Reader Comments On Renminbi & Alternative IMF Reforms Part 1
Reader Comments On Renminbi & Alternative IMF Reforms Part 2
Chuc1997 NOVEMBER 13, 2014 AT 2:41 PM Bernanke pointed to FDR’s 1933 gold revaluation in his famous 2002 Deflation speech as a very effective means of creating inflation…the speech is still on the Fed website, you can google it.
The speech reads like an instruction manual for 2008-present…with only the final step of revaluing the US’ gold not having occurred yet.
The last time the USD got into trouble in the 1970s, gold was also revalued, from $35 to $800.
The last 100 years of history would suggest that if gold is not revalued much higher by the end of the cycle, something would be very different.
SDR may be the US gov’ts preferred means of a recap, but its not the preferred means of BIS. If that was the case, SDR’s would’ve taken off in the 1970s instead of gold.
JC Collins NOVEMBER 13, 2014 AT 3:29 PM Some would suggest that the USD is not in any trouble at all, as referenced by the continued increase of dollar denominated assets in the foreign reserve accounts of central banks around the world, so your reference to the 1970′s is irrelevant.
Prove that the SDR is not the preferred method of the BIS, because based on the official statements by the BIS itself they actually publish their own accounts in SDR’s and have done so since 2004.
In addition, your reference to $800 gold in the 1970′s is misleading as by the early 1980′s gold was down in the $300 range. So perhaps your $800 dollar reference is comparable to the $2000 range a few years ago and today we are seeing the continued decrease in nominal value as it did by the mid 1980′s.
And SDR’s didn’t take off in the 1970′s because it wasn’t meant too and didn’t have the broader and more institutional support that it has now.
Once again your logic and data trending is misleading and faulty. As stated before, it is the same tired script which is repeated verbatim by people like you.
We can do this back and forth forever by I have to draw the line somewhere. How do you feel about giving people advice that has lost them thousands of dollars, if not more?
Gustavsaure NOVEMBER 13, 2014 AT 5:24 PM The USD as a percentage of global reserves is going down according to Rickards. Is this wrong?
As are foreign holdings of US debt.
I know this presentation these charts come from is a little corny, but the numbers are either right or wrong.
JC Collins NOVEMBER 13, 2014 AT 7:19 PM They are wrong and Rickards is presenting misleading information. Check out the link below for the real numbers. Scroll down and view the graphics.
The numbers can be finessed many different ways but the reality is that USD are increasing in foreign reserve accounts, as are other currencies, such as SDR’s. The data does not support the flight from dollars or collapse of the dollar that others are predicting. The dollar will be a reserve currency for years to come.
chuc1997 NOVEMBER 13, 2014 AT 7:37 PM Yes, BIS figures are denominated in SDR’s, but what is the #1 or #2 asset on their balance sheet, denominated in SDR’s?
JC Collins NOVEMBER 13, 2014 AT 10:00 PM You said:
“SDR may be the US gov’ts preferred means of a recap, but its not the preferred means of BIS.”
From there I stated that SDR is important to the BIS as it listed its account balances in SDR’s. And then you respond with asking what are the two top assets on the BIS’s balance sheet that are denominated in SDR’s.
I’m assuming you understand that the balance sheet is broken up into two sections, Assets and Liabilities. Under Assets the two largest segments of the balance sheet are “Government and Other Securities” at 33%, followed by “Securities Purchased Under Re-Sale Agreements” at 25%, which is then followed by “Treasury Bills” listed at 19% of the total Assets balance. In this category gold is listed as 8% of the total.
Under the Liabilities category we have “Currency Deposits” listed as 83% and gold as 4% of the total.
The most current balance sheet can be viewed here.
So gold is obviously not on the top of the priority list for the BIS. And considering the BIS’s often published support of an SDR liquidity system, I find your original comment of SDR’s not being important to the BIS as very misleading and nonsensical. Let this be the end of this foolishness.
Also see the following link for BIS support for the SDR.
gustavsaure NOVEMBER 13, 2014 AT 8:04 PM I don’t know how Rickards is misleading. The IMF data shows that the USD is decreasing as a % of global reserves to around 60% which is what he’s saying.
But the point of contention between you two is this: Will the transition to SDR require a collapse or not? You say no, he says yes. I think it is an important distinction, as collapses have a tendency to spin out of control.
Brandon Smith also sees a collapse scenario, and just wrote a very good piece which characterizes the IMF reforms as a “fake conflict” designed to isolate the US, contrary to yourself who saw them as a stepping stone to moving forward. Again, the question isn’t whether there will be an SDR, the question is will it take collapse to get it.
JC Collins NOVEMBER 13, 2014 AT 8:48 PM I’ve stated that a liquidity crisis will be used as the pretext to reliquidify the system with SDR bonds. This will not be a complete collapse of the system but it will be felt hard by many. Please represent my position accurately.
JC Collins NOVEMBER 13, 2014 AT 8:52 PM And you stated that foreign holdings of US debt has been going down. And you used a link to Rickards material to support it.
That is misleading as the IMF link I provided clearly shows that foreign holdings of US debt has been going up, not as a percentage but as a volume. Mincing data does not make for a convincing case.
Cramley NOVEMBER 13, 2014 AT 3:32 AM JC, You do realize the debt in the system can’t be serviced?
Isn’t that why ZIRP is in place?
Could the current debt be rolled over without QE in place somewhere in the world?
If you start looking at things from the perspective of interest rates, it’s easy to see liquidity is not the problem. There will be plenty of liquidity just not at current bond prices if CB’s were to stop propping markets up.
What would happen to bank balance sheets if rates were to rise?
A lot of these banks are long sovereign bonds yet sold default swaps on these same bonds. How’s that going to work when bond prices fall?
JC Collins NOVEMBER 13, 2014 AT 4:42 AM I do not accept your framing of the argument. It’s the same tired script that has bamboozled the uninformed.
QE and bank balance sheets are the setup for liquidity challenges and SDR denominated bonds. The game has changed friend and you’re still playing at make believe.
Do you honestly think the whole world is just going to economically reset? Please.
Everything is transitioning exactly as planned with the framework already in place for the massive liquidity exchange to SDR debt instruments. This isn’t what I want to happen but there is no denying it.
The more your storyline fails and fragments the more evidence is revealed which supports the multilateral transition. If I’m wrong than why are PM sellers so desperate to sell their inventory?
Because they just want to help others out by exchanging their valuable PM’s for the worthless fiat currency they claim is going to crash? This jig was up 5 years ago and those in the know have been trying to dump their inventory as fast as possible. Many mouth pieces have been hired to facilitate this process.
Gustavsaure NOVEMBER 13, 2014 AT 3:00 PM A dealer’s inventory is hedged so they don’t gain or lose if the price goes up or down, so I’m not sure what you’re saying here JC.
JC Collins NOVEMBER 13, 2014 AT 3:43 PM Hedging does not entirely eliminate a dealers exposure to the price of gold. There are two types of hedging which a dealer can choose.
One is called Delta Hedging and another is called Delta Gamma Hedging. Positions in a Delta Hedge will still likely be negative gamma and negative vega as well.
Residual gamma and vega exposures are unavoidable on Delta Hedge positions.
Delta Gamma Hedging can help reduce these exposures to zero gamma and zero vega, but are very costly and are not typically utilized by PM dealers.
The dealers reduce their risk by Dynamic Hedging, constantly adjusting the Delta Hedge while reducing their inventory as fast as possible. That sir, is where I am going with that.
Gustavsaure NOVEMBER 13, 2014 AT 10:49 PM Thanks for all the convoluted jargon. Look man, I just want to know what it is you are saying. You said: PM dealers are “desperate” to dump their inventory because those “in the know” understand “the jig is up” and want to sell their metal to the suckers.
That’s quite a statement but, okay. But in your response you are saying that they need to quickly reduce their inventory because of their “dynamic hedging.” So which one is it? Please respond because I took the time to look all that ** up, lol.
JC Collins NOVEMBER 13, 2014 AT 11:14 PM It’s both. Is that convoluted enough for you? (lighthearted sarcasm)
It’s like Michael from The Silver Bomb fame commented earlier today, there are always a percentage of people who are not doing things for honest reasons.
There are those in the precious metal business who probably recognize that we are entering a deflationary period, and likely suspected that this would be the case, or had direct knowledge, and that deflation would be a direct cause and effect of QE, as with QE money velocity decreased.
Like all human endeavors, some of these dealers have likely promoted false stories based on manipulated data to drive fear and get people buying PM’s at inflated prices.
The Dynamic Hedge is simply frequent and steady adjustments to the Delta Hedge to stay abreast with the PM spot price. Adjusting the Delta Hedge (which is Dynamic Hedging) and reducing inventory through fear propaganda helps minimize the losses of the PM dealer.
When a “new bottom” is determined they can go and purchase all those PM’s back again at dramatically reduced rates. It is a method of wealth transfer.
Now, many PM dealers are honest and present factual information, like Michael. But unfortunately many are not. Anyone selling anything based on urgency and emotion should be questioned.
Storing your wealth, being your time and labor, in gold and/or silver is fantastic. But this only works if you are in the right mindset and plan to maintain this method of wealth storage over a lifetime.
To buy and sell at the whims of a manipulated market or the fear backed propaganda of someone who attempts to gain from your loss is not the method of PM wealth retention that I support.
I just read a very interesting article at this link which may help clarify how literally everything is being manipulated to broaden the transfer of wealth.
daneackerman NOVEMBER 14, 2014 AT 1:10 AM It sure gets tiresome seeing the same attempts to mislead people who have a….more generic understanding of this subject. And its sad to see that our peers still attempt to divide people or loyalties.
JC thanks for shining the light and showing the way.
Raymond Kwai NOVEMBER 14, 2014 AT 1:59 PM I’m beginning to think that SDR as a new reserve currency is quite possible. Folks didn’t find it difficult to embrace a currency back by debt rather than gold for more than 40 years.
If I lived in that era of transition now, knowing what I know, I would not believe people will really use a paper back by debt as currency. Most folks probably didn’t notice any difference since the money in their pocket looked the same.
You won me over with “Storing your wealth, being your time and labor, in gold and/or silver is fantastic. But this only works if you are in the right mindset and plan to maintain this method of wealth storage over a lifetime.” Thanks
Michael MacDonald NOVEMBER 14, 2014 AT 5:43 PM PM dealers are not selling gold they bought at $1800 and selling it for current levels. PM dealers buy from the mints and other outlets at current price and sells at cost plus % mark up.
PM dealers are not selling “Their” inventories unless they bought that inventory at a lower price… they are middle men and hedge accordingly. “They” are not trying to hood wink anybody but make a profit…
Like any other business model…
However most PM dealers understand that the fiat game is deteriorating and at some point gold and silver will retain their rightful throne. And again, you do not have a crystal ball.
There are many other strong theories/patterns out there that contradict yours to a degree or other.
Your theory is very strong but not the only game in town. Could the Chess board actually be viewed as 4th and 5th dimensional? Could there also be other unseen forces at work?
Is your theory/pattern exist in a universe where unlimited patterns exist and the future is determined within each thought of now?
Is it possible for me to step into on pattern of the future and you step into another? Or are we all fated to step into yours? Agreement reality? Just rambling thoughts. Thank you for the forum!
Our World in Transition - A Time of Dramatic Change
Our World in Transition - A Time of Dramatic Change
daniel grig (@gelingrig) NOVEMBER 13, 2014 AT 10:24 AM Passion bears fruit.
You put passion, work, effort, time, and meditation, reflection and the fruits are mature.
Mr Collins, I think is the only blog that comes of Systematics is the subject of the process of change that we live in, to the SDR.
I am an independent analyst and as i sere all my life, but when you have a few points of reference (like this blog) that are updated to the extent the process avaza, is something that is very valuable.
Rick Shade NOVEMBER 13, 2014 AT 12:35 PM `Let’s say there will be this “benevolent” reset….using SDR’s or whatever. Each nation will have it’s currency valued by whatever it has.
How does the balance sheet of the US ever get fixed? Do they “forget” about the liabilities…SS, Medicaid, national debt…etc? they can’t….so what reasonably happens?
another subject….gold and silver….
I think getting once ounce silver coins at under 20 bucks is the bottom. Even if silver dives to 10-15, the premiums will raise to offset the obvious shortages. It just simply can’t be pulled out of the ground and refined at those costs.
It doesn’t matter what the “paper” prices says….what do you have to pay for the physical? Back when silver dove to these levels…the premiums on 12 dollar silver was 7 bucks.
The US has a HUGE dollar devaluation, because there are so many things that MUST be paid for, and no workers to “earn” what needs to be funded. Therefore, the currency will be worth less.
Rick Shade NOVEMBER 13, 2014 AT 12:41 PM one more thing…and I haven’t seen anything that fixes it.
how do you pay the debt off? How does recalculating the currencies via some other mechanism do it? How do you tie the US to a gold standard…when the liabilities are SO HIGH?
How many trillions of dollars must the taxpayer earn to pay the debt off? TOO MANY. The US will HAVE TO GO TO WAR…..or suffer a depression worse than the 30′s…..there is no other solution….
they won’t cancel the debt..so the debt will crush them. all the analysis doesn’t change it. The bankers can’t stop the HUGE depression on the way…and they can’t predict the outcome.
I’m guessing, as Celente says…..WAR
Raymond Kwai NOVEMBER 14, 2014 AT 2:11 PM @Rick Shade, We would have to go to war only if we owe that debt to other countries in their currencies. We owe the unpayable liabilities to ourselves.
I infer either we will not be getting our social security checks and suffer a depression or the checks will keep coming and we will suffer inflation.
Come to think of it. War is possible but it will be between the haves and have nots.
Safety Fishnet (@SafetyFishnet) NOVEMBER 13, 2014 AT 8:31 PM Watch Russia vs. EU/US theater if you want to see the roadmap towards the implementation of SDR.
We have been witnessing a pre-determined and gradual meltdown of Russian currency reserves and those dollars fly home to U.S.A leading to a seemingly “safe haven” status of dollar .
Next week it’s most likely that sanctions against Russia will be deepened and this next stage of CSI which will cause those “angry Russians” to react with other energy deals to bypass dollar.
This game will follow until mid 2015(timeline claimed by J.C) and the foundations of petrodollar will be shaken and following the liquidity crisis all the fingers will point at “selfish and destructive Americans”.
Every time things get tenser and the stakes get higher dollar/ruble rises, other EM currencies (CSI again) will fall in tandem with ruble against the dollar and the mighty dollar will eventually stand aside for SDR.
Russia is, was and had been chosen by the enlightened elite to transition the ignorant masses and heads of states towards SDR, a revolution considering constant struggles between nation states for centuries.
Faux struggles between states is for distraction purposes but our mentally boxed species never learn to step outside.
Cramley NOVEMBER 13, 2014 AT 10:58 PM JC, your NOVEMBER 13, 2014 AT 10:00 PM comment just made the argument for why the BIS will need a higher gold valuation to balance its books. What’s going to happen when all those other assets drop in value?
How much of “Gold and gold loans” is gold loans? Is there a finer breakdown of that?
JC Collins NOVEMBER 13, 2014 AT 11:28 PM What makes you so certain that those other assets are going to drop in value to the point where gold has to be revalued upward?
My comment and links to factual information make a stronger case for a liquidity exchange with SDR assets, utilizing substitution accounts and a method of SDRM, Sovereign Debt Restructuring Mechanism.
A larger percentage of the foreign reserve accounts are going to be exchanged for SDR bonds. This has been happening and will continue to happen. Take a look at the unallocated portion of the Assets. It is likely that most of those are SDR’s.
It is also likely that gold will be added to the SDR basket along with the renminbi, which is why many countries, especially the ones that want the favor of the IMF, are building up their gold reserves.
Gold will trend upward again, but not before trending downward more, and it will never see the $10,000 range. At least not until the SDR liquidity scheme has ran its course.
The assumption that the system has no out is wrong. The current system is transitioning to the SDR multilateral system, which will include gold. Like previous systems before it, gold will eventually be removed from the SDR valuation.
It’s not a coincidence that the SDR was created 2 years before the dollar went off the gold standard. In 10 years or so we will likely begin to see the emergence of what will replace the SDR.
The bankers are not losing control, they are simply going to complete a cycle of wealth transfer before the system renews with SDR’s. You will see friend. The same methodology has been used for hundreds of years, if not more.
Roger Parness NOVEMBER 14, 2014 AT 12:40 AM If Au follows the trend to $0/oz it will be free!
Steve Henningsen (@Stevephenni) NOVEMBER 14, 2014 AT 3:25 AM JC, my only disagreement would be timeframe.
These changes usually occur over generations as human nature is to allow the past to fade from memory along with its lessons. (Not many Americans today even know their currency was once backed by gold.)
Currencies are faith based today and once that trust is broken and the SDR (or something else) is wheeled out to save the day, it only works if something tangible is thrown in the mix.
If gold is added to the pot, and I believe it has to be, then I doubt it will be removed within 10 years. They will wait until another generation has passed before slipping the shiny one into their pockets at the same time proclaiming how silly and useless it is to include in the SDR. As you state, the cycle then repeats…
Regarding all the back and forth about gold’s price, I think people are looking at it the wrong way. Own it for its ability to protect your purchasing power and not speculation.
Sure it’s $ price may continue to drop in the near turn, but I fail to see how it won’t be more valuable in the years ahead. (Eastern central banks certainly believe so.) Those trying to time this are walking a dangerous line, as when you finally want some it may not be so easily obtained.
(History shows these big changes typically occur over a weekend, when markets are closed.) One needs to buy their insurance before the event and just be content that their protected and not concerned that the premium keeps dropping.
Comments may be made at the end of Part 3 Thank You