On The World's Reserve Currency: What's Past Is Epilogue

Tyler Durden's picture

Simply put, "it does not last for ever" should be ringing in the ears of every investor in the world with more than a few millisecond return horizon. And neither do any and all chartalist conventions which rely on the articial construct of reserve permanence, for one simple reason - being artificial, means the theory is flawed from the beginning. But it is JPMorgan's Michael Cembalest who frames it the best, "I am reminded of the following remark from late MIT economist Rudiger Dornbusch: 'Crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.'"


Source: JPM, Hong Kong Monetary Authority, December 2011

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Seize Mars's picture

This is cool. Where can one find the underlying data? Thanks.

trav7777's picture

fuckin Santorum goin over the top...stick a fork in us

Flakmeister's picture

Whattsa matter Trav.... Is the RP crowd too depressing for you :)

But seriously, Rick fuckin' Santorum?!? 

trav7777's picture

watchin RP's speech now...it strikes me as a concession as much as anything else.  Never thought he had a chance.

But, Rick Santordumb?  WTF?  Rly?

Aeon the Terrible's picture

His opening made me feel better though...he viewed this as taking second place since Santorum has no money or real supporters other than Jim Bob Duggart! LOL. He was being interviewed on CNN in Iowa an hour or so ago, fucking hilarious!

And here comes Gingrich.....talking about how only HE speaks the truth....get the fuck outta here!


Still sad though that we placed 3rd, yes.

strannick's picture

Hey America;

Looks like the 2012 election will be another made for television, Shithead(D) v. Shithead(R) affair, brought to you by your oligarchical overlords. I would suggest you at least buy silver, but the response would probably be 'silver a bubble'.

Freedom isnt free, and apathy and ignorance also come at a cost. Looks like your going to get the political representation you deserve.

Mr Lennon Hendrix's picture

Iowa doesn't mean anything, come on, they voted for Huckabee last time.

d_senti's picture

IMPORTANT - Watchthevote2012 has reported discrepancies in the following counties so far (all to the downside for RP):





All small discrepancies to be sure, but the larger the county, the more difficult it is to tally and monitor manipulation. As such, any voter fraud would most easily be recognized in the smallest vote counts. 

d_senti's picture

Oh and just my two cents: if Ron Paul doesn't win the nomination, I say we torpedo the Republican candidate's chances of winning by splitting the vote via write-ins. That way the RP/libertarian/not retarded bloc of Republican voters become absolutely necessary for winning elections.

Assuming, of course, that elections will even exist or matter 4 years from now...which is a big assumption...sigh...

shesalive's picture

agreed. the GOP has gotta burn or they'll never learn. not that they are capable of learning, but they might remember for the next election. not that they'll promote anything other than more sheister plastic men, but...ugh

jeff montanye's picture

yet on the other hand it seems wrong to reward obama in any way for his monstrous performance as the change agent of reform.  it's not over til it's over.  

nmewn's picture

The games afoot!!!

An open caucus state, with past & present O'Barry voters wringing their hands nervously up until the last possible moment, trying to decide on the weakest candidate of all to place on the ballot to oppose their Messiah...help elevate...Santorum?

Mr. Earmark himself?...really?


trav7777's picture

yeah; Santordumb's showing was unprecedented.

there's no way I could vote for Mormney or Bama...I mean can you even imagine those debates?

nmewn's picture

They will be morbidly hysterical together on one stage.

One saying he made money from laying off workers and the other saying he had many more layoffs under his watch...one saying he imposed healthcare socialism on a state and the other saying he imposed it on the entire country.

Its a bona fide race to the bottom...lol...but Romney will be chosen to oppose O'Barry, its the only way the bankers win.

TheGameIsRigged's picture

seriously...what do people have against RP?  Truth hurts too much?  Kicking the can seems easier and more fun?


I just don't get it.  This is reality, people....wake up and deal with it.

eureka's picture

US will start WWIII when it sees fit in order to preserve US paper hegemony - only this time the "flight to security" won't last very long.

The entire world is sick of US hegemony. Except US' new BFF - France. God knows what US whispered in ther Frenchies' ears... something that would make them go against Germany's demand that bondholders, banks and investors should participate in losses - and on top of that push for new sanctions on Iran including freezing Iran's Central Banks' EU assets..... 

Do you see the light, Bitchez... are you connecting the dots....France is frying some US Freedom Fries for Barry -

oh yes, the world is topsy-turvy and totally fucked - and the only sane politician in the empire is declared "unelectable".... well if so, the US and the world will truly and irrevocably fall apart. You see, the MSM potato heads don't realize that US hegemony IS THE PROBLEM - not, what keeps it together, but will destroy it.

What should we expect? A hard fight. No one gives up their empire with a shrug. Get dirty now, folks. Tell the born agains about Mormonism's freakish and cult-ish elements. If you want Ron to win - you must fight NOW!


The Fonz...before shark jump's picture

You are making the assumption that the economy will continue to limp along...a coup,e of financial black swans or even one...could be enough to have RP leapfrog to the top

xela2200's picture

Your choices Pepsi and Coke. Pick your poison.

AurorusBorealus's picture

Look at the bright side; this is becoming a very expensive election for status-quo-seeking PACs to buy.  They have had to put money on Romney, Gingrich, Bachmann, and now Santorum.  Paul-supporters are getting value for their dollar in the information wars by placing only 1 bet: bleeding the beast while gaining political support.

d_senti's picture

Kinda hard to "bleed the beast" when the contributors can print the money to fund the campaign...

floridasandy's picture

obama won iowa by a big margin last time, and iowa is not a traditional conservative state.

the battle for the republican party is just beginning, and i can't believe that some might want to call it over before it actually starts.

santorum isn't going anywhere in the party, as long as the people remember what happened to the last war hawk on election day.

oddjob's picture

Fleeting USD hegemony is a subject you always chose to ignore....even on a thread that discusses such. 

Mr Lennon Hendrix's picture

How about we discuss the fact that the other reserve currencie above were denominted in gold and silver (except the end of the pound sterling's tenure).  The dollar, once domestically and internationally backed, is the first true fiat standard, thus why it will fail more missriably than any other.  The quadrillions of derivatives would never come about if it wasn't for this fact, because you can't print that much wealth.  Now it revolves above our heads like a giant cloud of doom in the sky.  How much longer the Central Bankers can run this shitshow, who knows, but they can't run it this way much longer.  The math doesn't add up, unless we are all going to be millionares soon.

BigJim's picture

Much as I loathe fiat currencies...

I've been wondering how exactly a country can establish a 'reserve currency' if it is truly backed by gold. If it is truly backed by gold, then isn't gold itself the reserve 'currency'? In what way was (for instance) Spain the issuer of a reserve currency in the 1500's? What does this mean? That there was a preponderance of Spanish coins in other countries' treasuries? That Spanish coins were more widely recognized (and thus traded at a lower spread) than other sovereigns' mintings? That Spanish government notes of credit were widely traded in lieu of specie?

I understand how we can say the UK pound sterling was a reserve currency, because they were afforded the 'exorbitant privilage' of having people trading their paper notes at par specie value even when they inflated. (Until they didn't, of course. Bye, bye, Britannia).

Help me out here, peeps.

MrSteve's picture

At the top of the pile of the best books on this topic is David Fischer's The Great Wave.


The Spanish inflation was not due only to ships full of New World looted gold coming into Spain, it started in the 1300s as the population came back from the Black Death. Eventually Spain over-reached as all empires do and all the money on earth couldn't save them. Sounds familiar!

I think modern derivatives will come to be seen in comparison to French fiat inflation notes: money that was a complete construction of deluded fiction and eventually proved to have zero value. John Law's mortgage-backed notes were an historical "kick the can down the road". It won't be a pretty story, as Marie Antoinette found out.

Some new reserve currency or international construct will replace the dollar and its value will be benchmarked against gold. That's why CB buy and keep gold. That's the real bottom line in today's fiat accounting.

BigJim's picture

...At the top of the pile of the best books on this topic is David Fischer's The Great Wave.


Looks interesting, thanks for the link. Not sure it answers my questions re: reserve currencies during the preiod when gold=money, though.

So many books, so little time :-(

joe90's picture

Why have a single reserve currency?  If all central banks;

1) had a policy of selling any other country's fiat for gold, as soon as they had it deposited with them, and

2) floated their own fiat currency against gold, and

3) bought and sold gold for their own fiat at a price determined by a ratio of their gold holdings and the amount of fiat on issue.

Why wouldn't this work?  Countries that printed or ran a huge deficit would be "punished" with a high price of gold but that would attract gold to the treasury coffers (especially if taxes could be paid in gold as well).  I think this is the solution proposed by FOFOA but I'm not sure.  So this is a blend of fiat and a gold standard.


Yardfarmer's picture

@ Mr. LH there is spellcheck after all. your mongrelisms are atrocious. hopefully just hungover. "denominted" ha ha.

TheGameIsRigged's picture

That's all you got?  Spellcheck?  We are talking about important issues, and you throw the "spellcheck" at us?  Stay in the car, Junior.


And while you're at the fourth grade english teacher level....senetences are started with capitals, and one should use a comma when addressing someone in a sentence.


You are a buffoon.  

goat's picture

Buffoonery all around, for everyone YAY!  (Buffoonery: a much underused word)

I think I need to buy a gun's picture

well santordumb means we are all on our own, i mean talk about fucked up,,,,,,this man shouldn't be close it worries me about the populace i realize iowa is a different breed but this is so fucked up....i'm now considering canada based soley on the stupidity of the populace. Its no wonder the state of this country,,,,,,

EnglishMajor's picture

Better go before it takes an indefinite amount of time to obtain a passport.

Calmyourself's picture

If lennon above is right and I think he is on a long enough timeline what the heck good is a passport going to do you?  Where do you go?  No where with out a portable fortune you can get across borders and that description does not include 99.9999% of us..

Rakshas's picture

Getting money across borders is getting harder and harder although there are a few avenues left. Although PM proponents tend to attract detractors on here the facts and history support this as being one of the few options available for the upcoming collapse of the financial system and by extension PM miners are a decent proxy with natural leverage; however if you are timid of roller coasters you best get a supply of depends before proceding.  

Many folks think they lack the ability to invest in PM's to any significant degree, and while true of most of us it is equally true that this is where the junior miners can come into the equation. Clearly PM's have been beaten like a dog over the past decade iand a half with the intensity of the beat down increasing as we approach the banking system implosion; by extension the junior miners have been beaten even harder making solid prospects with very interesting projects available at bargain basement prices. 

Or if you think PM's are an overhyped bunch of bullshit you can buy beans and flour and hunker down for what comes next.

The decision is yours to make but given the available choices playing the the junior PM miners for a while and converting gains to PM's stored overseas then using your passport to find your way to Belize or Costa Rica or Paraguay.  As Lennon noted several months back {paraphrasing} - each time the Crooks beat the PM's down it gives you another shot at freedom.... your call    

xela2200's picture

Last Year, I bought 10 bricks of coffee at $2.00. This Year $2.75 same brick and same brand. It was a very nice profit. The only problem is I drank the profit and the original investment. But seriously, You can use your FIAT to buy stuff that you will need, and it will give you a better return than the bank.

Costa Rica is not what it used to be. Try less populated countries to migrate. Uruguay has the easiest residency in the planet. Best advice go to the country of your choice and live there for a few months. I am from one of these countries, and the US is still far better IMHO.

disabledvet's picture

We're not gonna hear the truth the American people know is in fact real.'Stand next to that Heartland trucker and you'd be on your way Mr. Freedom! The American people have more than just a right to be safe in their own home "from the intrusions"...it is what sustains whatever endeavor the PTB wish to engage in..."out there." since when did the American people's freedoms become "the problem"? We're the Vanguard here...but sometimes it takes time for time to catch up.

maxcody's picture

Anybody but Romney tea baggers.  They do not care he may be the only one who can beat Obama. ABO

Vic Vinegar's picture

What the fuck does ABO mean?

STFU asshole.  Your comment is nonsense as they all have been.

Uber Vandal's picture

But, but, but the MSM said that Iowa would not matter.... Oh, wait, ONLY if RP won.

I think I need to buy a gun's picture

the anchor of nightline just called ron paul "CRAZY" and his following  off the wall

I think I need to buy a gun's picture

there is actually someone on here right now dishing negatives out for the santorum campaign

Drunken Monkey's picture
Definition: Santorum

Pronunciation: san-TOR-um
Function: noun
Savage Love - 05/29/03

The frothy mixture of lube and fecal matter that is sometimes the by-product of anal sex.

Oh regional Indian's picture

Look at the size of those blocks. 

the real (tin-foilllll) trouble is that the same institution has stayed in the background, pulling strings as the apparent holder of the reservve currency status changed.

Fiat currency (40 years give or take, life spanwise) and now this.

Bye bye Ms. American fiat.... I'm sure each change of status brought along or was accompanied by some.... perturbence in the field, a war or three maybe?