BACKDOC: HOW LONG HAVE WE BEEN HEARING OF THE NEED FOR CENTRAL BANKS TO SOLVE THE DEFLATION OR THE LACK OF INFLATION PROBLEM, NOT TO MENTION THE RACE TO THE LOWEST CURRENCY VALUE IN ORDER TO HAVE A TRADE ADVANTAGE OF ONE COUNTRY OVER ANOTHER? RIGHT! FOR YEARS!
IT LOOKS LIKE THE POLICY MAKERS ARE GETTING SERIOUS ABOUT THE PROBLEM AS THEY DISCUSS OPTIONS THAT ARE "OUTSIDE THE BOX”; NOT THE SAME OLD POLICY TECHNIQUES. FISCAL STIMULUS AND INTEREST RATE POLICIES WILL BE ABANDONED FOR A BACKUP SYSTEM AS THEY SAY!
THUNDER AND I HAVE BROUGHT YOU A LOT ABOUT THESE STRATEGIES IN THE PAST. THEY ARE TALKING HERE OF IMPLEMENTING THE MULTILATERAL SYSTEM (SDR)!
THAT SHOULD RING BELLS IN YOU BELFRY! HEE HEE
BACKDOC: THEY ADMIT THAT SOLUTIONS ARE RUNNING THIN WITH THE OLD SYSTEM!
WHY DO YOU THINK YOU ARE HEARING OF PARALLEL TRADING PLATFORMS? SLAP, MCFLY! BAAA HAAA! THAT MY FRIENDS, IS STRUCTURAL, NOT JUST POLICY!
SIMON POTTER, THE EXECUTIVE VICE PRESIDENT OF THE FEDERAL RESERVE BANK OF NEW YORK SAID THAT, “CURRENCIES HAVE BECOME MORE IMPORTANT RECENTLY”. OH MY, THAT IS SO TRUE!
MANY AT THE MEETING ADMITTED THAT THERE ARE A LIMITED NUMBER OF RABBITS THAT CAN BE PULLED OUT OF THE HAT AT THIS TIME! WHERE’S HARRY POTTER, INSTEAD OF SIMON POTTER, WHEN WE NEED HIM? HEE HEE
SERIOUSLY, WE SEE THE SOLUTIONS WILL COME FROM THE MULTILATERAL SIDE OF THE EQUATION. AS WE SHARED IN THE PAST, COUNTRIES WILL EXCHANGE WEALTH AS NEEDED THROUGH CURRENCY SWAPS AND OTHER MECHANISMS IN ORDER TO SHARE EACH OTHERS' WEALTH WHEN A CRISIS ENSUES.
THERE MAY ALSO BE TARGET RANGES SET FOR CURRENCIES TO TRAVEL WITHIN. IF THOSE RANGES ARE BREACHED OR CHALLENGED, GROUPS OF COUNTRIES WILL COME TO EACH OTHERS' AID! THUNDER AND I SHARED SOME OF THESE IDEAS WITH YOU TWO YEARS AGO.
THESE NEW METHODS OF CURRENCY CONTROLS WILL CERTAINLY BE A HUGE STEP TOWARDS GLOBALIZATION. ALTHOUGH IT DOES SEEM TO IN PART A BACKSTOP FOR UNFORESEEN DISASTERS, IT REALLY HITS TO THE HEART OF SOVEREIGNTY.
TO PUT IT SIMPLY, WHAT’S YOURS IS MINE!
WILL SEPTEMBER 2ND SHOW US ONE OF THOSE NEW STRUCTURES? MMMM
8@8, DOC IMO
Thunderhawk: Backdoc Alert…… They just showed their cards
Central Bankers Float New Currency System, Safety Net at Confab
Central bank officials from around the world converged on the Indonesian island of Bali on Monday to swap ideas on tools to address global economic and financial risks. The takeaway: it’s time to start thinking outside the box.
Meeting in a location better known for its surfing and temples than debates on financial safety nets, policy makers from Switzerland to the Philippines agreed that conventional monetary policy alone is no longer enough to manage growth. They also debated inadequacies in the current global financial safety-net system.
Outgoing Reserve Bank of India Governor Raghuram Rajan reiterated his proposal for a new permanent liquidity facility, building on the dollar swap lines that were established between the Federal Reserve and a selection of central banks after the 2008 financial meltdown, to ensure funding during emergencies.
"Longer term, we need some agreement between the fund and major central banks,” Rajan said, referring to the International Monetary Fund. The plan “would allow the fund to be a backstop to a liquidity facility from the central banks that don’t come on an individual bilateral basis but on a multilateral consensus.”
There are other, more radical suggestions too. Monetary Authority of Singapore Managing Director Ravi Menon said there’s a case to explore ideas such as "target zones" to help limit currency volatility.
“Even if you allow considerable amount of flexibility in exchange rates, are there some kind of target zones that can be set internationally, and an international coordinating mechanism to make sure that exchange rates stay within those target zones?” Menon said. Another argument for the method is that it “conditions market expectations and prevents overshooting and undershooting” of currencies, he said.
Simon Potter, an executive vice president of the Federal Reserve Bank of New York, said at the same conference that currencies have become more important recently.
“In our current environment, the role of the exchange rate in trade and current-account adjustments becomes more critical as monetary policy stances diverge across the major economic areas,” he said.
In the case of the Swiss National Bank, Chairman Thomas Jordan said it had no option but to abandon a conventional policy approach after a wave of safe-haven buying among investors sent the Swiss franc soaring against the euro. The bank responded through intervention and negative rates, and has no plans to drop those policies in a hurry.
"We are convinced that given the difficult situation with the overvalued currency, the overvalued Swiss franc, the negative output gap and negative inflation, the current approach is the right one," said Jordan, referring to "the expansion of monetary policy with negative rates and the willingness to intervene."
The gathering of central bankers came amid continuing uncertainty for the global economy as growth slows and market sentiment remains fragile.
Current and former central bankers used the conference to list how the economic landscape is increasingly becoming more complex and influenced by factors outside their immediate influence: terrorism, migration, disease, geopolitical risks and domestic political shocks were among the issues added to the worry list.
The need for more structural reforms was also aired at the conference, backing calls for governments to tackle their economies’ underlying problems and take pressure off central banks. Until then, the world will need to adjust to a slower pace of growth than experienced before the 2008 crisis, said India’s Rajan.
"Clearly many central bankers are convinced there are a limited number of rabbits that can be pulled out of the hat at this point in time," said the former IMF chief economist, who is set to leave his post next month.
Another issue that drew concern among the attendant policy makers was the growing backlash against globalization. Federal Reserve Bank of New York President William Dudley was among those offering a defense.
"When I think about globalization I think about the hundreds and hundreds of millions of people who have been lifted out of poverty over the last several decades," Dudley said. "I just can’t see how someone can legitimately say that globalization has been a bad thing."
Thunderhawk : PSSST Family - Hey I'll let you in on a little secret
Hows about that Hundred Dollar Bill.
Ya know some times it's best to hide things in plain sight . SHHHH!
Maybe we just tear it in half someday - Can we say transition....