Post From KTFA by NOVA » April 15th, 2014, Good Morning All, I Am Bring This Post Over By Memphis Because I Feel Everyone Needs To Read It!!
I Feel It Is One Of His Best Summaries On What Is Happening In Iraq And What Is Coming For The USD.
Happy Anniversary Mr & Mrs, Enjoy Your Day Together. Nova
PS, You Will Be Living In Hawaii For Your Next One!!
Memphis: Hey guys, thought i would drop in and comment on an article from Monday titled: (Post by walkingstick » April 14th, 2014, 5:12 pm • [Post 339])
"The power of the cash reserve to support the value of the national currency"
Memphis Continues: I recognize that the above article is garnering some attention as it speaks to "economic change" that we are expecting but beyond this I love this news piece as it's greatest value to us (as global students) speaks to a truth about how currencies actually work in the REAL world!
The article has a common theme throughout that states clearly this truth:
The true support, justification, for any nation's currency lies not in their reserves of currencies or even in how much gold they own.
By extension the natural resources of the land mean nothing to their currencies intrinsic value to the world as the true and only REAL measure is the nation's productive capacity.
What they make, what the citizen's produce. This speaks to the industry of the land and the currency must always revert to a value reflective of this.
I could open a whole new series of posts on this but few would be awake with me thru such a discussion so just recognize that this article fully refutes the endless GCR rumors stating that the money supply of all nations will be anchored to their assets, their stuff.
No need to take my word for it, go back and look again with this theme in focus and the words leap off the page.
Such a model would ultimately fail miserably in the REAL world as there would be no mechanism to keep forces such as inflation in check. We could park here and talk for many hours as money must obey certain unstoppable forces in the world.
Taking our own USD as example, reality can be delayed and market forces manipulated for a time but in the end equilibrium will always win. In our case, interest rates will rise as the UST seeks new suitors for it's debt as the FED stops showing up at auction to pick up the slack. Once rates are allowed to find their true balance? Everything begins to unravel.
To finish this thought, should we see such a plan rolled out by the world's "thinkers" as they actually implement a system of control and force currencies to be fixed in value based on such a model?
It would not last as market forces would require these imagined values to mean revert to proper levels. Things would find the PROPER balance over time.
Not conjecture here and further, this discussion is only one of many that is proof positive that the USD will find a new normal in the next few years as we have (more than any developed nation) allowed our productive capacity to be....exported. Not even the most uneducated could deny this reality.
Getting back to today's news headline, I found one paragraph of particular interest as it speaks to the dinar's value. Here is a copy/paste of an email I sent to Nova on this:
I like the 1st article in that it implies the rebalancing of the CBI's gold reserve was a marker to "re-evaluating" the re-pricing of the dinar. The language only became clear to me after I took some needed liberties by adding words in brackets. The ONLY word below that gives me pause is "re-evaluate".
This is not a common word for them to use in this context and should be recognized as distinct from "re-value".
Having said this tho, we both know that no article will ever telegraph this event and perhaps JUST PERHAPS we will L@@K back and recognize that the word "re-evaluate" was our big clue.
A final thought. Articles such as this ought to be the final iteration before the dinar re-prices. I feel pretty secure in this because the old language of dropping, deleting, removing, the zeros is now replaced with CLEAR wording of "increase value" and "revaluation".
When taken together with our discussion yesterday about the 3 phases for implementation by the CBI with phase 3 being "educate the citizens" and all the recent evidence to this end it sure reads to me like they are close.
Here is my favorite paragraph:
...revaluation [of the currency] was called for earlier [today by] an academic economist [stating that] those in charge of the economic sector in Iraq [need] to re-evaluate the value of the currency after it [the CBI has enhanced] enhances the cash reserve quantities of gold.
Dr. Majid Baidhani said he supposed [concludes that] After adding about 1.5 billion dollars [worth of gold] to the Central Bank reserves [the way is fully paved] to [see a] rise [in] the value of the dinar to a higher level compared to its exchange rate against the dollar, [he concluded by] praising the procedures [that the CBI has] followed in the context of monetary policy, stressing the need to speed up [hasten] the move to re-evaluate the dinar .
Memphis: A closing thought to bring focus to last months discussions...
I am thinking that with the US Congress refusal to pass 2010 IMF code of Governance and quota reforms we have a new possibility that would mirror the worst case scenario spoken of by me a month ago.
The obvious direction (momentum) here is one bent towards political expediency, the path of least resistance. Our political leaders at the highest level know full well our dilemma as a nation.
We have a debt that can never be repaid. If they do not flinch and take measures to stop this madness then it seems clear that the unthinkable will unfold.
To slightly simplify the discussion, the marker to L@@K for would be a FED announcement that a return to QE is needed. I see any such reversal in FED policy as clear indication that America will not openly default on our public debt but rather inflate (debase) the currency until it has no value.
Such a scenario would see China and other markets unhinge from the IMF and set their own course.
To be fair, some of the brightest thinkers known to me are divided on this coming fork in the road. For example, Martin Armstrong see's a coming US default while Peter Schiff see's a return to QE.
Each option brings about the end of US dominance in the world and only one thing known to me might lessen the effects of America's fall and that being the dinar.
Due to such divided thinking by men that I esteem, I hesitate to be dogmatic and simply offer here what I see as a real possibility that, if chosen, is the one that WOULD be the least desirable path thru for Americans.
As to the dinars possible role in global debt restructuring, we should pray that the governments and central bankers are sufficiently leveraged (forced) by the new players in town into properly stewarding such monies toward the reduction of each nation's sovereign debt.
Without the hand of Providence to guide these men's hearts I would not expect them to do the right thing. Just my thoughts...
Going briefly to the other extreme, if we see the FED continue to unwind QE in the coming months and normalize fiscal policy then it seems likely that we will ultimately choose default on public debt and this then would call into play Nova's speculation that our Congress will swiftly pass the code of reforms after the mid-term elections.
This would be the best path thru for Americans tho still fraught with many perils.
If you have not followed my discussions that began here in January or if you are simply catching this post as a snapshot on another dinar forum you may think me to be un-American and anti "apple pie". Folks these are the realities facing America. Please get caught up.
This is already more than I had intended to say tonight. Back to my studies. Speaking of studies, might I recommend two new books both released on April 8?
"The Real Crash" revised and updated by Peter Schiff
"The Death of Money" by James Rickards
Great reading for those in search of the truth. Blessings, Memphis