Memphis » October 23rd, 2013, 7:08 am • [Post 77]
I want to take time here and thank the many people who THEMSELVES took time Monday to thank me! :pompom: It was very kind and encouraging!
Over the past 18mo I have posted very little and have felt compelled to study the many trends that are unfolding in the world. Although the learning curve for me remains quite sloped :boohoo: it has occurred to me that I should not be selfish about my pursuits.
Following the IQD has received little of my time as I have been attempting to prepare for the unfolding of many economic/financial cycles. What was discussed on Monday's cc was of great importance to us as holders of dinar but in the grand scheme of things?
I find little profit in such things given the great magnitude of responsibility that is to follow. THAT stuff is what really gets me going...
Read More Link On Right
None of the world's current financial woes are new. One constant with mankind (I have learned) is that we do not learn from past mistakes.
Throughout all recorded history the same mistakes are repeated and the same attempts are made to remedy.
One ALWAYS follows the other. The current cycle for the entire western world is showing GREAT manifestations of this reality. Capital controls are being placed daily and this is resulting in capital fleeing the marketplace. This is commonly called a flight to safety.
I am already beginning to ramble here on a topic that cannot be treated properly with even a very large post so let me get to my point.... :thug:
I hope to offer some things (going forward) that are IMO of value.
Ultimately (in greatly condensed verbiage) here is how I view the next few years...
The cycles that are unfolding are nothing new, they cannot be stopped (nor should attempts be made to stop them!) and when we come out on the back side, the cycles will begin to repeat. The OPPORTUNITY for us here is to be on the right side of the equation.
Consider this reality, the financial elite are not troubled by the global debt crisis or the death of the USD or any of the other things that could be listed here. What they are doing is positioning themselves to PROFIT from the coming events. This pursuit can only pay dividends for us and these dividends are only limited by the extent to which we employ what we learn!
Today I simply want to re-post an article from last week that is of great significance. It refers to Nobel laureate Joseph E. Stiglitz and I would like to point out that THIS MAN? He has the ear of the elite.
That is important to recognize. It also makes reference to SDR's as an instrument to be used for valuing currencies. For the serious student...IMO....this will be of future value... :handshake2:
By walkingstick » October 17th, 2013, 5:40 pm • [Post 267] Revoking America’s Exorbitant Privilege
Oct. 16, 2013 NEW YORK – The ongoing political stalemate in the United States holds two major implications for the international monetary system.
The better-known consequence has been deepening uncertainty about the US dollar, the main global reserve currency, and US Treasury securities, supposedly the world’s “safest” financial asset. Not surprisingly, the major investors in US Treasuries, China and Japan, have expressed alarm.
Simply put, the global economy has at its center a dysfunctional political regime that generates recurrent threats of default on the world’s major reserve asset.
The second implication is further postponement of the International Monetary Fund’s 2010 quota and governance reforms, which would double member countries’ contributions and modestly increase major emerging economies’ voting power.
Prior to its approval by the IMF Board in December 2010, the reform, agreed at the G-20 Seoul Summit, had been hailed as a “historic” breakthrough. But history has stalled without approval by the US, which has an effective veto over major IMF decisions.
The threat of a US default may well end in a political agreement to raise the US government’s debt ceiling, as occurred in 2011.
But, whatever the outcome, the latest episode makes it abundantly clear that our globalized world deserves a better international monetary system than the current “non-system” that evolved in an ad hoc manner after the collapse in the early 1970’s of the initial Bretton Woods arrangements.
The need to overhaul the international monetary and financial system was one of the basic lessons of the global financial crisis.
While there have been major, albeit incomplete, reforms of international finance, efforts in 2009 and 2010 to reform the international monetary system – including the proposed changes at the IMF – have led to no significant action.
The reform proposals came from diverse quarters: the governor of the People’s Bank of China; a commission convened by the United Nations General Assembly on reform of the international monetary and financial system, headed by the Nobel laureate Joseph E. Stiglitz; and the French Palais Royal Initiative, led by former IMF Managing Director Michel Camdessus.
There have been myriad academic contributions to the debate as well.
The first element of reform should be to give a greater role to the only true international money that the world now has: the IMF’s Special Drawing Rights, created in 1969 as the result of another dollar crisis.
The establishment of SDRs was accompanied by a commitment, included in the IMF Articles of Agreement, to “making the special drawing right the principal reserve asset in the international monetary system” (Article VIII, Section 7 and Article XXII).
But this commitment has remained a dead letter, except for periodic emissions of SDRs during crises, including the equivalent of $250 billion in 2009.
[Memphis note: my intent was to NOT add commentary to this article but I cannot resist stating that the following sentence is evidence that mankind does not learn. These idiots are attempting to prevent natural flows of capital and the resultant highs and lows (cycles) that MUST present.
Their attempts will fail as history clearly records. OK, back to the article...]
The IMF Articles of Agreement should be amended to allow more flexible use of SDRs, replicating the way central banks operate. That is, SDRs could be created during global recessions and withdrawn during booms.
They should be the major source of IMF financing as well, replacing quota subscriptions or lending to the Fund by member countries (potentially making the IMF a purely SDR-based institution, as proposed decades ago by the late IMF economist Jacques Polak).
The simplest approach would be for countries to “deposit” the SDRs that they receive at the IMF, which could then lend them to countries and invest the remainder in sovereign bonds.
This should be combined with a more active role for the IMF – rather than the G-20 – as the true instrument of global macroeconomic policy coordination. One essential (and generally agreed) goal of such coordination should be to reduce global imbalances [cycles] like those caused in recent years by the European Union’s rising external surplus, which has forced many emerging economies to run growing deficits.
Because other global currencies – the dollar, the euro, and increasingly the renminbi [aka China's Yuan] – would continue to coexist with the SDRs as global reserve assets, another essential element of global macroeconomic cooperation should be defining the particular obligations of countries (or regions) issuing reserve currencies.
Still another element of international monetary reform is better management of the global exchange-rate system (or, again, “non-system”), which should aim at avoiding currency “manipulation” – but only after defining precisely what that means. It should also reduce the high levels of exchange-rate volatility – “a tax on international specialization,” as the economist Charles Kindleberger once put it – that we have seen in recent years, including among major currencies.
[Memphis note: what follows is their open admission that they (think they) are smart enough to get this right...... in defiance of history. "What we lack here is enough controls..."]
Long-term global-finance discussions have also made clear that, under certain conditions, regulation of capital flows (“capital-flow management measures,” in current IMF terminology) are warranted on “macroprudential” grounds – an understanding accepted by the G-20 at its 2011 Cannes meeting and by the IMF last year.
[Memphis note: below is a reference to Joseph Stiglitz, another Nobel Prize winning economist who is slowly ruining the worlds economy with his every breath. Strong words? Yep....]
Last but not least, the international monetary system requires governance reform, which includes giving a stronger voice to emerging and developing countries.
Aside from the final adoption of the 2010 reforms and the forthcoming 2014 quota debates, the changes should include those recommended by the Stiglitz Commission, the Palais Royal Initiative, and the 2009 Committee on IMF Governance Reform headed by Trevor Manuel, among others.
One central element of these proposals is to eliminate, once and for all, the veto power of any individual country. With the world waiting anxiously for some of America’s political leaders to behave like adults, the cost of maintaining the current non-system has become all too obvious.
Read more at http://www.project-syndicate.org/commentary/on-the-us-threat-to-the-international-monetary-system-by-jose-antonio-ocampo#ICL1kiRRrv12JJRV.99