12) The most common argument against the dollar losing world reserve status has been that such a shift would be “impossible” because no other currency in the world has the adequate liquidity needed to replace the dollar in global trade.
These people have apparently not been paying attention to the Chinese yuan. China has been quietly issuing trillions in yuan denominated bonds, securities and currency around the world. Current estimates calculate around $24 trillion created by the PBOC and the banks under its control.
Mainstream talking heads are calling this a “debt bubble.” However, this debt creation makes perfect sense if China’s plan is to create enough liquidity in its currency in order to offer a viable alternative to the U.S. dollar.
Linking the yuan to the IMF’s basket currency would complete the picture, forming a perfect dollar replacement while dollar cheerleading-economists stand dumbstruck.
13) China's retreat away from dollar denominated investments has left a hole in the U.S. bond market. Recently, that negative space was filled by an unexpected source; namely Belgium.
A country whose GDP represents less than 1% of total global GDP buying more U.S. bonds than China? The whole concept sounds bizarre. Where is the capital coming from?
Think about it this way - Belgium is the political center of the European Union and a haven for international financiers. There are more corporate cronies, lobbyists, bureaucrats, and foreign dignitaries in Belgium than in all of Washington D.C.
But more importantly, Belgium struck a deal with the IMF in 2012 to begin pumping SDR denominated funds into "low income economies". I would suggest that this funding flows both ways, and that now, the IMF is feeding capital into Belgium in order to buy U.S. Treasury Bonds.
That is to say, the IMF is going to start using smaller member countries with limited savings as proxies to purchase U.S. debt using IMF money.
The ultimate danger of the IMF (run by internationalists, not the U.S. government) pre-positioning itself as the primary buyer of U.S. debt is that when the U.S. finally defaults (and it will), the IMF is likely to become the "guardian angel" of the U.S. economy, offering aid in exchange for total administrative control of our financial system, and the institution of the SDR as a world reserve replacement for the dollar.
14) The serious prospect of regional conflict or world war over tensions between the Ukraine and Russia, Japan and China, the U.S. and Syria, the U.S. and Iran, the U.S. and North Korea, etc., could make the effort of exposing the plan to shift economic power into a one world system centralized under the IMF almost meaningless.
How many people will truly care about the financial power grab by banking elites if it drifts under the surface of catastrophic engineered wars? They'll be too busy hating and fighting artificially created boogeymen to pay attention to the real globalist culprits.
I have been pointing out for quite a long time that globalists need a “cover event”; a disaster, an economic war or a shooting war, in order to provide a smokescreen for the collapse of the dollar.
Alternative analysts have been consistently correct in predicting the trend towards the dump of the dollar. Years ago, we were laughed at for suggesting China would shift towards a consumer based economy and away from U.S. dependence.
Today, it is mainstream news. We were laughed at for suggesting that nations like Russia and China would drop the dollar as a reserve currency. Today, they are already in the process of doing it.
And, we were laughed at for suggesting that Russia or China would use their debt holdings as leverage against the U.S. in the event of a geopolitical conflict. Today, they are openly making threats.
I have to say, I’ve grown tired of the dollar cultists. How many times can a group of people be wrong and still argue with those who have been consistently right? The answer is that zealots never actually escape their own delusions, even when their delusions lead them and those around them to ruin.
I suspect that in the face of complete dollar collapse, they will still be rationalizing the chaos and pontificating on our "lack of understanding" while the theater burns down around them.
"reserve"status written by CIGA Freddie , March 12, 2014
People need to remember that there doesn't have to be any formal agreement by the G20 or the IMF or any other entity to have the US dollar reserve status disappear. Simply, countries just have to make other arrangements with their trading partner(s), just like China has been doing since 2009.
It's no different than a homeowner changing his plumber because the other one got too expensive.
Just use somebody else, period. As these foreign "side deals", bartering, and trading in local currencies become more prevalent, those unneeded US reserves that would normally be stashed in the treasuries of the various countries will end up back here in the US.
Yet another reason that the QE will have to be UNTAPERED. Looks like the dollar game is over from my perspective, and the US consumers are going to get decimated by inflation.
china -- written by red dragon , March 12, 2014
"China, our largest foreign creditor, and India (a supposed ally) have clearly sided with Russia on the Ukranian issue." india yes, but china has NOT CLEARLY sided with russia. china sides with itself.
aside from the u.s., china has way too much at stake in europe to take sides. look for china to step aside (as they always do) and wait for the dust to settle. its not their fight.
written by Brandon Smith , March 12, 2014 @Red Dragon
No. China has been making open threats and has been war gaming a dump of the dollar for years. They've been preparing to use the dollar's reserve status specifically as a weapon.
ALL available evidence suggests China will dump the dollar even if U.S./Russian tensions ease. Let's not forget about the Japanese situation. Frankly, China has very little to lose and much to gain by decoupling, as the article illustrates.
the con written by Mr Doze , March 12, 2014
it is easier to fool a man than to convince him that he has been fooled. (Quote By Einstein)
I've expect great stuff from you -- written by The Parashootman , March 12, 2014
Been following your work from back in the neithercorp days and have come to expect great analysis from you. I look forward to each new piece you publish and this piece does not disappoint.
As usual, I can definitely see the logic in all the points you make and support. The timing of how fast these things develop always seems to take longer than we anticipate though. That's where, for me anyway, the biggest uncertainty lays. For example:
- As soon as China is ready to become #1 consumer market, US relevance will be diminished, but there is still #2, #3, etc. UK used to be #1 and although they aren't any longer, they still matter in world affairs, don't they?
- While China can move their currency, if they allow it to move too much immediately, wouldn't it hurt their exports?
I agree with the dynamics of your article and think all of your points are valid. I guess I'm just struggling to quantify the timing of it all (when & how much).
Thanks again for your passion to share your insight and inherent pledge to make a difference.
written by Brandon Smith , March 12, 2014 @Profit
The great events of world history are, at bottom, profoundly unimportant. In the last analysis, the essential thing is the life of the individual.
This alone makes history, here alone do the great transformations first take place, and the whole future, the whole history of the world, ultimately spring as a gigantic summation from these hidden sources in individuals.
In our most private and most subjective lives we are not only the passive witnesses of our age, and its sufferers, but also its makers. We make our own epoch
– C.G. Jung, 1934
Find out just what the people will submit to and you have found out the exact amount of injustice and wrong which will be imposed upon them; and these will continue until they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress. — Frederick Douglass
"They are on our left; they are on our right. They are in front of us and behind us. The **** won't get away this time!" -General Lewis "Chesty" Puller, 1950
written by Brandon Smith , March 12, 2014 @Parashootman
First, yes, some nations have retained influence in the global economy after losing top status, but one needs to look at specific history. How many nations that monetized their debt, defaulted on their obligations, and hyperinflated their currency, did so without catastrophe or the development of tyranny?
Your second question is already mostly answered in the article. China has formed bilateral trade agreements with at least half of the world's major economies. They are already in the process of removing the dollar as world reserve.
China has shifted its economy towards greater consumption, and has alternative export markets larger than the U.S. in the combined nations of the ASEAN trading block.
China is likely to suffer like many nations will suffer during a dollar collapse, but they have positioned themselves to suffer FAR LESS than the U.S. will.
ZH Article written by Bruno , March 12, 2014
Dear Brandon; Always enjoy your macro insights. Thank you for sharing your quality work.
I wrote an article this past Sunday in the same vain and actually quoted you. Thought you might enjoy it.
written by Brandon Smith , March 12, 2014 @Bruno
Excellent article! Love the folks over at Zero Hedge. They are never afraid to publish articles that go against the majority view, even if that majority view happens to be within the Liberty Movement.
Group think can be dangerous, especially for revolutionaries. As long as we continue to think outside the box, while keeping one foot on the ground, I think we'll be okay.
The BIS is where it’s at written by Tezcatlipoca , March 13, 2014
Brandon, I agree with all the points of your excellent analysis. Dollar cultist propaganda is for the sheeple and shouldn’t be given much consideration by those of us in the know.
And I especially agree 100% “…that there comes a point when those who are going to figure it out will figure it out, and the rest are essentially hopeless.”
That being said I do feel you focus a bit too much on the IMF and not enough on the BIS as the forum for planning the “cover event” for any dump of the dollar. ‘
That’s where the real power of Global Governance lies, IMHO, where the real policy is made and where the real agreements on any eventual replacement of the dollar as the world’s reserve currency will be hammered out.
See this article, http://theeconomiccollapseblog...etly-does, for a really succinct summary of the background on this and a pretty telling description of the BIS’ bi-monthly Central Banker shindig where such doings routinely take place.
“Every two months, the central bankers of the world gather in Basel for another ‘Global Economy Meeting’. During those meetings, decisions are made which affect every man, woman and child on the planet…The central bankers that gather for these meetings are not there just to socialize. ‘
No staff members are allowed into these meetings, and they are conducted in an atmosphere of absolute secrecy...”
Wouldn’t you like to be a fly on the wall for the current/next one of these meetings? Let’s review who would be in attendance at this Global Economy Meeting (GEM), according to the BIS website, http://www.bis.org/press/p130605.htm:
“The GEM comprises the Governors of 30 BIS member central banks in major advanced and emerging market economies that account for about four fifths of global GDP. ‘
The members of the GEM are the central bank Governors from Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Malaysia, Mexico, the Netherlands, Poland, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom and the United States and also the President of the European Central Bank and the President of the Federal Reserve Bank of New York. ‘
Governors from several other central banks attend the GEM as observers.”
Pretty impressive list, I’d say. So let’s review who will be sitting down “…at a round table in a dining area scented by white orchids and framed by white walls, a black ceiling and panoramic views.”’
None other than the Governors of the central banks of Australia, Belgium, Brazil, China, Germany, India, Japan, Russia, the UK, and the Presidents of the ECB and the New York FED - the heads of all the central banks of every country mentioned in your article and all the major players in the current manufactured Ukrainian crisis. Gee, I wonder what they’ll be talking about? ‘
Maybe newly minted Ukrainian PM Yats, and former central banker, will get a special invite?
So, in conclusion, it’s fairly obvious that the BIS is where it’s at. They are the real front for the "globalist culprits" pulling the strings, the top level management, so to speak. All the rest is smoke and mirrors.
written by Brandon Smith , March 13, 2014 @Tezcatlipoca
The BIS is the original Central Bankers club, but the IMF and the World Bank have essentially taken over policy actions from that organization. The BIS is NOT the institution generating the new global currency mechanism, the IMF is.
Which is why I discuss the IMF often. It will be the IMF that comes to the "aid" of America after the dollar implodes, not the BIS, so it is important to warn people what face the enemy will be wearing.
Ultimately, the IMF, the BIS, the World Bank, the Federal Reserve, are all being run by the same elitist families from the Rockefellers to the Rothschilds. The BIS is just as much a front organization as any other.
BIS Working Document on SDRs written by Ben Franklin , March 13, 2014 @Brandon Smith
Brandon: Have you read BIS' Article 444 on SDRs? It seem to fit into your commentaries above.
BIS vs. IMF written by Tezcatlipoca , March 13, 2014
Brandon, Yes, you are technically correct that the “…BIS is NOT the institution generating the new global currency mechanism, the IMF is”, if that mechanism is the SDR.
If it’s another central bank generated fiat currency, say, the Yuan, then IT IS the BIS who will generate it, albeit indirectly.
But my point about the BIS is that they are the arbiters of the power behind the throne, so to speak. Do you really see Christine Lagarde being the one formulating policy on anything, let alone a new global currency mechanism? After all, who is it that came up with the whole bail-in scheme, for example?
The BIS, through the FSB, that’s who and no one even suspected such a thing until it actually happened. The IMF just comes in to pick up the pieces and play bad cop.
The sheeple have no clue about the BIS, although they are hidden in plain sight, as is so much else. On the other hand the IMF is well known and discussed regularly in the MSM. The IMF is the public "face", as you so correctly point out, and, along with the World Bank, enforcer of the "policy actions" of TPTB.
(The Rockefellers, and the Rothschilds to some extent, while undoubtedly powerful, are too, like the IMF and World Bank, the public faces of TPTB, IMHO, but that’s a whole other discussion.)
So, again, my point is that the BIS, unlike the IMF, is probably actually tasked with coming up with the policy actions needed to carry out direct orders from above.
While the BIS is certainly a front in its own way, it merits much closer scrutiny than it currently receives from those of us in the know.
Missing something - written by Agent P , March 13, 2014
One of my observations regarding the U.S.-centric view of economics - both domestic and global, specifically as they relate to $USD hegemony, is that many analysts either disregard or are completely unaware the nature of other nation's recorded history of hardship, and what that means within the context of global economic currency strain, and/or crisis vis-a-vis U.S. historical context.
In simple terms, the large nations we speak of in contrast to the U.S., have all endured both economic and social hardship that, aside from the Civil War, the U.S. has had no visibility of.
This is no small consideration, as the threshold of pain for governments outside the U.S. to inflict or allow upon their people's is ~Much~ lower than that of a Justin Bieber/Miley Cyrus-addled West, whose entertainment appetite quota is on par with other equally hedonistic pleasures, competing for the need of air & water...
In closing, we (the United States as currently occupied and led), is in NO SHAPE for anything remotely resembling a currency crisis, but at the same time, its pleasure-addled, soft-belly hubris makes it impossible for the ship to even recognize the iceberg dead ahead -
global conflict written by marty fee , March 14, 2014
While I have no doubt the dollar is headed the way of the dodo. Global conflict is not really a possibility. Kind of hard to make money in the aftermath of global thermonuclear war.
No world war would end any other way. Might not start with Minuteman III's but damn sure would end that way. Though maybe that is exactly what the world needs at this point. Too many people nowhere near enough resources
written by Brandon Smith , March 14, 2014 @Marty
You are assuming this is about making a profit?
Deluded Currency Cultists ... written by Pat Fields , March 15, 2014
While I largely agree with the bulk if Mr. Smith's article. I should point out that all banknotes are ludicrously over-valued in real terms. The 'dollar' be damned, if any banknotes are preserved as 'legal-tender' media, the intrinsic disparity between the sheer hypothecated credit they embody, contrasted against physical goods and Labor, will continue to wreck its havoc on finance and economy.
There isn't a single banknote anywhere, the real tangible expression of which, is more than one to three grams of copper per unit. Pretense of 'devaluing' any one country's brand of banknote does nothing to alleviate the ruin inherent in the banknote scheme as a whole.
Ideally, circulating money and goods at market are in balance when they're roughly equal in value. That can never be the case with the banknote scheme because its core design imperatives cause infinite currency inflation and growing debt, each by the other.
written by Brandon Smith , March 15, 2014 @Pat
True, all fiat is intrinsically corrupt. However, the difference between the dollar and all other fiat currencies is that the dollar is the world reserve, making it more "powerful", and yet, far more vulnerable.
All fiat currencies are based on blind faith in value, but the dollar requires the faith not of a single nation, but of the entire world.
The globalists are devaluing the dollar because they intend to replace it as the world reserve with yet another even more centralized fiat scheme. A truly global currency.
While it is important to understand that the fiat methodology is dangerous in itself, most people here already know this well. You are essentially preaching to the choir.
The important thing is to know HOW, exactly, the Ponzi scheme is evolving. If we can stop the development of a global currency, and end the plans of the globalists, then we can eventually do away with all fiat.