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40 Central Banks Are Betting This Will Be The Next Reserve Currency

Tyler Durden's picture




 

As we have discussed numerous times, nothing lasts forever - especially reserve currencies - no matter how much one hopes that the status-quo remains so, in the end the exuberant previlege is extorted just one too many times. Headline after headlines shows nations declaring 'interest' or direct discussions in diversifying away from the US dollar... and as SCMP reports, Standard Chartered notes that at least 40 central banks have invested in the Yuan and several more are preparing to do so. The trend is occurring across both emerging markets and developed nation central banks diversifiying into 'other currencies' and "a great number of central banks are in the process of adding yuan to their portfolios." Perhaps most ominously, for king dollar, is the former-IMF manager's warning that "The Yuan may become a de facto reserve currency before it is fully convertible."

The infamous chart that shows nothing lasts forever...

Nothing lasts forever... (especially in light of China's recent comments)

 

As The South China Morning Post reports, Jukka Pihlman, Standard Chartered's Singapore-based global head of central banks and sovereign wealth funds (who formerly worked at the International Monetary Fund advising central banks on asset-management issues), notes that:

At least 40 central banks have invested in the yuan and several others are preparing to do so, putting the mainland currency on the path to reserve status even before full convertibility

The US dollar remains in charge (for now)...but

The US dollar is still the world's most widely held reserve currency, accounting for nearly 33 per cent of global foreign exchange holdings at the end of last year, according to IMF data. That ratio has been declining since 2000, when 55 per cent of the world's reserves were denominated in US dollars.

 

The IMF does not disclose the percentage of reserves held in yuan, but the emerging market countries' share of reserves in "other currencies" has increased by almost 400 per cent since 2003, while that of developed nations grew 200 per cent, according to IMF data.

As SCMP goes on to note, the rising popularity of the yuan among central bankers is probably mainly due to Beijing's extremely favourable treatment of them as it has sought to encourage investment in the yuan.

For example, central banks enjoy preferential treatment in the qualified foreign institutional investor category, both on the size of the quota and the length of the lock-up period. The QFII quotas given to central banks are not publicly known, but some of those announced by investing central banks are up to 10 times larger than others in the programme and, most importantly, free of any capital controls.

 

"Central banks and sovereign funds have special treatment," Pihlman said. "They have the ability to invest in a way that any other investor does not have. When it comes to convertibility, there is nothing formally out there, but it is fully convertible."

As Pihlman explains, things are accelerating...

Pihlman said "a great number of central banks are in the process of adding [yuan] to their portfolios".

 

"The [yuan] has effectively already become a de facto reserve currency because so many central banks have already invested in it," he said. "The [yuan] may become a de facto reserve currency before it is fully convertible."

 

The central banks more likely to add yuan holdings in the future were the ones with "strong trade linkages to China" and those which had relatively large levels of reserves which could consider diversifying more for return-related reasons, he said.

 

"The [yuan's] convertibility may be already there for central banks in a way that has got them comfortable to start investing in the currency," Pihlman said.

We leave it to a former World Bank chief economist, Justin Yifu Lin, to sum it all up...

"the dominance of the greenback is the root cause of global financial and economic crises,"

It appears the world is beginning to listen

 

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Tue, 04/08/2014 - 22:45 | 4637971 Robot Traders Mom
Robot Traders Mom's picture

Just tell me it isn't the 'Shekel'...

 

www.TopTheNews.com 

Tue, 04/08/2014 - 23:02 | 4638025 markmotive
markmotive's picture

China is on the verge of imploding.

"About 20% of China's Economy is Shrinking"

http://www.planbeconomics.com/2014/04/about-20-of-chinas-economy-is-shri...

Tue, 04/08/2014 - 23:07 | 4638056 macholatte
macholatte's picture

 

China = Predator not Protector.

Major political changes will have to take place before the concept of Reserve Country will happen.

Tue, 04/08/2014 - 23:16 | 4638082 0b1knob
0b1knob's picture

So the same "geniuses" who bet everything on NINJA mortgages, credit default swaps and subprime junk are now getting into the Yuan.

The smart play would be to do the opposite of the banks.   

Tue, 04/08/2014 - 23:18 | 4638085 Pladizow
Pladizow's picture

Putin goes to China in May to seal the oil deal!

Tue, 04/08/2014 - 23:35 | 4638124 TruthTalker
TruthTalker's picture

what do you think the US is?

Wed, 04/09/2014 - 02:19 | 4638377 Seek_Truth
Seek_Truth's picture

The image of the beast. - Revelation 13:15

Tue, 04/08/2014 - 23:27 | 4638108 TheReplacement
TheReplacement's picture

But it's okay if they default.  The guy will promise to pay you when he has money. 

Great way to do business.

Wed, 04/09/2014 - 00:01 | 4638175 macholatte
macholatte's picture

 

 

"I would gladly pay you Tuesday for a hamburger today"

-- J. Wellington Wimpy

 

Wed, 04/09/2014 - 07:56 | 4638665 Bill of Rights
Bill of Rights's picture

So if the clowns on CNBC say it it must be true....

Wed, 04/09/2014 - 08:24 | 4638722 ejmoosa
ejmoosa's picture

So if 38% of US companies are making less than they did a year ago, what does that say about us?

Wed, 04/09/2014 - 10:26 | 4638789 Drifter
Drifter's picture

"China is on the verge of imploding."

If China is on the verge of imploding then America has already imploded. If their GDP is 4 down from 8 ours is -4 down from 0. 

They have the factories we don't have anymore.  They have the trade surplus we don't have anymore, and most of their trade surplus is our trade deficit.  50% of their govt budget isn't borrowed money.  Their cental bank isn't buying 80 billion a month of bonds to keep their bond market from imploding, more like 150 billion a month truth be known, and no there ain't any "taper", just going off balance sheet cause it's getting so embarrasing.  Now they have the gold we don't have anymore.

Arrogant Americans point fingers at a few holes in China's economy ignoring the empty hollowed out shell our economy is.  The classic distraction game from American imperialist egos. 

American hubris is astounding.  We have far and away the biggest govt debt on the planet and it's growing faster than everybody else on the planet combined.  We include exported debt, bank bailouts, and other financial shennanigans to make our negative GDP look positive, make up phantom jobs to pad NFP that disappear next month, stop counting large swaths of unemployed to make 26 unemployment look like 6, and every other economic number put out by this govt is a cooked-book lie that would embarrass a snake oil salesman.

Jim Willie says China will shake the world fairly soon now.  Rest of the world is going back on a gold standard whether we like it or not, China will be leading the way, and their asian alliance has a shitload of gold and nuclear weapons to make it stick.  US dollar hegemony and hubris is on the way out the door followed by the Fed, Wall Street, and all the rest.

So go ahead, point fingers all you want.  The paradigm shift is on the way.

Tue, 04/08/2014 - 23:00 | 4638030 SafelyGraze
SafelyGraze's picture

"The Yuan may become a de facto reserve currency before it is fully convertible"

convertible into what

Wed, 04/09/2014 - 01:14 | 4638292 donsluck
donsluck's picture

Oil my friend.

Wed, 04/09/2014 - 06:32 | 4638565 Wahooo
Wahooo's picture

Perfect.

Tue, 04/08/2014 - 23:01 | 4638034 john39
john39's picture

>>shekel

as if the dollar is substantively distinguishable...  

nothing changes until the central bank system is history

Tue, 04/08/2014 - 23:55 | 4638159 theliberalliberal
theliberalliberal's picture

i'll take a pre-1980 shekel just fine

Wed, 04/09/2014 - 02:21 | 4638382 Seek_Truth
Seek_Truth's picture

@john39-exactly.

Wed, 04/09/2014 - 10:50 | 4639169 Treason Season
Treason Season's picture

dbl post

Wed, 04/09/2014 - 10:46 | 4639181 Treason Season
Treason Season's picture

...nothing changes until the central bank system is history...

 

IMHO this is a commonly held myth. The banksters will have positioned themselves accordingly when the US$ suffers its inevitable devaluation. Think of a street shell game on a global scale.

Wed, 04/09/2014 - 06:28 | 4638558 Wahooo
Wahooo's picture

The tribes will control the yuan. Control is in transition.

Wed, 04/09/2014 - 00:56 | 4637975 SgtShaftoe
SgtShaftoe's picture

Wash Rinse Repeat...  Fuck your system and your elitist baton handoff! 

 

Academic weasels have no business directing individual labor, and they won't.  The whole fucking thing is falling apart. 

Top-Down vs. Bottom up (Fight of the Century) - watch it again (really, watch it again - it's like telling the future, but accurately):

https://www.youtube.com/watch?v=GTQnarzmTOc

My favorite line: "Give us a chance to discover the best way to serve one another"

Absolutely beautiful!

Tue, 04/08/2014 - 22:50 | 4637981 I am a Man I am...
I am a Man I am Forty's picture

And there has to be a reserve currency because???????????

Tue, 04/08/2014 - 22:52 | 4637989 SgtShaftoe
SgtShaftoe's picture

Exactly.  It's all bullshit.  See above. 

Tue, 04/08/2014 - 22:58 | 4638018 666
666's picture

The only reserve currency I believe in is gold.

Tue, 04/08/2014 - 23:10 | 4638066 RaiZH
RaiZH's picture

Gold is reserve money... for when people quit playing around with all that paper currency, like they eventually do. 

Tue, 04/08/2014 - 23:22 | 4638095 Milton Waddams
Milton Waddams's picture

It's been edited for "mainstream" consumption, but gold represents the X and Y axis in that chart.

Wed, 04/09/2014 - 02:29 | 4638396 Seek_Truth
Seek_Truth's picture

The only reserve currency I believe in is God.

"Jesus answered, "I am the way and the truth and the life. No one comes to the Father except through me." - John 14:6

 

Wed, 04/09/2014 - 02:45 | 4638420 Tall Tom
Tall Tom's picture

Read Haggai 2:8 and Habbukuk 2:6 onward. Then we will talk about Honest Weights and Measures and the ordained currency of God (Gold and Silver).

 

This is a Financial Blog. Now I am most certain that many here will tell you that I love reading the Bible.

 

But being off topic will just anger the atheists and not serve our God well.

 

I just RESPOND after they bring the topic up.

Wed, 04/09/2014 - 04:06 | 4638454 Seek_Truth
Seek_Truth's picture

http://www.zerohedge.com/about

Rather than repeat it verbatim, there is much leeway as to commentary here.

I could not agree MORE with Haggai 2:8 and Habakkuk 2:6, and even moreso with James 5:1-5:

http://www.biblegateway.com/passage/?search=James+5:1-4

"Now listen, you rich people, weep and wail because of the misery that is coming on you. Your wealth has rotted, and moths have eaten your clothes.  Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. Look! The wages you failed to pay the workers who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty."

This very scripture will be fulfilled in our lifetime.

Wed, 04/09/2014 - 04:17 | 4638493 ebear
ebear's picture

Anything in there about Uranium?

Wed, 04/09/2014 - 04:33 | 4638499 Seek_Truth
Seek_Truth's picture

@ebear - + 1 greenie from me.

Wed, 04/09/2014 - 07:11 | 4638602 fattail
fattail's picture

1Peter 2: 18. Slaves, obey your masters, not only those who are good and considerate, but also those who are harsh.  

Your over lords request you pay your taxes, buy cheap shit from China, root for the red team, or blue it doesn't matter, and shut the hell up.  But never lose your religion because you are so much easier to control in one big group of scared little children.

Wed, 04/09/2014 - 08:39 | 4638764 fiftybagger
fiftybagger's picture

Servants, be subject to your masters with all fear; not only to the good and gentle, but also to the froward.

1 Peter 2:18

King James Version (KJV)

 

You see my friend there are indeed consequences to using the vaticanus manuscripts over the textus receptus.  That's why the Vatican has tried to destroy the Bible for nearly 2 centuries.

http://www.youtube.com/watch?v=GijmNGyBJE0

 

Wed, 04/09/2014 - 08:29 | 4638739 Agstacker
Agstacker's picture
Proverbs 22:7

King James Version (KJV)

The rich ruleth over the poor, and the borrower is servant to the lender.

 

http://www.biblegateway.com/passage/?search=Proverbs%2022:7

Wed, 04/09/2014 - 23:15 | 4641987 Seek_Truth
Seek_Truth's picture

"'They will throw their silver into the streets, and their gold will be treated as a thing unclean. Their silver and gold will not be able to deliver them in the day of the LORD's wrath. It will not satisfy their hunger or fill their stomachs, for it has caused them to stumble into sin." - Ezekiel 7:19

Tue, 04/08/2014 - 22:53 | 4637991 undertowed
undertowed's picture

Be prepared. The scent of a dollar "crash and burn" is in the air.

Tue, 04/08/2014 - 22:57 | 4638009 NoDebt
NoDebt's picture

Tut, tut.  Japan first, thank you.

Tue, 04/08/2014 - 23:43 | 4638137 SgtShaftoe
SgtShaftoe's picture

Yup, you're right, but that wave is going to be 100' tall crashing over 3' sea walls.  It could take everybody out. 

 

"Just because nothing bad has happened over the last 10 min. doesn't mean a disaster isn't 5 seconds away" - ME

Wed, 04/09/2014 - 01:50 | 4638333 Tall Tom
Tall Tom's picture

Which Black Swan are you most likely to choose?

 

Japan Hyperinflation? Yeah. It could happen.

China Property Bubble Pop? Yeah. That may happen before the Japan Hyperinflation.

Euro Meltdown? (We survived that but almost lost it in 2011.)

The Meltdown on the Highly Leveraged Derivatives Market??? It is most likely that it will be a consequence rather than a causal factor.

The Federal Reserve Taper? It may be the match that lit the fuse.

 

Who knows what will cause the calamity. But the certainty is that they will lose containment of contagion as the entire system is Fragile.

 

There are not enough fingers for the holes in the dyke...er...dike...when the dike is made up of fingers.  (The typo was intentional.)

 

The best that you can do is become antifragile through diversity.

 

May the Good Lord be with you as the calamity approaches. It is not a matter of if, but, when.

Wed, 04/09/2014 - 04:35 | 4638500 Seek_Truth
Seek_Truth's picture

+100 for "May the Good Lord be with you as the calamity approaches. It is not a matter of if, but, when."

Tue, 04/08/2014 - 23:02 | 4637996 Pairadimes
Pairadimes's picture

The yuan may very well be the next reserve currency, but not for very long. The Chinese economy does not have the durability to support such a lengthy transition to domination. This is a good thing, since every nation with a central bank is busy destroying the equity in their currencies. The next reserve currency should be 'none of the above'.

Tue, 04/08/2014 - 22:55 | 4638000 Confundido
Confundido's picture

As much as I cannot see the USD continuing to be the reserve currency, I have to disagree with the view that the Yuan will take over. Reserve currencies belong to market, liberty friendly nations. Neither the USA nor China belong to this category. If the yuan becomes pegged to gold, then gold will be the reserve currency, but not the peg.

Tue, 04/08/2014 - 23:14 | 4638075 SgtShaftoe
SgtShaftoe's picture

I think this is the road that those in power have colluded to sell.  If it will work for any measurable length of time remains to be seen.  It certainly won't last long.  I think the IMF SDR (with world influence) is ultimately the direction of travel, but WTF do I know, that's just an educated opinion. 

Wed, 04/09/2014 - 09:28 | 4638893 Raging Debate
Raging Debate's picture

Confundido - The IMF is telling you reality. China already IS the reserve currency. And who says a fascist country can't be the peg? China is where America was at in 1932.

How about attempted gold confiscation by FDR? If you read history America acted fascist in the 1930's and funded fascist Nazi Germany with the goal of a EU, for a bigger potential trade partner. Sad it isn't love that makes the world go around it's money.

During these transitions a lot can go wrong and does. Adolph went full retard. China could act militarily as a distraction if they get large scale rebellions during there depression they have now entered. Russia could feel cornered and betray this alliance if they get squeezed between America, the EU and China and go full retard. You could have military coup here in the US if the bankers don't accelerate learning how to manage the ability of self-determination and I wager the middle class would support such, causing far more dangerous international meddling where we go full retard. It is wise to continue to hedge. If you can't afford residence outside a major metro have 90 days food and water and means to defend yourself, a bug out backpack to survive a couple months (don't forget the wilderness
survival guide!) may save your life.

As for Truth Seeker and scripture: If you have read the bible cover to cover
you may not be so fear focused. Lots of Christians quote Revelations and as an analyst I agree it is coming true, to the letter and to the point. But most ignore the ending which states that the tent of God will reside with man forever and He will wipe every tear from there eye and death will be no more.

Look to science now as well, particularly quantum physics. We're punching holes in 4D. It is now only a matter of this last nasty evolutionary cycle to play out and you'll see fulfillment of that promise in Revelations. I find it useful to balance those that had prophetic visions such as bible writers with understanding the why of things, not just God this or that. I have a relationship with God out of love, not fear. Evolution on this plane is a bitch but we're less than 50 years from not just punching holes in 4D but exploring it. If I had had visions or what not, I refer to that as statistical probability. With quantum physics, it is possible to predict say the weather at 99.7 percent. If I have understanding, it is to do something useful as a servant, note there is a difference between servant and slave.

There is much truth in what was written in "seek God and you will find him" That does not mean one must become a Christian either. Enough said, Tall Tom is right it is a financial blog. Last word, may God bless all of us, including our misguided insider, control freak leadership.

Tue, 04/08/2014 - 22:55 | 4638001 Dr. Engali
Dr. Engali's picture

It seems that events are accelerating in preparation for the collapse of our current system. Goldman's moves if late combined with the fact the morgue is getting out of the commodities business is very telling. You layer chatter like this in there and it's becoming obvious that the world is ready to ditch the dollar. It bares repeating, if you aren't fucking prepared you better get it in gear. Big changes are coming, and it's going to happen fast.

Tue, 04/08/2014 - 22:58 | 4638020 NoDebt
NoDebt's picture

Yes, but Japan is the canary in the coal mine.  They go first.

Tue, 04/08/2014 - 23:01 | 4638033 Dr. Engali
Dr. Engali's picture

It matters little who goes first. If Japan goes the carry trade will drag the U.S. right down with it.

Tue, 04/08/2014 - 23:39 | 4638127 NoDebt
NoDebt's picture

Not without a delay.

We may not have to wait too long to find out how this plays out after all.  Nikkei is bombing downward (bigtime, again) while the rest of Asia is green.  Japan is already toast.  They just haven't admitted it to themselves yet.  

Wed, 04/09/2014 - 01:54 | 4638338 Tall Tom
Tall Tom's picture

Delay times shorten with an exponential collapse. Do not count on that delay to be long lived.

Wed, 04/09/2014 - 08:56 | 4638798 GetZeeGold
GetZeeGold's picture

 

 

Think......"really fast".

 

We came really close to disaster in 2008.

http://www.youtube.com/watch?v=GPYLJoq_40Y

Tue, 04/08/2014 - 23:05 | 4638050 Pairadimes
Pairadimes's picture

Too convenient. Conventional wisdom is watching the USDJPY too closely. The first real cracks will appear elsewhere.

Tue, 04/08/2014 - 23:43 | 4638136 NoDebt
NoDebt's picture

Forget the carry-trade bullshit.  That's for intra-day trading.  Right now, as I type this, the USDJPY is up something like 0.18%.  The Nikkei is down roughly 1.80%.  That's more that carry-trade headwinds can explain. 

Wed, 04/09/2014 - 02:55 | 4638437 Philalethian
Philalethian's picture

Good Dr,

Sometimes the truth rings loudly in words, and resonates deeply in the heart.

Thank you sir for speaking your truth to power. The truly sad truth that it is. Blessings on all your doings.

And blessings on the good doings of all gathered herein this forum of the world greatest thinkers and tinkers of fine worderey.

Wed, 04/09/2014 - 02:56 | 4638438 Philalethian
Philalethian's picture

"It seems that events are accelerating in preparation for the collapse of our current system. Goldman's moves if late combined with the fact the morgue is getting out of the commodities business is very telling. You layer chatter like this in there and it's becoming obvious that the world is ready to ditch the dollar. It bares repeating, if you aren't fucking prepared you better get it in gear. Big changes are coming, and it's going to happen fast."

Good Dr,

Sometimes the truth rings loudly in words, and resonates deeply in the heart.

Thank you sir for speaking your truth to power. The truly sad truth that it is. Blessings on all your doings.

And blessings on the good doings of all gathered herein this forum of the world greatest thinkers and tinkers of fine worderey.

Tue, 04/08/2014 - 22:58 | 4638016 Ignatius
Ignatius's picture

"...at least 40 central banks have invested in the Yuan and several more are preparing to do so."

In poker parlance I believe they call this a tell.

Wed, 04/09/2014 - 04:55 | 4638508 ebear
ebear's picture

I'm gonna run against the herd here and suggest this story doesn't amount to a hill of beans.   China has been moving towards full convertability for some time now.  Seems to me that before they can do that the world's central banks have to hold a certain amount of Yuan as reserves, just as they do every other currency in proportion to its trade weight in their respective economies.

OTOH, if it IS a hill of beans, then it seems more likely this is some sort of back door bail-out of China's banking system, which, if I recall,  holds a lot of foreign debt and might start selling in a panic if things really come unstuck there, which we're already getting hints of.

As for a gold backed Yuan or Ruble:

China and Russia can acquire all the gold they want, but will the rest of the world trust them to remit in gold when the chips are down?   I doubt that very much, and that's where the true test of a gold based reserve lies:  you have to be ready and willing to pay in specie on demand.

OK... so how did that work out for de Gaulle?

 

Tue, 04/08/2014 - 22:58 | 4638017 TruthInSunshine
TruthInSunshine's picture

China will never have the reserve currency. The One Global Government Cartel will attempt to force an alleged weighted-average basket of currency, similar to the SDR that has been spoken of, used as a reserve fiat, to further their social & economic control that they so desire to impose on the stripped-of-real-sovereignty world citizenry - they don't want any nation to ever have a reserve currency again, for the same reasons they wish to disarm citizens.

For those who think that this comment is "time foil-y," do even basic research on the openly endorsed SDR by the IMF to disabuse you of your naivety.

Tue, 04/08/2014 - 23:06 | 4638052 Dr. Engali
Dr. Engali's picture

Agreed. Even if they wanted to China can't support a reserve currency. China has been on the same page as the U.S. since Nixon. The SDR wil be the next global currency.

Tue, 04/08/2014 - 23:23 | 4638096 UselessEater
UselessEater's picture

Which is why the IMF veto vote discussion is getting interesting lets see what happens April 10; also makes the BRICS alternative bank and alternative to SWIFT plans interesting. A basket seems more likely than a single national reserve currency. Lets see how loyal the City of London and Germany are to the USD.

Tue, 04/08/2014 - 23:51 | 4638149 NoDebt
NoDebt's picture

Bullshit.  A "basket" currency made up of some esoteric weighting of individual national currencies would be arbitraged into oblivion.

World reserve currencies don't exist in a vacuum.  They exist becuase somebody has the guns and the leverage to impose them.  

Say what you want about western wet dreams of NWO and supra-national governments, but they don't exist yet.  CHina ain't on board with them, Russia ain't on board with them, India ain't on board with them and it's damned certainty the whole of the middle east (especially Iran) ain't on board with them.

No, for right now, this is still a nation-state-level currency game.  Somebody's gotta be the alpha.  Right now it's the US, but China is in its ascendancy.

Wed, 04/09/2014 - 00:22 | 4638211 Bear
Bear's picture

Thanks for your rationality ... it is far too easy to see the lunacy of the USD and its global status that most thinking souls have concluded that it is worthless paper. However, travel almost anywhere in the world and your dollar will appear like gold to the locals. There is a global shadow banking system and it is anchored by the dollar

Wed, 04/09/2014 - 02:02 | 4638349 Tall Tom
Tall Tom's picture

That Dollar Anchoring of the Global Grey and Black Market, too, has been diminishing in recent years.

 

The erosion begins so imperceptably slow at first and then accelerates with growing increments of velocity change, in the same measured time periods, at the very end.

 

Exponential Growth and Exponential Collapse are truly misunderstood by most. It is most spectacular and remarkable as a physical phenomena. Ever watch a structure collapse?

Wed, 04/09/2014 - 00:53 | 4638258 UselessEater
UselessEater's picture

OK I have no wet dreams about the NWO.

We'll see how the basket goes.

The USA is being broken, marginalised and isolated. More nations are engaging in direct trade and currency swaps.

Gold is freely moving west to east.

You are being sold out and the idea of alpha is being redefined. We are 'global' not soverign.

Wed, 04/09/2014 - 08:02 | 4638681 Snidley Whipsnae
Snidley Whipsnae's picture

No Debt, I gotta go with you in this discussion. IMF is a US puppet and unless IMF is restructured to allow all big powers equal say in it's operations it will remain in the backwaters and the SDR will remain the oneworlders wet dream. If IMF offers equal power sharing with China, Russia, Iran, et al, then the IMF could become a power house but I don't see this happening.

Meanwhile, China, Russia, et al, are building up the SCO, the BRICS bank, BRICS payment system, etc. If the BRICS were treated like equals by the IMF then none of these work a rounds would be necessary.

This is a high stakes game with the winner taking all... or, the lions share.

I am the peanut gallery.

Tue, 04/08/2014 - 23:53 | 4638155 Seeking Aphids
Seeking Aphids's picture

Not to mention the fact that the Chinese themselves have floated the SDR basket of currencies idea and seem quite happy with it....the US has shown the folly of allowing any one country to have the global reserve currency - it will never be possible again once the $US is deposed.

Wed, 04/09/2014 - 09:59 | 4638975 StupidEarthlings
StupidEarthlings's picture

This whole "basket of currencies" idea (which is a term I friggin hate btw) seems like an idea that came from someone that knows they are on the short end of the stick soon (kinda like the USD) . It just seems like a way they can still have their worthless crap still included in the future.

 

Anyone that knows that they are in a good position , wouldnt want to share with one in a bad position.. (imo of course)

 

Ya know..one bad apple spoils the bunch and all that.

Tue, 04/08/2014 - 23:51 | 4638151 Ocean22
Ocean22's picture

With gold as common demoninator.

Tue, 04/08/2014 - 22:59 | 4638023 db51
db51's picture

Explain to me, a novice, exactly what happens when the Dollar loses it's Reserve Status?   Get prepared?   For what?  and how?   Guess I need to be invested in lead.

Tue, 04/08/2014 - 23:15 | 4638079 Pairadimes
Pairadimes's picture

Short answer - US loses the ability to export inflation, and dollars stop participating in international wealth creation and exchange while dollar-denominated debt starts flooding back to the Fed. Fed's grossly inflationary posture finally uncoils like a loaded spring. The purchasing power of the dollar disappears almost overnight. That's when we discover what it really meant when we spent the last several decades moving almost all our manufacturing overseas. Every drawer will be full of FRNs, with nothing on store shelves to buy.

It's all about trust - when enough nations decide they can no longer trust the ability of the dollar to retain its value, things will start to happen very fast. No one knows where that threshold is, however.

Tue, 04/08/2014 - 23:39 | 4638129 McMolotov
McMolotov's picture

So it won't be too bad. That was a close one...

Wed, 04/09/2014 - 02:06 | 4638355 Tall Tom
Tall Tom's picture

Good short answer. Spot on.

 

We lose it when Saudi Arabia turns its back on the US Dollar and Oil is no longer purchased in Dollars exclusively.

 

When the Saudis start taking Yuan for Oil then it is the End Game for the Petrodollar and the World Reserve Currency status.

Wed, 04/09/2014 - 05:45 | 4638533 The wheels on t...
The wheels on the bus are going to fall off's picture

This would be the final nail in the coffin and a big one, the only issue is, who will protect Saudi when the US create a false flag and bomb the shit out of them.

I have no doubt that the US dollar is on its way to destruction but my concern is, is the US just going to let this happen?

Wed, 04/09/2014 - 06:57 | 4638587 Ace Ventura
Ace Ventura's picture

Whether the US government lets it happen or not.......depends entirely on the globalists that own it. I tend to think they WANT the dollar destroyed, in order to usher in their one-world currency. However, their ultimate dream is a completely electronic currency, wherein they don't even have to go to the trouble of printing actual toy money. The proverbial "cashless society" is the true endgame. On the other hand....nothing beats war when it comes to generating profits for them, so it's quite possible.....even likely.....that they will choose BOTH to let the dollar implode, as they simultaneously try to 'preserve' it by starting another hot war.

Kind of a win-win for the vile, parasitic, life-sucking, demonic hellspawn bankster ghouls running the show.

Wed, 04/09/2014 - 13:51 | 4639964 WillyGroper
WillyGroper's picture

A cashless society will make it a bit more difficult for the USG to launder their heroin $$$.

Wed, 04/09/2014 - 08:24 | 4638723 Snidley Whipsnae
Snidley Whipsnae's picture

"When the Saudis start taking Yuan for Oil then it is the End Game for the Petrodollar and the World Reserve Currency status."

Saudi oil reserves are a closely held secret. How long can the Gawr (sp?) field continue to pump 8-12 million bbls per day? If Saudi reserves are near rapid decline then the entire global energy picture changes and the global financial system changes with it. If Saudi Arabia becomes a smaller player then Russia becomes a bigger player.

Just something to consider... and, as Another said 'oil and gold never flow in the same direction'. 


Tue, 04/08/2014 - 23:27 | 4638109 BooMushroom
BooMushroom's picture

Sure. When the dollar loses reserve status, whether officially or unofficially, that means that governments, banks, and people decide not to keep dollars on hand for ongoing expenses, or savings. That means that all those dollars get spent, slowly, then quickly, for other currencies or goods. When all those new dollars are chasing the same goods, their value declines. And since it is no longer the reserve currency, the number of countries you can spend them in declines as well. So instead of the dollars being spent or held all over the world, they all come back to the USA. Triple digit inflation easy. The only question is whether it happens in six months, 1,2,5, or 10 years. The quicker it happens, the more painful it will be.

Wed, 04/09/2014 - 05:08 | 4638520 ebear
ebear's picture

"So instead of the dollars being spent or held all over the world, they all come back to the USA."

Not if the US defaults.   A good percentage of those dollars then go poof!

Of course that has other ramifications...

Wed, 04/09/2014 - 11:36 | 4639393 GoldIsMoney
GoldIsMoney's picture

"The quicker it happens, the more painful it will be."

 

I guess you meant the later it happens, the more painful it will get or am I missing something?

Wed, 04/09/2014 - 03:38 | 4638467 Seek_Truth
Seek_Truth's picture

Things will go downhill fast for materialists.

Hedge accordingly.

Long God!

http://www.biblegateway.com/passage/?search=Revelation+18&version=NKJV

 

Wed, 04/09/2014 - 05:10 | 4638521 ebear
ebear's picture


Insha' Allah

Wed, 04/09/2014 - 12:09 | 4639531 ebear
ebear's picture

Sorry.... wrong god.

Tue, 04/08/2014 - 22:59 | 4638024 cbaba
cbaba's picture

This should be the flash news of the day.

Tue, 04/08/2014 - 23:02 | 4638038 Dr. Engali
Dr. Engali's picture

The flash news of the day is the squid's latest move. They are up to something and it's big.

Tue, 04/08/2014 - 23:24 | 4638097 Milestones
Milestones's picture

I agree--and I too think it will be a ball buster-but there will be at least one other bank iinvolved.             Milestones

Tue, 04/08/2014 - 23:34 | 4638120 Pairadimes
Pairadimes's picture

Squid Vicious.

Wed, 04/09/2014 - 00:21 | 4638210 Kirk2NCC1701
Kirk2NCC1701's picture

...and The Sachs Pistols.

Tue, 04/08/2014 - 23:45 | 4638139 seek
seek's picture

Yes. It's too bad BATS didn't go through with their IPO, that's one hell of a short opportunity if it were.

GS is clearly OK walking away from their investment in BATS, so it tells you there's much bigger returns elsewhere.

And don't forget that Goldman bailed out of the NYSE floor on April 1st as well. They're sending huge signals that the excahnge environment is about to change radically.

Tue, 04/08/2014 - 23:02 | 4638036 Ralph Spoilsport
Ralph Spoilsport's picture

"In for a Jiao, in for a Yuan."

"Motherfucker dropped a Jiao on me!"

Jiaobag Daryyl

Tue, 04/08/2014 - 23:16 | 4638080 yogibear
yogibear's picture

Russia and China in charge of a few HFTs could  affect the markets. Take down the economy and the US dollar and the countries don't have to fire a shot.

Tue, 04/08/2014 - 23:28 | 4638112 Seasmoke
Seasmoke's picture

50,000USD =

Tue, 04/08/2014 - 23:53 | 4638153 slightlyskeptical
slightlyskeptical's picture

It will be a potpouri of currencies in a reserve basket:

20% US Dollar

10% Euro

10% Ruble

10% Yuan

10% Yen

10% Pound

10% Rand

5% Real

5% Aussie Dollar

5% Canadian Dollar

5% Middle East Currency

 

 

 

 

Wed, 04/09/2014 - 00:11 | 4638189 Bear
Bear's picture

With this setup the world would be in a constant state of confusion ... even more than it already is

Wed, 04/09/2014 - 00:09 | 4638190 Bear
Bear's picture

Looks like a 'fee-for-all'

Wed, 04/09/2014 - 00:26 | 4638218 Kirk2NCC1701
Kirk2NCC1701's picture

You're suggesting that the BRICs get 35% and Club Fed & Friends get 65%.

Yeah, right, like that's gonna fly.

Wed, 04/09/2014 - 02:10 | 4638362 Tall Tom
Tall Tom's picture

Whatever it turns out to be it will be commodity backed. Either by Oil or by Gold.

 

Who has the Oil and who has the Gold?

Wed, 04/09/2014 - 04:24 | 4638497 effendi
effendi's picture

That mix of currencies leaves out half the world. Big countries like India, Indonesia, Brazil and Korea are not on your list and having the Rand at 10% and the same as the Euro?

 

Wed, 04/09/2014 - 05:25 | 4638529 ebear
ebear's picture

 

 

.005% Iceland krona

.000000000000000000000000000000000005% Zimbabwe dollar

Tue, 04/08/2014 - 23:55 | 4638160 db51
db51's picture

Thanks for the answers to my question.   I'll sleep well tonight knowing that Lord Blankfein is doing The Lord's work as I slumber.   Night all.

Tue, 04/08/2014 - 23:56 | 4638162 New American Re...
New American Revolution's picture

I don't think it will be just the yuan, but more of a gold basket of currencies which will comprise the new world reserve currency.  It will however, still be a phoney gold standard, and the one with the greatest perceived gold value will benefit the most; and eventually, like all phoney gold standards, its ability to maintain the illusion still has an expiration date based upon the speed of beggar thy neighbor in the race to the bottom.  And somewhere in that transition there is a very high risk of a widespread shooting war.   I file it all under "Not A Perfect World."   www.electanewcongress.com

Tue, 04/08/2014 - 23:57 | 4638166 Handful of Dust
Handful of Dust's picture

Can't stop the inevitable, can you.

Wed, 04/09/2014 - 04:03 | 4638484 kurt
kurt's picture

I up arrowed you. The face, the Handful of Dust. I don't know if I like you more or less than Whif of Nothing, Forgotten Dreams of a Hamster, A Gnat's Life, Here and Gone, Ice Cream Wrapper, or Faaaaaahhhh

Wed, 04/09/2014 - 07:59 | 4638675 shovelhead
shovelhead's picture

How about a fart in a mitten?

Tue, 04/08/2014 - 23:57 | 4638168 NoWayJose
NoWayJose's picture

Reserve currencies have already gone the way of the human floor trader and the dinosaur. You used to need one because information traveled as fast as a ship could sail. No one set cross currency exchange rates for all currencies, so you only knew your own country's rate versus the reserve currency. Today you can get currency exchange rates on-line instantly, 24-7, for all currency pairs. China and Russia are already doing direct non-reserve agreements with other countries.

It is not the status of reserve currency that wil crush the US - it is the end of the otherwise obsolete Petro-Dollar. When countries decide that they do not need to first convert to dollars, but rather can swap directly at currency market rates, then they can dump dollars. But remember, for every country like Russia or China that want out of the Petro-dollar, there are even more that want itbto stay because they fear the potential for manipulation of any thinly traded currency pairs.

Wed, 04/09/2014 - 00:09 | 4638188 Quaderratic Probing
Quaderratic Probing's picture

We print 1 USD and China prints 6 YUAN to keep the YUAN fixed to the USD. Pick your printer both guilty net neutral.

40 Central Banks are buying YUAN, Hmmm buy low sell high. These banks think the Yaun is going higher. Makes sence to protect against US exported inflation China will let it float higher ( a bit )

Or are they printing their own currency to lower it and force the Yaun higher, They win twice more competitive local manufacturing and a higher YUAN to sell latter. Maybe they are selling Gold to force it down and raising cash for YUAN buying.

Good old money making this is not the Global conspiracy you are looking for

Wed, 04/09/2014 - 00:37 | 4638212 Radical Marijuana
Radical Marijuana's picture

Indeed, nothing lasts forever, and the bigger they are, the harder they fall. However, this was merely another typical article providing a little superficial good analysis of a few facts, followed by pointing vaguely towards old-fashioned bullshit "solutions," which are ridiculously optimistic:

"the dominance of the greenback is the root cause of global financial and economic crises"

Hah! The problems that the human species has created for itself are trillions of times worse that merely the current completely crazy and corrupt financial accounting system, which has had the US dollar, made out of nothing as debts by private banks, dominating the world since the end of World War II

We are headed towards Peak Insanities in the form of a Global Government based upon SDRs, as the ultimate "kicking of the can upstairs," while nothing whatsoever about that fake "solution" faces the basic problem that money is measurement backed by murder. The biggest problems we face are how to operate saner murder systems, to back up saner monetary systems. There is absolutely nothing to be found in switching to the Yuan or to SDRs which is not just more of the same old insanities, still peaking!

We rush towards our exponential growth reaching the real limits of planet Earth, where upon we discover that we have been overshooting so severely, since everything was based on being able to strip-mine a fresh planet, and there was never the slightest chance that anything else happen, than that the world was controlled by lies, backed by violence, directing everything to happen, in such a way that we generally regarded turning natural resources into garbage and pollution, as fast as possible, as a great thing to do.

All of the plans for the future that I am aware of are criminally insane attempts to keep Neolithic Civilization going, in the same old-fashioned ways, which are patently impossible. There are plenty of theoretical alternatives, but all of those would require a series of political miracles to ever be implemented. When I start to hear significant political leaders talking about how they are going to actually operate better death controls, to back up better debt controls, then I will believe that the human species is finally addressing its real problems forthrightly.

Without that, then there can be no better human ecology, which then means that there can not be any better industrial ecology, and also no way to save natural ecologies. While it is plainly obvious that the human population can not keep on endlessly growing at an exponential rate, nor can its economic activities keep on doing that either, the basic premise behind all of the ideas for "reforms" that I am aware of are based upon either not facing those facts, or covertly preparing to face them in ways which will become expressions of the Peak Insanities, which will accompany Peak Everything Else.

In my view, clearly the real problem is that the currently established systems are globalized electronic fiat frauds, backed by the threat of atomic bombs. The notions that we can keep that going by switching over to a different form of fiat "money," such as Yuan, or SDRs, is laughable to someone with a macabre sense of humour. The real problems we face are trillions of times worse than ever before in human history, because everything we do is controlled by the historical habits of previously successfully operated murder systems, backing up monetary systems.

Our profound problem is how to operate a murder system after the development of weapons of mass destruction. There can be no genuine resolution of the crazy collapsing of the previous systems without some better resolution to that issue. This kind of article is based on the typical bullshit of presuming that governments which were previously able to operate the death controls, to back up the debt controls, are able to cope sanely with technologies becoming trillions of times more powerful and capable, by merely continuing to swing through the same old jungle, like brachiating primates, swinging from one reserve currency to another.

The currently established systems were built on the basis of some human beings being able to get away with enforcing frauds against other human beings, while they were all able to collectively ignore the overall natural environment in which that was being done. In that context, the only thing that mattered was being able to back up lies with violence. That the resulting behavior operated with superlative levels of evil deliberate ignorance towards the actual longer term consequences of the actions controlled by those lies did not need to do anything else than continue to be able to enforce itself, by continuing to be able to back up it bigger lies, with more violence.

Switching over to any different kind of fiat reserve currency, as well as the nostalgic nonsense of going back to commodity backed forms of money, are pathetically inadequate, except inside of the context of taking for granted that the human systems will be able to continue to operate through some people being able to coerce others, while the resulting collective deliberate ignorance that engenders does not matter.

All of the biggest banks have become criminally insane monsters. They are excellent examples of being able to operate through a fraudulent monetary system which takes no responsibility for the murder systems that back that up. The deeper truth is that there are no genuinely better resolutions for human problems than some better human murder systems, operating better death controls, and that is why our real problems are trillions of times worse than what most goofball financial articles ever address.

From the point of view of the ecological environment, the established economic systems could barely be imagined to be much more insane than they already are. Furthermore, within that context, nobody who is successful within those entrenched systems, such as the biggest banks, will entertain the slightest degree of more reality regarding how they operate on the basis of taking for granted everything that was historically necessary for them to develop in the first place.

People currently making "money" are doing so through a fundamentally fraudulent financial accounting system, which gets away with maintaining attitudes of evil deliberate ignorance towards itself. The more successful they were at making that kind of "money," the more social tokens of success that they believe that they have accumulated, and therefore, believe that they should be able to keep, even if they have to transfer some of them into new forms of fiat money, or possessions. However, the basic real facts are that they are actually operating organized systems of lies and robberies, which are never fully faced, but rather, continue being done through attitudes of evil deliberate ignorance towards the resulting runaway social polarization and destruction of the natural world.

Since Neolithic Civilization was a social pyramid system based on being able to back up lies with violence, that is the real problem that we face! After science provides technologies which are trillions of times more powerful and capable, the problems created by fraudulent monetary systems, backed by deceitful murder systems, become amplified trillions of times. Articles like this one above presume that somehow we can all keep on going, by switching the superficial forms of how those enforced frauds have their symbolic expressions substituted for other symbolic expressions.

China has the same sorts of problems that everywhere else has, only generally way more so. The whole world has the same problems! Therefore, nothing about the Yuan, nor SDRs, nor anything else, provides any genuinely better solutions. Furthermore, there is nothing in the nostalgic nonsense about being able to go return to commodity backed forms of money which come remotely close to dealing with the deeper nature of our problems.

The only theoretical solutions which are possible require intellectual scientific revolutions which would apply to politics, and especially to militarism, so that there could be better murder systems, to back up the death controls, which would be necessary to run the debt controls in monetary systems which were consistent with operating through the evolutionary ecologies of energy systems.

However, since all of the entrenched established systems are based on successfully operating frauds, backed by force (that mostly get away with their attitudes of evil deliberate ignorance towards all of that, since the current systems are based upon being able to back up legalized lies, with legalized violence, as done by professional liars and immaculate hypocrites, who excel at lying about all of that to everyone, including themselves, as well as others), the growing Grand Canyon of Paradoxes due to progress in science and technology manifesting inside of social pyramid systems that are based on backing up lies with violence, in ways which excel at doing that through being able to deny and suppress awareness of those facts, has generated a runaway globalized criminally insane civilization.

Wed, 04/09/2014 - 01:11 | 4638284 teslaberry
teslaberry's picture

radical pot brain---

 

if humanity survived the black plague. it can survive eveyr least city of the 21st millenium being atomized. 

 

what you are worried about is civlization. what's to worry? if things are terrible and only getting worse, than just enjoy what you can while you can.....

Wed, 04/09/2014 - 02:27 | 4638391 Tall Tom
Tall Tom's picture

Yeah. Fuck your children and your grandchildren. Yeah. Who needs to leave a legacy?

 

Why shall you have any concern about anyone else?

 

After all it is all about you, right, teslaberry?

 

Have you ever read about NARCISSISM? Psychopaths are Narcissistic.

 

Humanity will not survive a Nuclear Winter teslaberry.

 

But you are the typical person of whom I was writing about earlier today. There is no hope whatsoever because of people as yourself.

 

And you are not about to change so I do not delude myself into expecting that.

 

So RM writes the requiem of a dying world. But most are too self absorbed, too myopic, and too bitemporally hemianopic to understand it.

 

So I have accepted it and I am at peace with it.

 

And you are so deserving of the aftermath.

 

So maybe you will linger on for some time after receving your burns. Perhaps you need to feel it and know what it was like for so many others.

Wed, 04/09/2014 - 05:18 | 4638526 TeraByte
TeraByte's picture

Unfortunately you have nailed it quite right.

Wed, 04/09/2014 - 05:37 | 4638531 ebear
ebear's picture

"We rush towards our exponential growth reaching the real limits of planet Earth"

Or the Zero Hedge word count, which I've noticed is inversely proportional to the meaningful content.

Wed, 04/09/2014 - 07:19 | 4638611 SmallerGovNow2
SmallerGovNow2's picture

After a quite lengthy (and excellent I might add) rant, let me point out that no one is saying yuan reserve currency is THE solution.  Simply pointing out that it may be the next failed attempt...

Wed, 04/09/2014 - 15:19 | 4640327 Radical Marijuana
Radical Marijuana's picture

I agree, SmallerGovNow2.

Metaphorically, my point was that switching from one reserve currency to another was like brachiating primates, swinging through the jungle, while the bigger picture was that jungle was changing towards becoming a savanna.

The fundamental facts were that Neolithic Civilization emerged onto a fresh planet, which it could exploit, without having to be aware of the general environmental ecology, and therefore being able to take no responsibility for activities which destroyed that life-support system, which used to be so big compared to humans that we could continue to take it for granted, while we were killing it off with thousands of cuts, being made faster and faster, at an exponentially accelerating rate. Our economic system is based upon being able to strip-mine a fresh planet, while turning its natural capital into garbage and pollution as fast as possible, which process was directed by the people who were the best at being dishonest, and backing that up with violence.

The fundamental problems are all related to the limits of a finite planet, which are being approached at an exponentially accelerating rate. The fraudulent financial accounting systems that we operate now are based upon being able to finance strip-mining the whole planet, in ways which are of benefit to the current strip-miners, who are able to do that because they can use some of the benefits they thereby obtain to generate the force to back up their frauds.

Human beings have always operated as robbers in their environment, to the degree that we define them as separate from their environment, and they become worse robbers the more alienated they perceive themselves from their environments. Human civilization must necessarily operate as an assemblage of entropic pumps of energy and matter. Theoretically, it is possible to imagine better systems of human ecology and industrial ecology evolving to cope with the limits of the environment. However, the basic systems that exist NOW are based on lies backed by violence, and attitudes of evil deliberate ignorance, because the current systems are based upon frauds backed by force, that deliberately deny and suppress the truth about themselves, while burying the basic facts under bigger and bigger mountains of bullshit.

We should have a monetary system which makes sense in terms of general energy systems (which includes a radically different understanding of entropy), because such a monetary system embraces understanding how and why money is actually measurement backed by murder. All human realities are always organized systems of lies, operating robberies. Governments are the biggest forms of organized crime, controlled by the best organized gangs of criminals. In that contest, developing a monetary system which is more scientific has to go through much more profound paradigm shifts than anything like merely another attempt at developing another reserve currency, regardless of whether or not it pretends to be backed by some commodities.

The deepest problem with understanding a better money system is that it must face the profound paradoxes that general energy systems are controlled by their most labile components, which, in human terms, means by the most dishonest and violent people, which are the ruling classes of the social pyramid systems, which are becoming more criminally insane, faster, because they live in the most protected environments, which therefore enables them to least encounter the consequences of what they are really doing overall.

My main point is that the human species can not survive the exponential growth of scientific knowledge and technological power unless its politics goes through just as profound paradigm shifts as its other basic sciences already have. (As well, there needs to be more profound paradigm shifts in basic sciences too, because those also were often victims of the biggest bullies' bullshit becoming triumphant.) The corollary to that is all of the currently dominate religions and ideologies should be transformed by being put through the process of perceiving them differently, as all the rest of our politics is perceived differently.

Meanwhile, it is quite natural that people are trying to adapt by changing the minimum necessary in order to stay the same. However, it is clear that we are reached a bunch of turning or tipping points, which are going to force more drastic transformations. Therefore, going through some phases towards a different reserve currency may well happen, as a transitory attempt to continue to cope. However, nothing which is being promoted significantly in the public spaces is remotely close, so far, to coping with the two basic facts of exponential progress in science and technology, and exponential strip-mining of the planet.

My view is that we should try to develop a monetary system which is as consistent as possible with that being done through an approach based on understanding the evolutionary ecologies of general energy systems, along with a radical critique of the current conceptualization of entropy. That is actually how to best understand the monetary system that already exists, and therefore, that is the best way to perhaps understand how to develop a better monetary system.

Wed, 04/09/2014 - 00:25 | 4638215 matrix2012
matrix2012's picture

Zero Hedge seriously missed the GOLD factor in the World Reserve Currency chart.

 

Here's an improved chart showing the gold plunder under colonialism as well.

Wed, 04/09/2014 - 00:31 | 4638225 Yen Cross
Yen Cross's picture

   So I'm sitting here looking at the dxy chart and thought I'd share it.

 http://i.imgur.com/TJVuKcn.png  

   This is a 10 day dxy hourly chart with "vwap light blue line" and "pvp solid red line". It has 3 standard deviations on each side of vwap and the shaded area is the volume histogram. It gives an idea of how oversold the usd icurrently is and why I expect a retrace over the next 12 hours.

Wed, 04/09/2014 - 00:45 | 4638248 Kirk2NCC1701
Kirk2NCC1701's picture

Am rather surprised and disappointed that the authors missed the obvious Alternative Scenario:

A group of REGIONAL RESERVE CURRENCIES (RRC), backed by Precious Energy or PM (Gold). Russia will back the Rouble with Gas+Oil (as will Iran); China, India etc will back theirs with gold.

The USD will still be the Bigshot of NAFTA and where they will keep using their Petro-Dollar in its demoted status. The other regions will each have their own RRC. E.g. Euro, Real, etc.

Under this scenario, the CBs are simply doing the opposite of zero hedge: All Hedge.

Sheesh.

Wed, 04/09/2014 - 05:46 | 4638534 ebear
ebear's picture

To back something with something it has to be something someone wants (whew!).

Ironically, those are the things we're least inclined to part with, especially in the face of shrinking supply.

Wed, 04/09/2014 - 09:54 | 4638250 evernewecon
evernewecon's picture

 

 

 

Regardless of how kookie our

own leaders are, and though the

rank and file Chinese is 

undoubtedly a nice person

(as Americans we're all people,)

I can't say that we should 

actually want to see the dollar

lose reserve currency status.

 

With this, I wouldn't say it's

a done deal.

 

(I'm linking a search simply to

offer the issue of course.)

 

 

https://duckduckgo.com/?q=yuan+dollar+peg+partial+peg

 

This is inventive, and our own leaders 

encourage it, saying the yuan's undervalued

 

 

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a04ESaRrTpcU

 

 

and yet there's this (I'm clueless as to the underlying facts:)

 

 

http://truth-out.org/news/item/20362-everyday-low-wages-at-walmart-broug...

Dean Baker: "Everyday Low Wages at Walmart: Brought to You by Government Policy"

 

Quarterly sales $130 B

http://www.google.com/finance?q=NYSE%3AWMT&fstype=ii&ei=rlBFU5ibHuOeiALkGg

 

(I'd say democracy there and here and collective 

bargaining there and less doing what Dean Baker

says we're doing and if all fails if you're democratic

and we're democratic and not serving just rich

people with puppets, then we can always trade 

temporary concessions.)

 

 

Now, Mr. Soros at one time 

thought the euro was toast, 

I think.

 

There may be a nuclear 

physicist here or there 

who thinks Fukushima's a

ceiling for the yen, which

people may increasingly shun

because of it.

 

 

But if the dollar's to matter, it

should be maintained 

democratically.

 

Our own leaders have shafted

the dollar in the process of enabling

free reserves for TBTF banks, and 

welcoming currency devaluation to 

lift their collateral prices.

 

There's nothing democratic about it.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wed, 04/09/2014 - 00:49 | 4638252 freedogger
freedogger's picture

20 years out if we don't nuke ourselves to oblivion - safe bet that most manufacturing will all be robotic. Will it still make sense to ship manufactured goods at that point? I could imagine some of that lost manufacturing could be returning.

Wed, 04/09/2014 - 01:10 | 4638279 kurt
kurt's picture

Probably won't be Gulagamerica in that short of a timeline.

Wed, 04/09/2014 - 01:12 | 4638285 evernewecon
evernewecon's picture

interesting (freedogger's)

Wed, 04/09/2014 - 00:50 | 4638254 WTFUD
WTFUD's picture

SDR = Basket Case

Wed, 04/09/2014 - 00:51 | 4638255 Bear
Bear's picture

The Chinese are feverishly tying to get out of yuan denominated assets and into dollar asset ... watch fiatleak for a few minutes and watch the transaction volume in China vs everywhere else ... I live in CA and China's millionaires are flooding into the area. I think those that really know China are enjoying the ride but want to be in the US (and in USD) when the music stops. I don't see a lot of US millionaires heading for China or trying to acquire Chinese assets ... except Jim Rogers and he only went as far as Singapore.

Wed, 04/09/2014 - 05:53 | 4638535 ebear
ebear's picture

Exactly.  The place is falling apart like a Robert Hall suit.

Wed, 04/09/2014 - 01:02 | 4638270 WTFUD
WTFUD's picture

@ Crazy ' Bear '

The number of foreigners (across all spectrums) learning the Chinese languages are 1000 fold the number of thieves fleeing china to ussa/west.

Wed, 04/09/2014 - 01:47 | 4638332 Dr. Sandi
Dr. Sandi's picture

A peasant needs to know the language of the boss to beg from him.

Wed, 04/09/2014 - 06:08 | 4638541 ebear
ebear's picture

As were the number of foreigners learning Japanese 25 years ago.

Good luck ever being able to read Chinese BTW.  Especially hand writing.

Wed, 04/09/2014 - 01:11 | 4638280 honestann
honestann's picture

What's the phrase?
Red Herring?
Red Fish?

The problem is FIAT, not any particular version thereof.

Talk about a lame attempt to make weak minded fools take their eye off the ball... and actually, off the entire game (FIAT).

Sigh.  As usual, almost nobody wants to "get real".

Wed, 04/09/2014 - 02:32 | 4638403 Tall Tom
Tall Tom's picture

There are NO POLITICAL SOLUTIONS. Nobody in power will get real as to get real will mean a subsequent loss of power. It is not about the Fiat Currency but it is about the power to control others.

 

That is why they hate Gold as it empowers the owner.

Wed, 04/09/2014 - 15:57 | 4640529 honestann
honestann's picture

Yes, FIAT is definitely not the whole problem, but FIAT is a very important part of the problem, because it makes possible, and makes virulent and strong a great deal of the other aspects of the endless so-called "political solutions"... all of which are harmful.

In other words, by means of FIAT, a small pack of predators-that-be abuse and often dominate everyone else.  Even those of us who completely abandoned fiat and other paper "instruments" are fleeced by the existence of fiat, because the fiat system substantially to massively increases the cost of ALL products by creating artificial demand and enabling thoughtless consumption and financial decision making (example: people no longer ask themselves whether they have enough savings to buy a home, or even whether they can afford to buy a home, only whether they have (or can borrow) enough to put a down-payment on a home).

So yeah, FIAT is far from the "only problem", but fiat is at the root of a great many of them, and enables most of them.

Wed, 04/09/2014 - 01:13 | 4638290 Schmuck Raker
Schmuck Raker's picture

Well if the Central Banks are doing it then we can all rest assured that it is in our best interest.

Wed, 04/09/2014 - 01:55 | 4638337 ebworthen
ebworthen's picture

I just want gold at $50,000/troy ounce, or equivalent.

The U.S. is utterly corrupt, therefore the Dollar as well.

Fair wage for a day's work the world over is what is needed.

Wed, 04/09/2014 - 01:57 | 4638341 I Write Code
I Write Code's picture

Obambus say: He who print fastest print best.

Wed, 04/09/2014 - 02:00 | 4638344 lasvegaspersona
lasvegaspersona's picture

I'd like to know what the world will look like when the Fed's efforts to control interest rates (by buying them down presumably) fails. Will it end in fire, ice or a bang or whimper? I'm thinking an exciting firey bang...but it is hard to really know what is happening because only the few are allowed to know.

Wed, 04/09/2014 - 02:21 | 4638381 Nehweh Gahnin
Nehweh Gahnin's picture

Sheeeeet.  Ain't gonna be no reserve currency, doncha yuan know.  *pop*  *pop*  *pop*

That's the sound of bubbles, fizzing like champagne all over the globe.  If you want to worry about China, worry about the boat people (raiders -- think Oriental vikings) that will be flowing to PNW shores as civil war, ecological devastation, famine and plague render not only the Middle Kingdom, but also the Shining City on the Hill, smoldering wrecks of human misery and destruction.

It's gonna be a long ride folks, and the shit's going down now.  Prepare your grandchildren.

Wed, 04/09/2014 - 02:28 | 4638393 Watson
Watson's picture

Of course the Yuan is going to become the next reserve currency.

To become a reserve currency, all the following need to be true:
1. You have an economy substantial in comparision to the total world economy;
2. You have run surpluses for some time, and no-one thinks this will change in the near future;
3. You place no restrictions on the ownership or transfer of your currency.

The US abandoned test 2 for various reasons (including the financing of the Vietnam war), but no credible alternative appeared.

China just needs to announce tomorrow that Yuan (and Chinese government bonds) can be held and transferred without restrictions, and the Yuan is the world's new Dollar...and the UST market will not like that situation.

Tylers: Any chance of putting the number of years each currency was reserve onto the graph (say inside respective dark blue boxes)?

Watson

Wed, 04/09/2014 - 03:11 | 4638448 vyeung
vyeung's picture

There's more to it than meets the eye. Forget SCMP comments, they are clueless bunch of retards.

Wed, 04/09/2014 - 04:11 | 4638482 inky
inky's picture

 

Yep it looks as if its all going to plan !

It does look like the monetary end game in the usa is near to an end.the dollar has lost most of its value,the banksters are now at the point where they are squeezing the last few drops out of the sponge.

Then when that is more or less dry,they will then pass the baton (currency reserve) to the next country who ever that may be.

Then the wealth and prosperity cycle will be in play again (fattening up the livestock) and then once again rinse and repeat.

The sad thing about it all is that most of the sheeple will not even notice/question what is being done to them and their accumulated wealth.They will just go along with it all & think that this is just the way things are.

 

Wed, 04/09/2014 - 04:09 | 4638488 the tower
the tower's picture

Surprise, there won't be a next reserve currency.

Nation states will become less important, and so do nation state issued currencies.

We live in a globalized world, run by multinationals.

Do you really think that they aren't inspired by bitcoin?

All we buy comes from a handful of companies, and they will soon provide us with the money to buy their products too.

If you think it's far fetched think about this: people stand in line for (big label) gadgets, buy the latest (big label) fashion, listen to the latest (big label) music because they love to buy into the corporate world. They TRUST the corporate world and it gives their life meaning.

No-one trusts countries anymore, politicians don't give people's lives meaning.

Wed, 04/09/2014 - 06:05 | 4638540 A_Nejad
A_Nejad's picture

I think you've got something interesting there T...Based on my talk with some Chinese Business dudes, I seriously don't even think Chinese want their currency to become the next (so called) reserve currency.  They know it's NOT good for the business/country in the medium/long-term.  Dollar is doomed (starting by losing it's value as petro dollar as we speak...), but what can be used for international trade is still very much up for grab.  Bitcoin was a first, noone said there won't be a second, remind you.

Wed, 04/09/2014 - 06:30 | 4638547 inky
inky's picture

@the tower

I hear you tower .. personaly i think bitcoin is a trojan horse (a tester) maybe for the nwo currency.

 

Wed, 04/09/2014 - 04:55 | 4638507 meatworm
meatworm's picture

Free gold!

Wed, 04/09/2014 - 04:56 | 4638510 CHX
CHX's picture

<<< GOLD

<<< YUAN

Wed, 04/09/2014 - 06:05 | 4638539 AdvancingTime
AdvancingTime's picture

Whether by design or merely as a byproduct of globalization we have weaved a web of financial transactions that circle the globe. Over the last several years as money was printed by the central Banks it was not contained in the countries where in was printed. This money flowed across borders influencing and distorting markets and prices across the world.

Some people have been calling for a "world currency" for years. the saying "one should never let a good crisis go to waste" means a meltdown with high levels of fear would present a perfect opportunity to advance this agenda down the field. Remember many people with agendas have a lot to gain when a major shift in the currency markets takes place. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/02/contagion-may-lead-to-new-world-c...

 

Wed, 04/09/2014 - 06:14 | 4638543 smacker
smacker's picture

If Jukka Pihlman is right - evidence suggests he is - where does that leave Madame Lagarde and her IMF "SDR"?

The IMF has been peddling the SDR around the world as a progressive replacement for the USD for some time.

 

And most important of all is exactly what will the USG do about it?

When a small country announces plans to dump the dollar in favour of euro, gold or whatever, it has usually been bombed into regime change, or sanctions imposed to wreck its economy and bring it back into line.

The USG cannot bomb the whole world or even another major country without starting WWIII.

The only sensible way forward is to "manage" the USD's demise over a period of time to minimise disruption. Even then, the American people will suffer badly as they suffer inflation, costly imports and a whole lot more. The end of the American Dream cometh.

Wed, 04/09/2014 - 06:30 | 4638562 A_Nejad
A_Nejad's picture

I agree with you Smacker, but how is it possible to have "managed" demise of USD, whilst continue having an old century gung-ho foreign affair attitude?  Unfortunately, the sadest part of your comment was also the one most striking and true: someone will have to pay for all these partying, and it won't be the owners of the "Irish" clubs in NY or their lackey in Washington....Sad state of affair.

Wed, 04/09/2014 - 08:41 | 4638765 smacker
smacker's picture

Well, even though there's no public mention of it, the decline of the USD is already being "managed".  Look at the number of currency "swap deals" signed up to between a growing list of countries. The recent reported barter deal between Russia & Iran on oil/gas is another example. All happening despite the USG continuing to rampage around the world as it sees fit.

The USG basically has two options:

     - do what it's always done: impose USD supremacy by force.

     - accept that it cannot risk WWIII and attempt to manage USD decline with minimum pain.

The former used to be the preferred action. Nowadays it seems the latter path is being taken.

Given the progressive destruction of American manufacturing industry over the past 30+ years, all this implies a lower value USD, higher import prices, potential shortage of imports (lack of foreign currency to pay for them), a reduction of consumerism and our old friends: inflation and continued impoverishment of ordinary people.

 

Wed, 04/09/2014 - 09:16 | 4638862 A_Nejad
A_Nejad's picture

You forgot a third option:

Something (god forbid...) like a revolution over good old US...don't forget, history tells us Empires not only deminish, but also splits up like a sack of Legos. 

Wed, 04/09/2014 - 07:04 | 4638590 Global Observer
Global Observer's picture

The IMF SDR is the only one with a high enough acceptability. among the options available today, that has a potential for high longevity. However, for it to become the world reserve currency, the US$ has to die first. While the US$ still rules the roost, US won't agree for the SDR to replace the US$ and US agreement at IMF is necessary. So something will replace the US$ and then the US will agree for the SDR to replace the something. Since almost all countries except the US, but including China have already consented to IMF reform, once the US gives its consent, it is a done deal, if the something is a national or regional currency. However, if that something doesn't as yet exist and mimics the proposed SDR in character (in that it is purely electronic, available only to nations and not individuals, used only for international commerce and all members have some say in creation of new money), that institution may continue or even be expanded even after the US accepts the IMF reform and there may be two competing reserve currencies, the SDR and the as yet not created currency that replaces the USD.

Wed, 04/09/2014 - 08:47 | 4638776 smacker
smacker's picture

Can't see your rationale for a series of changes USD -> Yuan -> SDR.  Why not go directly to SDR?

I suspect that the SDR is a long way off or will never happen. Or maybe it's another fight to come.

This would explain why the Chinese have bought up large quantities of gold to back the Yuan as a global reserve currency. And as this article points out, 40 central banks are buying into it.

Wed, 04/09/2014 - 06:30 | 4638561 Peter Pan
Peter Pan's picture

Nobody knows what the next reserve currency could be. It could be anything including iodine.

Then again there might not even be a next reserve currency.

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