The Emerging Multilateral By JC Collins
July 11, 2014
The Purpose of QE Was to Fund the New Financial System
“We have reached an agreement that, in the current conditions of capital volatility, it is important for our countries to have this buffer a so-called “mini-IMF”- a financial organization which could quickly react to capital outflow, providing liquidity in hard currency, in particular in US dollars.”
The above quote by Russian Finance Minister Anton Siluanov is very telling of the structure of the emerging multilateral system. The term “mini-IMF” was not used by accident.
It was intentionally stated in that manner to accurately reflect the micro role the BRICS Development Bank will take in the larger macro SDR supra-sovereign currency system which will be fully implemented by 2018.
The BRICS Development Bank, or New Development Bank as it will be called, will likely be headquartered in Shanghai or Hong Kong and will be funded by $100 Billion for its members. This will continue to grow as additional members are added to the BRICS organization.
The possibility of long time American allies, such as Germany and France, including other South American and Asian countries, being included in the BRICS organization is becoming increasingly more likely with each passing week. Many of the unseen variables with the transition to the multilateral system are becoming more clear with each passing day and week.
The comment about liquidity being provided in hard currency, US dollars, brings more focus to the purpose of QE and my proposition that its purpose was to partially fund the new emerging multilateral system.
At some point the US dollars, or sovereign debt, will be restructured and repackaged as SDR bonds which will be allocated through not just the BRICS Development Bank, but other international financial institutions, including the World Bank, European Central Bank, Federal Reserve, and all other central banks.
The BRICS countries are providing an additional $100 Billion in funds to help stabilize the currency markets. What this means exactly and how it will be accomplished is probably the bigger story emerging over the next few weeks than the announcement of the bank itself.
The bond markets and currency markets are where this story will play out between now and 2018. That year in particular, is the year where are all plans and engineering come to completion, especially the Basel 3 Regulations as designed and dictated by the Bank for International Settlements.
The BIS has been calling for an end to unrestricted money printing and the Federal Reserve, as has been suggested, getting ready for a controlled “collapse” of the US dollar.
I don’t like using the word collapse because in essence the US dollar has already lost so much of its value in the last few years as true inflation numbers accurately reflect. Rising food and fuel prices in America are very telling of the devaluation of the dollar and a further move to purchasing power parity for the purpose of adjusted trade imbalances and eliminating arbitrage.
The rest of the world holds so much US debt that they also do not want to see the value decrease dramatically but do wish to see a purchasing power parity situation where the new issuance of bonds through a debt restructuring program will more effectively mirror and represent the economic realities of the “emerging markets” and the socioeconomic balance which is taking place between the developed world and the world that is modernizing at an ever increasing rate.
QE has been the one program that should have been a dead giveaway about the larger bond restructuring and currency stabilizing that is a required component of implementing a multilateral financial system.
All the signs and segments of this system have been there since 2010, from the transfer of gold east, to the outlines of new development banks, new international credit rating agencies, rumors of new exchange rate regimes yet to be implemented, currency swap agreements, the dropping of the dollar in international foreign reserves and trade, as well as the repositioning of geopolitical interests, along with the massive QE money printing, all correlate into the framework of the emerging multilateral system.
The system itself has to be presented to the people of the world as the solution to a problem that could not have been prevented. Each segment of the new system will be introduced as the solution to a recognized problem which has been slowly and intentionally built up as such over the last 5 years. The forthcoming announcement of the New Development Bank is one such example of this.
From that announcement there will continue to be a further erosion of American economic and political hegemony as more countries drift away from the dollar and the US geopolitical sphere. The trend is now more obvious than when we first discussed the transition by way of problem/reaction/solution back in January. Civil unrest and sovereign debt crisis continue to increase and will further push all components of the financial world into the framework of the multilateral system.
Illusions of the end of a unipolar world and the introduction of a new multipolar world are simply that, illusions of division meant to distract from and facilitate the process of transition to a multilateral financial system. See, the geopolitical terms of unipolar and multipolar are references to countries and ideologies, neither of which matter in the modern world of centralization and total central bank control of all countries.