The Last American Alamo JC Collins Part 2
The Approaching Reset of International Currencies
Before explaining that statement further we need to understand two important terms, which also tie in with the conclusion of this essay.
Microprudential Risk is the level of threat to the solvency or economic viability of individual financial institutions.
Macroprudential Policies are implemented to reduce the extreme risk in aggressive financial sector environments.
Most of the readers here will not be surprised that I have introduced two more micro and macro terms, as the opposing paradigms are a major component of what is written on this blog, whether economic or esoteric.
Since floating exchange rate systems lead to an increase in international capital flows, it can be further determined that an increase in capital flows lead to an increase in macroprudential risk, which without offsetting policies, will lead to extreme credit booms and asset bubbles.
This is what the world has experienced under the floating exchange rate system dominated by the American dollar. And all central banks and economies have fallen victim to the regime.
The coming of a new international financial system can no longer be denied. We are now seeing the beginnings of restrictions on cross border capital movements and additional tightening of bank and capital regulations as detailed in the Basel 3 regulations of the Bank for International Settlements.
These restrictions and tightening of regulations are the forbearers of a return to a fixed exchange rate regime.
After the 2008 financial crisis the G20 countries conveniently asked the BIS and IMF to develop the framework for a macroprudential policy to reduce risk and implement a new fixed exchange rate system.
It has been my proposition that this new fixed exchange rate system, though likely volatile at first, we eventually settle into the SDR supra-sovereign system.
The process of all currencies and commodities unpegging from the US dollar and pegging to the SDR will in all probability happen piecemeal with the Eastern regions quickly jumping on the BRICS bandwagon. The Western regions will eventually be dragged along as both Eastern and Western regimes are consolidated under one massive agreement.
This agreement will also include the restructuring of sovereign debt through the IMF’s Sovereign Debt Restructuring Mechanism, or SDRM.
At some point throughout this process we will see the modification of the International Monetary Fund to more fairly reflect the economic reality of the international community. The IMF will see its first non-European Managing Director, most likely the current Governor of the People’s Bank of China, Zhou Xiaochuan.
Russia is taking the lead role in the dollar destruction script so China can maintain a level of approachability for the restructuring.
Some of the challenges to having an SDR reserve system is encouraging the private markets to trade in SDR denominated assets. This is where the overall allocation of a countries or regions SDR composition will come into play. The inevitability of oil, gold, coal, wheat, rice, etc.., being priced in SDR’s will become more obvious as the new system emerges further.
Another challenge to the SDR system will be in getting sovereign countries to give the IMF the authority to issue SDR’s as it sees fit too when needed. This is the quintessential movement towards a method of global governance.
There has been much conversation on the internet of a forthcoming Global Currency Reset. What we have covered in this essay is in fact what is being referred to as the reset. So many people have been attempting to describe this process in both the simplest terms and complex terms.
On some deep level we all know that the US dollar will not be the reserve currency of the world forever. Our efforts to understand what is coming is giving birth to urban legends and internet conjecture about how it will happen and when it will happen.
Some predict that it is going to happen tomorrow. And its always tomorrow.
Some are certain that we are at least 10 years away from the transition.
Somewhere in the middle I reckon will be the actual event. If indeed there is one specific event which we can point at and say, there, that was the great global currency reset.
Many are so obsessed with what certain currencies are going to be worth after they unpeg from the dollar and peg to the SDR that they are missing out on the most exciting transition that we will ever see in our lifetime.
What will the Iraqi Dinar be worth? What will the Vietnamese Dong be worth? How will all that money in circulation be taken out so that the currency can actually be revalued at something worthwhile?
I get many questions on this all the time and I’ve answered it already to the best of my ability in the post “The New Exchange Rate System”. A large portion of the M1 money supply of all countries will be restructured through the SDRM.
This will fix both the sovereign debt crisis and currency crisis with one move. The money left in circulation will be revalued based on each countries SDR composition and defined allocation, determined by economic indicators and fundamentals.
Perhaps cross border restriction on the movement of capital will prevent mass transfers of wealth from one end of the spectrum to the other.
The common denominator to all events, countries and institutions is the Bank for International Settlements. From that observation we can assume that the unfolding world drama is a well scripted stage play to direct populations and industries into accepting the SDR dominance.
The involvement of the United States in the coup which overthrew the democratically elected and pro-Russian government of Ukraine, as well as its manufactured control and abuse of the international institutions which it has dominated since 1944, will soon serve to isolate the dollar. America’s friends will soon turn their backs and join the larger union of emerging economies.
Historians will look back and say that American hegemony died in Eastern Europe. Ukraine is the last American Alamo.
In closing I would like to state that being a Canadian has created strong associations with America for me. Countries are, like global financial institutions, tools of the international bankers.
Whether Canadian or American, or Chinese for that matter, we are all victims of a larger process by which our very existence is engineered and sold to us as the only reality.
Patriotism is one of the strongest tools to divide and conquer masses of humanity. This method is very much at play in world events right now. With that being said, with all its probable faults and unfairness, if the new international financial system doesn’t emerge as another fixed exchange rate regime, the world will fall once more into the destructive pattern of a floating exchange rate regime, which will lead to more credit booms and asset bubbles.
The inherent fault in fiat currencies is another matter entirely.