This page has been archived and commenting is disabled.
Russia is de-dollarizing
The ruble and other currencies do not compete against the dollar. They are dollar derivatives.
The dollar is headed to ruin, but that doesn’t mean that any other paper currency can replace it. The others will fail first.
The dollar will fail last.
The failure of the dollar, and the transition to gold happens to be the theme of an event The Gold Standard: Both Good and Necessary, in New York on Nov 1. There hasn’t been a real recovery from the crisis of 2008, and there won’t be until we return to the use of gold as money. Please come to this event to hear Andy Bernstein present the moral case for capitalism, and Keith Weiner present the case against the dollar and for the gold standard.
- advertisements -
Russia is dedollarizing, indeed.
Many people think that the collapse of the ruble has to do with sanctions, which are effective, and that Russia is going down the tubes.
Certainly, Russia has big problems, for example the high inflation. Interesting that they don't lie as much as other countries about inflation. But, actually I would say that other countries face much bigger threats to their economies. The difference is just the perception. People have a very bad image about Russia, and not so much about the USA or any other western country.
So, why is the ruble devaluing so much? After the debt markets closed to russian companies in the west, these companies decided to pay off their debts. They can't raise dollars in Europe or the USA, so they have to sell assets in Russia, exchange them for dollars and pay off the debts. This is the biggest driver here, companies paying off their debts.
In fact, this is not a bad thing, just the opposite. The side effect is the very soft ruble, but this is a short term pain, for a long term gain. When the next huge credit crunch comes, Russia and russian companies will have much less debt, and they will be more independent financially, which means that they will be much better positioned.
Russia plays long term. What happens in few months is irrelevant, what is important is what happens in 5 or 10 years.
Even with the low rouble and the need to repay debts Russia is continuing to spend (dump) dollars to increase its gold reserves at the rate of around 34/35 tons a month.
They are building up their gold pile probably as fast as they can. I doubt anyone would call the current occupiers of the Kremlin 'stupid' so there must be a reasons both for the purchases and the urgency. I doubt that it is this Christmas's jewellry market.
Russia sees no future for the dollar but there is one for gold. The stackers must hope that it is not just the central banks that are in gold's future.
The Gold standard Institute bases this claim upon the spurious idea that it is stocks verse flow of a commodity that gives it value. There are more $US than any other currency so somehow the $US is the most valuable.
The Gold standard Institue is unable to see the contradiction in this quantity argument with its otherwise commendable stance on real bills, that is, the highest quality financial instruments.
There is no reason for the $US dollar to fail last, since it is junk like all other currencies. Predicting such is pure speculation.
Russia is selling US paper to buy Russian paper. They need the cash
I lived through this greatest of the stackers time, after that I knew you don't beat the house.... ever.
http://www.bloomberg.com/news/2014-10-23/hunt-s-death-revives-memory-of-...
5000 Russian Leaders Oppose Zionist Supremacism
if you don't need the petrodollar, you don't need the dollar. i think gold is becoming the secret guarantee for the expanded currency trade exchanges china, russia and the rest of the brics are setting up between their currencies. i will admit forex is not my baliwick so comment would be appreciated.
it seems to me the crosses that are becoming important are the crosses between the brics as related to brics/dollar. what is the ruble/rial cross compared to the ruble/dollar/rial/dollar, etc. yencross are you out there?
Yeah, the american underwear is the most under wear in the Universe. Only Einstein could explain to you how stupid you are.
Does anyone still discuss A. Fekete's ideas?
http://www.professorfekete.com
I used to read him on a regular basis and his ideas, especially the real bills doctrine, made a lot of sense to me. The notion of a credit based vs debt based monetary system and how it gets around the problem of insufficient specie was one of the highlights.
Still, on balance I don't know how you get there from here, or put another way, how do you defeat the tendency of those in control of the system to bend it to their advantage? I also see another problem which, while not directly related to money, is at least as challenging as monetary reform, and that's the issue of employment. How do you earn the money you need if, simply put, there are not enough real productive jobs due to automation and other forms of technology driven labor reduction?
Unemployment asiide, at present, we have any number of jobs that are not producing anywhere near the value represented by the paycheck issued, in fact you could use the old Soviet saying: "we pretend to work, they pretend to pay us" to describe the situation. This has to be inflationary, apart from the actual issuance of unbacked credit by CB's and their agents. So, even in a strict monetary regime, this problem exists and would ultimately undermine the value of money in much the same way as excessive credit issuance does today.
I offer no solutions here - just tossing some ideas out for discussion.
Step 1: Remove control.
Step 2: Hang the ones who have abused it.
Step 3: Rinse and repeat until you run out of rope or the gangsters give up.
The bankster and oligarch scumbags have the entire world entrenched in fiat, that what's to stop them from creating a new one. They make and break the laws, so they can easily create a new fiat currency and name it whatchamacallit, and back it by the actual, physical whatchamacallit candy bars.
WTF
Aside from inflation / deflation of currency, the first failure to occure will be the Comex / LBNA. It is generally the market backstops.
Anti-Russian sanctions drive rapid de-dollarization
http://failedevolution.blogspot.gr/2014/09/anti-russian-sanctions-drive-...
A Gold standard is not the solution, although it would clearly be a better one to the current dollar standard for every country but the U.S. As long as most nations want to subordinate their sovereignty to a "Global" system, there has to be some basic medium of exchange. As things stand, currently and for the forseeable future, that basic medium is the U.S. Dollar.
A mercantilist system, whereby the actual rates of exchange are worked out through commercial transactions between private entities using commercial banks to intermediate the exchanges, would be more fair and less manipulative than what goes on now. But that would be possible only if "sovereign nations" created and used their own currencies. (Don't you miss the Deutsche Mark and the French Franc? I do! And most Frenchmen and Germans do, too.) Of course, the problem that nations had with this type of system resulted from the abusive practices by governments which debased their currencies, whenever they saw an advantage in suppressing imports and encouraging exports (which was to America in most cases). But sovereign nations could offset these tactics by creating or raising tariffs on products coming from these debased countries, as America did so for most of its history, until the 1990s.
In order to help the rest of the world recover more quickly after World War II, "tariffs" were vilified in America, even as it was encouraged in other countries. During the Cold War, our statesmen and politicians used access to the American markets as an incentive for countries to favor the USA over the USSR. Tariff rates were tied to peace and friendship treaties. So Germany and Japan were allowed to "eat our lunch", so to speak; but various "socialist dictatorships" were barred from doing so.
We would do well to "De-Globalize" our economy, just as the "BRICS" "De-Dollarize" their own.
Name a gold backed currency that was run honestly that failed.
Name a fiat or other system that was run honestly or dishonestly that didn't fail.
The real problem is that you live on a planet with intelligent life so low on the order that the other intelligent life out there doesn't want to be seen hanging out with us. I have always read gold is " a store of value". Then you ask yourself, a store of value of "what". I see it this way. We as consumers in order to stay alive must constantly expend two things, time and energy. When you have done that you have hopefully produced something which you consume. What do you do with the excess? You must hold onto it, store it somehow. What are you holding onto? the fruits of your production, which represent your spent TIME and ENERGY. Whether you are for or against gold that is not the question. The question is which represents your time and energy spent, gold or fiat currency or cryptocurrency for that matter. Gold takes time to find, unearth and refine - time and energy. It also has up till now been used for jewelry. If that changes then reassess. Fiat currency on the other hand represents Future enerning, maybe. Am I right about this I don't know. Bitcoin - regulated through time so has a time component and also used computing power to produce.
Bitcoin also requires some sort of computer, electricity, and a network in order to use it. There are manifold risks in that whole contruction.
Meanwhile people are selling gold like it is going to 0 and the dollar index is trading at multi year highs.
So do you listen to the old mantra of buy low and sell high or do you follow the crowd and get your head cut off? The choice is yours.
Just buy some while you still can, at a discount.
Gold "standard" is as obsolete as buggy whips. Fiat currency is obviously unacceptable.
Best solution is "earned money" ONLY. Overwhelming amount of money exists in computers. Just add one field to every account for:
1. earned money = money earned from actual production & sales of goods & services
2. created money = financial engineering, central banks, govt debt issuance, etc
3. unknown money = origin has not yet been investigated & confirmed
Operating Rules:
1. All money is "unknown money" until its source is investigated & confirmed. If it does not qualify as "earned money", then it is confiscated/destroyed.
2. Only "earned money"can withdrawn in cash, cash can be deposited only to "earned money" accounts. Only "earned money" can be used to purchase ANYTHNG, including financial assets.
3. Adding/mixing "created money" or "unknown money" to "earned money" irreversibly destroys all of it.
etc etc etc
Goal is to destroy ALL forms of money that do not result from genuine economic activity, ie money earned from actual production & sales of goods & services.
Okay that sounds like a plan. You send me your bank account info and what you think you have earned and I will make the necessary adjustments based on how much of it I want for myself.
A gold standard is an answer (whereas your scheme is outright ridiculous and completely unworkable except from the point of view of a socialist). It is something you hold. You cannot create it. You can work to dig it out of the ground but then it is earned.
Please go spout your nonsense at CNABSC where the sheep will just nod and not understand a word of it because it would require thinking.
For a person called "Socialismis cancer" you made me laugh.
Every single thing you suggest involves some "judge". Judging what labour is worth, where it comes from. Boy the bribery and corruption starts before one accounting entry is logged. Likely with you.
How do you propose to classify the drug money? Is that money earned?
How do propose to judge anything?
Give me a break.
I want to be in the club in charge of deciding what qualifies as "earned money" and what the amounts are.
Your "solution" would be a bigger "Big Brother" State than what we have now.
Gold "standard" is silly nonsense, solves no problems, the politicians will keep creating money and the conversion rate between created money and gold will just keep going up.
The Gold "standard" is nothing more than a persistent pervasive attempt by the people who own gold to have its value in currency increased by relentless proposing this Gold "standard" crap.
You need to do one of these things:
1. Go back to your school and slap your econ professor for filling your head full of bullshit.
2. Go back to your employer and ask for a better script.
I think you need to do some reading and look at some history.
I suggest Fekete. I suggest the Austrian school.
Then for balance go read Keynes and then the mutants of Keynes. Lots to choose from here.
Go read the "Gold Trail"
Go read FOFOA blog.
Read some Sprott commentary. read something, as in all points of view and then do some thinking for yourself.
Read up on speeches made recently by Chinese officials reagrding gold/reserve currency.
Look at the Gold Initiative.
Gold related currency has one big advantage. It constrains drunken, coke-fired, hooker blasted, casino bankers from implementing "Operation Twist and shout", QE 1,2,2.5, 3, 4 5,,,,,,,,
If the Swiss Initiative passes the Swiss Currency will become the safe haven as the SNB will never be able to roll out a printing press to benefit the few. Nor aid in the grand machinations of bullion manipulation.
No peg to the Euro. No printing of billions of pieces of toilet paper.
I am an idiot but even I can connect the dots.
Stopped reading right there, you obviously haven't owned a sand rail and driven\ridden in the sand dunes. Buggy whips saves lives and gives great indications of the terrain by the way it moves.
I have done it all. A whip antenna provides all the benefits you described plus more that buggy whips cannot :-))
So if I need a loan to buy equipment for my company or invest in training for my employees or fund my R&D, does the person who makes the loan engage in #1 or #2 above?
And there's more...
I think you have a little more work to do on your model.
Simple: All of the activities that you listed are legitimate genuine economic activity around the production & sales of goods & services and qualify as "earned money".
You borrow from people/institutions, like me, who have saved "earned money".
You are obviously an entrepreneur, your kind would be protected and benefit from my monetary proposal, especially because you would not be competing against "created money", which is predominantly the playground of large priviledged players.
I am believing now that you must be pulling everyone's leg here.
Great joke.
No way you are for real.
Foreign Policy. You want the trigger? The catalyst? There it is. The article starts with the 'Ruble'. Why? Crimea, Ukraine. China? The South & East China Seas. The 'Senkaku' islands. The Philippines. Vietnam. Threats on a monthly basis from Chuck Bagel & Kerry that China (and Russia) better 'watch themselves'. These are the drivers, not what takes place domestically.
sell the USD as it's moving to multi-year highs
http://bullandbearmash.com/chart/dollar-monthly-long-awaited-move-contin...
those clever communists
OK, Please help me.
WTF is the vertical axis on the graph? How can you have a graph with some numbers on a vertical axis and no explanation??
This is becoming High-school-ish...
More like Mr Rogers' magical kingdom where money had no denomination...
RUB - USD. Please try to keep up.
If by "RUB - USD" you meant the price of Ruble in dollars then thank you.
That is by no means obvious, either in text or on the graph. But why not follow basic writing to indicate both axis?
If the goal was an article about de-dollaring the Ruble, maybe a graph about the amount of dollar reserves the Ruble has, rather than just conversion rate? Conversion rate is quite removed...
I'm stacking Cowery shells. When they come back I'll be rich!
I have boxes of tulips.
What, exactly, is a 'derivative'?
well, 'Investopedia' calls it a 'security whose price is dependent on the value of one or more underlying assets'.
I present the case that the USD is a DERIVITAVE ITSELF, and this article fails to understand it.
The USD USED to be a derivative of the REAL value of Gold and Silver (real, tangible assets). NOW, it is a derivative of the value of the price of a barrel of CRUDE OIL as set by OPEC.
Higher oil prices make the USD SEEM to be more valuable (because the OPEC Accords cause the trade for OPEC oil in USD denomination). THAT PROCESS is currently falling apart. Quadaffi tried to break away (and look what happened). Hussein ALSO tried to break away (and you see what happened there). The CHINESE are playing the game very well, though (with USD holdings through the roof to hedge the oil supply), and the Russians seem to have found all the oil they need...
'Currency games' are a worthless pursuit. Calling the kettle black (while promoting the stand of the black pot) is a diversion from reality.
Shhhhh... Talk like that might upset the muppets....
The others may fail first, but the USD will fail hardest.
The basket of currencies that replace it under a new international regime operated by many of the same criminals may take gold holdings into the weightings. But a gold-backed currency cannot happen while the gangsters run the game. For as long as they control the microphones, the wires, the guns by having the goods on those who "run" the government, then those criminals still run the game.
Stackers think they've got it made. Who's going to accept your silver/gold in trade? Markets will be so pervasively monitored that any attempt to trade PMs will be a high risk event that brings militarized enforcers for the .gov vacuum cleaners of your wealth and freedoms. They'll send you to the chipper.
I believe that if the nazis come for my precious metals they will have to settle for the base metals as well, more specifically lead with a copper jacket.
As well stocked as you may be with base metals, they have more.
However, even in the unimaginable fantasy where that was not so, the ability to actually trade those PMs for goods and services over any significant period of time will be hamstrung by the pervasive surveillance in electronic technology and good old human stoolies hoping for mercy by cooperating with Big Brother.
"they will have to settle for the base metals as well, more specifically lead with a copper jacket." And when they are done providing you with their own base metals, they will have your precious ones as well. And you will just be another "crazy terrorist" statistic for trying to resist the new order, an example for the others as free market places are closed and honeypot traps await those who are not yet apprehended.
Well then I'd rather die fighting then lay down and be a pussy like you.
You've already planned to "lay down", you just don't realize and accept that yet.
By your plan, you will be a mere statistic, and you will give them your stackin's, your weapons, your loved ones who survive you, and all you value.
The only natural world hope I can see is destabilizing the system (ala "Fight Club" as a metaphor) in a way that unmistakably points the finger of blame where it belongs so that some more folks begin to wake up. There are already blogs and forums a'plenty.
http://www.zerohedge.com/news/2014-10-22/it%E2%80%99s-not-just-spying-%E...
I agree.
The question to be asked is "What WON'T they do to maintain control of tens of trillions of dollars of wealth?".
Every other option remains on the table.
Our community sticks together. If they come for one of us, they get the whole trailer park...or something like that.
It's rumored that the Chinese will announce a two-fold, overnight increase in the price of gold, probably occuring within two to three months from now. In that event, the dollar will quickly plunge while those with at least some gold in their vaults will increase. The US, unfortunately, has no bullion left whatsoever beyond what it can still mine. Fort Knox has become melely a military storage facility, while all the bullion it once held has been "leased" away over the years in order to maintain dollar hegemony.
This scenario is naturally contrary to both the above articles' basic premises, as well as yours; but I''m telling you son, you better soon become one of those stackers you seem to be disparaging.
Who's going to accept silver and gold in trade? EVERYONE, soon enough. Just watch what happens when you wake up to the day the dollar is substantially devalued after the supply shortages begin. Why would their be shortage? Because the rest of the world has stopped buying US Treasuries to compensate for their exports to the US; therefore, there will soon be no basis to maintain trade in what has become the accustomed manner these last few decades. This will be particularly true if/when the price of gold is suddenly revalued in dollar terms, with the corresponding decline in the value of the dollar in the only "reserve" currency remaining to the world that has NOT lost its lustre: Gold.
knock, knock, neo....