part of petrodollar hegemony. As long as the swing world producer on export model, as his fellow OPEC members, are under $ Umbrella the FED mantra stays : we inundate the world in $, our money-your problem, as long as we avoid Weimar world.
Some balancing act achieving that, in a world now going south bigtime.
I don't know how they can continue without debt reset. Imposed Price controls, the other route to achieve that, means Capitalism is dead.
If that happens the USA becomes new USSR. So RUssia and China will become new Venice and Florence and the game rebegins!
Renaissance from new lands of opportunity.
Whats new in this world! Unless its peak fossil and hello renewables to prevent eco Armageddon.
falak pema Honda and Toyota are both rolling out hydrogen powered vehicles for consumer purchase in 2015. Would that fend off peak fossil and eco Armageddon? Who's gaming us really?
Could you remind us of the pricetag?
Starting at 45K on the honda ............Toyota was TBA last I looked. Also Hyundai will produce 1000 hydrogen powered cars at the 50k price level(2015).
Cheaper than a Tesla.
Yes
Then again, there is that pesky H2 supply....
It isn't exactly plug and play....
can you look beyond a few years, with a 6% depletion rate in conventional cheap oil, with a EROI going from 30/1 to 2/1 in non conventional, where do YOU think the future lies for energy consumption for a world of 8 billion?
It has to be in renewables and we have to PRAY that Moore's Law applies to solar like it has for silicon to get us there!
The future is a mix of renewables with a MINIMUM of fossils and fission nuclear to GET US THERE, to the new renewables plateau. Its now a question of life or death for the future generations IMO.
Its time to get Moore's law rolling big time.
AMerica has this OBSESSION with short term capitalism. We know where it has got us...RIGHT???
I believe that is the positive selection that ensures that the dollar is fixed in the global economy. In the US, the dollar is fixed through the Federal income tax (just like how tally sticks were fixed in medieval England). In both cases, internationally and domestically, the threat of force is what ensures the continued use of the dollar. Instead of calling it the petrodollar, we should call it what it is, blood money.
Who is going to provide the military force to enforce the adoption of the SDR? The petro-dollar system is backed by the U.S. military, which has already shown it cannot effectively play globo-cop.
Force projection requires (cheap) oil.
I think this is a big part of the reason behind the expanded use of drones.
How about the dollar loses reserve currency status to a currency which will have nothing to do with SDR at all? Doesn't seem a bad idea ... ;-)
The RMB will be backed by gold, if for no other reason, to prevent it from being attacked the way other Asian currencies were in 1998.
And while the Chinese were busy stockpiling physical, someone else was tinkering with bitcoin and laughing.
AAPL, BBRY, NOK, even XAU, XAG, etc., tinkerers were also laughing, until they aren't... what makes you think this time has to be different, re BTC?
Bretton Woods is dead. Expect something ugly to happen on a global scale and a new "deal" being struck in the aftermath. Who the hell knows what that will be.
Bretton Woods was dismantled in 1973. Bretton Woods II is often discussed today - it is a discussion topic only. See below.
http://bullandbearmash.com/about/usd/
I like the idea that our current system is really a tempory spit and duct-tape solution to the last sytem collapsing in 1971.
IOW, our current system wasn't designed by anyone, it's just a kludge. I agree with your "who the hell knows" comment too. The decisions will be utterly pragmatic and based on the (mostly secret) positions of the powerful players. If they like gold, then gold it will be. If not, something else.
I think they will try and push for the SDR, but actually the SDR will promote worse activity by its member currencies.
If the US continues to be a weak member with congress not addressing costs or taxes, the other members will be forced to act as bad, otherwise they will be the Germany of the SDR. They will have to fund the bad actions of the other members.
So in effect, it is worse than a single fiat. It is an entity larger than any single currency now and it will act as the worst of its participants, especially if the bad player is a large component of the whole.
Nice....
Point number 4 implies they can remove or reduce the weak participant and the other members increase their participation. But that is a ludicrous solution or at least something that will take decades to accomplish. Again, how easy is it to remove Greece from the EU? How easy do you think it would be to remove the dollar from SDR? Reduce it? Same issue.
But the financiers will try it cause it keeps the fiat gravy train going
What military is going enforce the adoption?
They are not doing this out of the goodness of their heart. They are being forced to do this by the downside of not doing it. Therefore it will require the participants to fund the global cop, but even if the US was still the cop, the US would gladly pay. This has been planned for decades, with the US a willing participant.
I agree it will not be smooth and the other participants will probably balk at funding more since the US will no longer be alone.
But they were fucked over by the US pretty raw, so they may see it as a cost of doing business. Also the US is motivated to keep things the same, so they will keep the serfs at home at bay and pretent they are still BMOC.
The most important thing is they get to continue the FIAT game. That is the single most motivating factor.
I am not sure it even matters at this point anyway. Since globalization, American manufacturing has been gutted. A country that does not manufacture has no future.
SDRs can't compete against BitCoin.
Last price:$438.59000
Let's all face it. The only reason banks exist is that they are a criminal gang of terrorists that have temporarily gained control of politicians. Their only purpose is to steal the wealth of nations.
Come on...we all know this time it's different.
Actually, the SDR is the next step in a series of mulitgenerational steps towards "one world government". it does not matter that the SDR works great now just as long as the plutocrats can get the masses used to the idea and contuinue by merging these items with other global alliances and programs, eg NATO, United Nations, etc.
The is the "progression" of our loss in independence.
The powers that be are happy to slowly boil the frog. It is our job to fight this and undermine it any way possible. No resistance is to small or inconsequential.
Lol. With the dollar making up about 65 percent of the value of the SDR we can only hope the SDR replaces the dollar.
If it does then the USA can continue its exhorbitant privilege a while longer.
They will move to an SDR type of currency for two reasons:
1) to lessen conflict within the band of thieves over who will be the top dog,
and 2) to ameliorate the 'benefits' flowing to debtors, us, over debtees, them, brought about by their printing/inflation. I.e. when the dollar goes supernova-inflationary, debtors will be able to payoff their debts for next to nothing. That of course cannot be allowed to stand, so they will decree that the dollar may be toast but that the debtors still owe in "SDRs." This will be repeated elsewhere--Greece, Spain, etc.
"In the end only bullets will be able to repudiate the debt."
The Powers That Be aren't going to give up their fiat privilege without a fight. Monetary systems (not truly based on gold) fail every few decades, and this one is due for the dustheap in short order. As much as I love gold, I've also been thinking that the SDR is a logical dodge for them to use to keep the party going for a few more decades, except now they will fleece the entire world instead of just individual countries.
I'm sure that will be a sweet deal...
Anyway, the only thing that will slow that down is if enough countries are smart enough to go off and do their own thing, but the US (and the Eurozone) is still the 500-pound gorilla to who the rest of the world wants to export in classic mercantilist fashion, so I don't really see sufficient discipline there.
I'd love to be wrong about all of that.
The SDR is a global fucking tax that benefits just 4 countries which make it up: USA, UK, JAPAN and the EU, since all the other 188 odd members must keep making tributes to these four just to stay in the club. Don't be fooled by the seemingly foreign faces of the IMF heads - according to the voting regulations and share rights, Washington/Federal Reserve controls this entity with complete impunity. I've done several posts on the IMF over the years, and it always surprises me that people think Washington has nothing to do with its control. It is as American as apple pie. Changing the global reserve currency from USD TO SDR is no change at all.
I've done case studies of IMF loans, and basically it is a scam - a protection racket to keep the USD as the reserve currency. The last time somebody suggested having a basket of currencies from developing nations as well as commodities (gold) as the SDR, thereby diminishing the US majority voting power, that somebody was arrested for sex crimes at the NY branch of Sofitel. So I reckon it isn't going to happen again any time soon.
Barring aside the dubious need for a reserve currency in the firstplace, since fx markets are sophisticated enough to handle trades anywhere on the planet, the thing that makes a reserve currency is the volume of trades with it - the country that sells and buys stuff the most is the defacto reserve currency. The dangers of pricing every commodity on the planet in fiat money should be apparent to everyone by now. We're all feeling the pinch of ever rising prices in the West, so one can imagine how worse it must be for the poor bastards in the 3rd world who are all being priced out of staple foods.
The IMF is just another criminal enterprise pretending to be respectable. Countries have traded with each other by fulfilling the needs of the other since man first formed organised groups without the involvement of third party toilet paper, and the meddling sociopaths that hold control over its supply.
SDRs based on a basket of fiat currencies is just a basket full of nothing but paper. When the world has exhausted all possibilities and we are on our way back to the Dark Ages and global famine the ruling class will finally face reality and go back to a gold base. Either that or chaos.
Of course a gold standard would freeze the social and economic classes in place. So before that happens the top 1% will transfer all the wealth they can steal from the 99% to themselves first.
Oh wait...
News-paper, toilet paper, currencies. They are all the same. At least I get to read the funnies on the news-paper, before I wipe my ass with it.
Channel surfing Old Timers
If you don’t like the channel, make one of your own.
The direction of the economy will be determined by who the old timers choose to carry the flag forward. Gold may be better than money, for a global middle class, but it is not as good as skill, which is not as good as character. So far, they don’t like what they see and are not dead yet.
Let’s say you are a tobacco farmer on your death bed, and you have a choice between Monsanto, payment in gold by a developer, payment in cash by another tobacco farmer, and trust, in a young person who has completed every task, increasing quality at a lower price. Which do you choose?
It’s not rocket science. The first three choices are Monsanto, with a time delay. Funny, how the approach of death increases acuity for some, those seeking to navigate through the eye of a needle. The empire BigAgREITs are attempting to control the outcome and failing miserably, because they kill everything they touch and end eating the seed. Chart the red tide of Monsanto. The farmers have no need of gadgets, fed by a clouded spy network judgment. The one and only thing they know is that nature takes care of its own.
No small business can start up an industry in a service economy, short of self-destruction, because the entry barriers are ridiculous, and no intelligent kid goes to a tourist town to get married and raise a family, on $10/hr chasing million dollar property. Government distills out the real economy and inserts itself in between falling quality and increasing price, growing like a weed until it consumes everything.
Once the weeds take over, you are better off leaving the farm to nature. The soil doesn’t forget. City folk either dismiss God outright or pray incessantly, with pretty words found in the feminist side of the Bible. If you ever lived on a farm, dependent on the rain and surrounded by developers sucking the well dry, you know what I am talking about.
Whether you like it or not, nations are built by families, who hold onto them until death, far beyond their productive yield, with governments built for the purpose. The Thyssens, the Krupps, and all the rest are beyond bankruptcy, which is increasingly obvious to everyone not in the union cartel, paid to look the other way. And they are competing for a shrinking slave labor pool, paying the Fed to maintain treasury demand with empty promises, hoping for an exit before treasuries blow up. Labor doesn’t need Mr. Gross, his bonds, or his ducks, which is why they are all in a row.
Silicon Valley is Monsanto’s best-last-to-lose-practice, its backroom data mining company. That’s what the latest flurry of free trade agreements is all about. The spy education network is slotting middle class social event horizons globally, to create a global middle class herd, eliminating culture as a variable to increase the marginal utility of money. George Soros isn’t escaping anything.
Silicon Valley has made it easier to exploit economic slaves globally, substantially decreasing the source, because everyone not paid to look the other way is increasing their distance, especially young people not imprisoned by the false assumption of empire, that an irrational market can outlast all individuals, and its foundation, that individual faith is itself irrational. Don’t build your home on a foundation of sand and expect a happy outcome when it rains.
War is a waste of time, money and human resources, which is about all America is good at, supplying artificial demand for a world full of artificial supply, in a global supply-side economy. Congratulations Chimerica; you are last to lose, supplanting Germany as the biggest idiot on the block, potatoes and sour kraut, famine for everyone.
The individual participant grants conscience to the least common denominator herd conscious, which competes with other herds to zero. The false assumption leads to extinction. That’s why the Nazis did what they did, and why the programmers are building this machine, imprisoning themselves and their masters, always building a taller lightning rod.
Christ Mass is not about toys, and an economy is not about grown men and women chasing toys, consigning children to poverty. Money is just an accounting set of training wheels. Don’t give it more credit than it is due.
Hillarycare is not about health. The first people to get whacked were individuals expressing choice. It’s about eliminating individual thought, freedom of action, which begins with free speech. Natural rights are not subservient to a contrived constitution.
The last thing this country needs is another bureaucrat inspector with a clipboard making a punch list, to create more make-work in the rat hole. TBTF fails every time because it is insurance against nature.
This is the best and easiest time in history to improve quality and decrease cost. Just wire around German stupidity funded by Chimerica stupidity. Wire home runs to the box and leave the monkeys trapped in the shaft.
Skills are more important than money, but not nearly as valuable as character, knowing when to ignore the science. Science eliminates thought, with algebraic reduction. That is not the function of humanity; it’s a byproduct. Gravity computes itself, not the universe. The universe has much better things to do and so do you. The automatons are going to run amok, with or without you.
Automatons can only produce what they fear, because they cannot focus away. San Francisco needs the tallest skyscraper like America needs to be bled with another hole in the head (F-ing Nazi doctors).
You know, my mom was a Diane Feinstein Nazi damsel-in-distress, who destroyed everything she touched. I loved her and pulled her out of every fire she created, without jumping in, until she built one that consumed her.
A line exists, it may be adjusted, and it may be cut at will. Old timers are always on the lookout for architects, now more than ever. You don’t need capital, you don’t need money, and you don’t need government. You need to order your priorities.
Marriage is a distillation process. Place your resistors to tune in the channel, and don’t presume to judge. Children are the integral. The empire is just a derivative, always on its way back to the DNA churn pool. Adjust the I/O feedback signal. You are not so different from the bumble be as you tend to presume.
Of course the business of America is business, Murder Inc. Why would you expect anything else, and who cares?
The empire murders itself. Don’t get involved and expect the old timer to give you the time of day. And never, ever underestimate a kid that sets up on bullies. Goliath always steps over the edge of the cliff, with momentum. That’s just the nature of a bully.
I don't know WTF I just read, but you're on to something. Sorry about your mom. :(
Fiat currencies don't create trade imbalances. Fiat currencies can be converted into copper, gold, aluminum, real estate etc at any time. Even if the currency is not officially backed by government they are generally convertible.
Trade imbalances are created by differences in the marginal discount rate (saving vs consumption preference) in different countries.
We already have SDR's in existence.
This is taken from a US postal customs form:
"Insured Number | Amount | SDR: You may copy the number off your insurance tag, or leave it for the postal clerk to complete. Enter the amount of insurance you wish to purchase. The postal clerk will complete the SDR (Special Drawing Rights), which is the international rate of exchange for the insurance."
http://www.isdntek.com/postalcustoms.htm
Agreed. The Universal Postal Union adopted the SDR value of its international transactions. But this is just one step towards its use as a reserve. Basically, what the UPU did was to use the daily value of the SDR to calculate the charge to the customer in his national currency.
Countries are already weighing options, taking sides, making deals, positioning themselves with whatever side they think will come out on top.
get ready for WWIII.
The SDR is not a currency and it never will be. It has been around for decades. No one ever used it. It doesn't make any sense as an idea or a financial instrument. It has no use, purpose, or reason to exist.
It doesn't matter what stupidity they put out in the news, concoct in a banker lab, or what you see on the tickers. The person with the most gold ALWAYS gets reserve currency status. It is ALWAYS about gold. Global trade always comes down to commodities and gold. Global trade evolved because of PMs and it will always be based on them. Notice how China makes everything and also gets all the gold? Not a mystery. That is how it works, despite how convoluted and complicated the arrival at the final result appears.
Agree
When this is over the last thing the world will look to is 'just another medium of exchange' to act as a store of value and tool for settlement.
The SDR, despite Rickards cheerleading, is not the future, gold is.
And...just what "problem" would an SDR solve...I mean, actually solve?! Bueller? Bueller?!
Dust to dust. Fiat to fiat.
SDRs are dead and cannot become a reserve currency. Given all the electronic trading in place today, you would almost wonder if the planet even needs a reserve currency any more. With China setting up its own inter-nation settlements, and Russia looking at doing the same, it is not hard to foresee all developed nations doing direct currency swaps with each other. It's not like the countries are swapping physical gold - it's all just numbers in a computer. If they really want a new reserve currency, then China, Russia, Europe, Saudi Arabia, etc will need to set up an international currency backed by physical gold. That may happen one day, but not anytime soon.
Let's see. 6 billion ounces of gold at $1,300 per ounce. That's $7.8 trillion. The country with twice that in debt, using its QE3 will crank that out in eight years. And that's just one country on the globe trying to print its way out of a hole. Gold can never be used to back any Medium of Exchange. There will never be enough of it.
Withglee, it would be giving you undue praise to merely point out that your 'analysis' is laughably shallow and woefully ignorant.
First, no amount of precious metal backing will ever suffice to cover the profligacy of politicians --- if and when hard money returns, most or all of that debt will simpy be repudiated, whether by dictate or by inflation.
Second, you implicitly assume that the price of gold is fixed, when any child can understand that if the supply of something is insufficient at a given level of demand, then the price will rise to balance the supply with the demand. It is demeaning to even have to address such an elementary matter over and over again.
Third, history proves you wrong.
Fourth, you are an idiot.
Akak, I welcome your attack.
Work this one out for me. It takes a little less than an ounce of gold to trade for a new ounce of gold production. Price that out for me.
Hugh-Smith's comments on the SDR are valid if, in fact, it will simply reflect the movements of four (or six or ten) currencies among each other. How does the average currency observer now read the daily tables? Mostly by the prices of these currencies in.....US dollars. This view of the SDR effectively continues the reserve status of the US dollar with a name change.
But this is not what the originators of the SDR concept had in mind, back in 1968. What they were looking for was a way to free international trade liquidity from the restraints of the gold reserves held by each participating country. The US was in danger of losing all its official gold as a result of its trade deficits. The idea was to expand each nation's gold stock by issuing a paper certificate, called by some "paper gold," in agreed amounts under strict guidlines by the International Monetary Fund. The hope was to expand trade volume and its opportunities, while retaining the disciplinary value of a fixed and recognized international asset, as was gold. Under such an arrangement, the SDR would fluctuate independently of the movements of national currencies, based on supply and demand. What is not widely known is that several corporations did their international invoicing in SDRs after they were initially issued by the IMF. This had the effect of stabilizing the accounting of some suppliers and customers.
SDR is the road to a currency used by, let's say, 70% of world gdp. A one world currency, no place to hide, except to the Zimbabwe dollar or the Venezuelan bolivar. Fiat scheme, with every now and then a few hyperinflationairy dropouts.
To control the money-god or not to control the money-god, this is the battle the babylonians spend 25 hours a day focusing on.
The drive towards the world digital money system has already begun. Take that bit-coin scam for an example. You got all the folks on one side of the ranch all debating about the new SDR cow that has come into the yard, while the real deal is being fanned to look attractive like a pig with lipstick on the other side. It quacks like a duck and stinks lie a pig, and the fact is all the babylonian efforts to control money using all sorted devices and con-ponzi-games is all headed towards the goal of total control using tracking and tracing, monitoring for taxation, and acquiring the potential ability to confiscate all the funds of any digital money the new babylonian new-world oderists will propagate to control the world's people after all the patriot games they will play first. This involves the population reduction wars first before they get to the digital money command and control system.
Is is sad that people have lost the real connection to goodness, love, righteous light, and the basics of a society that used to have that one commonalty of all holding up the higher values and morals of humankind. They have mostly become addicted to being conditioned to actually believe that money is god. Imagine that.
One of the serious defects of the international gold standard that existed between 1944 and 1971 was the absence of an agreed mechanism to reprice the value of gold in the face of global inflation. This was true even though there were periodic emergency repricings of individual currencies as a result of official devaluations. Notwithstanding the wide divergence between the official price of gold at US$ 36, and the open market, only a token adjustment was suggested, even though the unofficial market price was much higher.
The Fed's attempt to undermine the US dollar has been apparent without this mea culpa:https://s3.amazonaws.com/khudes/usdollar1.pdf
Where do we go from here? Back to what JFK was up to ten days before his assassination: US Treasury bills backed by gold on deposit in the vaults of the Bank of Hawaii. http://www.abovetopsecret.com/forum/thread975838/pg#pid17194170
I thought the silver certificates got him killed.
Sudden onset lead poisoning killed him.
Bitcoin Heist And Jim Rickards On Taper, Janet Yellen and Gold GLD, MUX, TNR.v, GDX
"In this very interesting episode RT is reporting about the hunger for the FIAT Currencies alternatives and how it is driving the Bitcoin Bubble, but it is not The New Gold or even close to it - as we have written before. New security concerns are reported with the cryptocurremcy and Jim Rickards dissects the Currency War situation in the ECB, BOJ and FED race to the bottom. You will find out why Janet Yellen can not Taper and what is behind the Gold and why Gold Standard is still valuable option even today. http://sufiy.blogspot.co.uk/2013/11/bitcoin-heist-and-jim-rickards-on-ta...
IMF will be the last capitalized player at the table cough*SDR*cough
by design
This has been the plan for 35 years, but they waited to long. Since Obama has put the nail in the coffin of the dollar (which was part of HIS original plan), it's doubtful that China/Russia will turn around and allow the west to control a new fiat currency, the SDR.
Things are complicated enough without resorting to making shit up...
Obama never had any such plan...
And the SDR has been around a long time....
http://en.wikipedia.org/wiki/Special_drawing_rights
Dear CHS,
A reserve currency is an oxymoron. The next global reserve asset is already held by central banks and/or in the case of the U.S., The Treasury. The Euro was designed to act as the planet's primary medium of exchange when the dollar collapses to zero in purchasing power. I suggest you revisit FOFOA's blog again to gain more insight.