This article examines two inflationary experiences in the past in an attempt to predict the likely outcome of today’s monetary policies. The German hyperinflation of 1923 demonstrated that it took surprisingly little monetary inflation to collapse the purchasing power of the paper mark. This is relevant to the fate of the “whatever it takes” inflationary policies of today’s governments and their central banks. The management of John Law’s Mississippi bubble, when he used paper money to rig the market is precisely what central bank policy is aimed at achieving today. By binding the fate of the currency to that of financial assets, as John Law proved, it is the currency that is destroyed.
Since posting new record highs in early August, the gold market has consolidated above $1,900/oz support.
A close below the $1,900 level would carry bearish implications for the near term.
Alternatively, a move back above $2,000/oz would likely be followed through to the upside with a rally to fresh highs. Silver, in turn, could be expected to run to new multi-year highs above $30/oz.
Those in favor of Judy Shelton’s approval by Congress, pursuant to her nomination to the Federal Reserve Board Of Governors, should not be surprised by the torrent of criticism directed at her.
A letter published and signed by former Federal Reserve officials and staffers called on the Senate to reject her nomination, stating that “Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand…”
Her “extreme” views were referred to in a general statement of condemnation:
In recent articles for Goldmoney I have pointed out the dollar’s vulnerability to a final collapse in its purchasing power. This article focuses on the factors that will determine the future for sterling.
Sterling is exceptionally vulnerable to a systemic banking crisis, with European banks being the most highly geared of the GSIBs. The UK Government, in opting to side with America and cut ties with China, has probably thrown away the one significant chance it has of not seeing sterling collapse with the dollar.
A possible salvation might be to hang onto Germany’s coattails if it leaves a sinking euro to form a hard currency bloc of its own, given her substantial gold reserves. But for now, that has to be a long shot.
And lastly, in common with the Fed and ECB, the Bank of England has taken for itself more power in monetary matters than the politicians are truly aware of, being generally clueless about money.
Conclusion: the pound is unlikely to survive a dollar collapse, which for any serious student of money, is becoming a certainty.
This article describes how China can escape the fate of a dollar collapse by tying the yuan to gold. There is little doubt she has access to sufficient gold. Currently, her interest is to preserve the dollar, not destroy it, because it is the principal means of Chinese foreign interests being secured .
Furthermore, a return to sound money requires China to reverse its interventionism under Xi, returning to Deng Xiaoping’s original vision. Sound money can only last if the relationship between the state and the wider economy is properly addressed.
Of all the major economies, China’s is best placed to implement a sound money solution. At the moment it seems unlikely the necessary reforms will be forthcoming; but a general collapse of the global fiat currency regime presents the opportunity for reassessment and change.
Dollar-denominated financial markets appeared to suffer a dramatic change on or about the 23 March. This article examines the possibility that it marks the beginning of the end for the Fed’s dollar.
At this stage of an evolving economic and financial crisis, such thoughts are necessarily speculative. But an imminent banking crisis is now a near certainty, with most global systemically important banks in a weaker position than at the time of the Lehman crisis. US markets appear oblivious to this risk, though the ratings of G-SIBs in other jurisdictions do reflect specific banking risks rather than a systemic one at this stage.
A banking collapse will be a game-changer for financial markets, and we should then worry that the Fed has bound the dollar’s future to their fortunes.
The dollar could fail completely by the end of this year. Against that possibility a reset might be implemented, perhaps by reintroducing the greenback, which is not the same as the Fed’s dollar. Any reset is likely to fail unless the US Government desists from inflationary financing, which requires a radically changed mindset, even harder to imagine in a presidential election year.
An unexpected destruction of fiat currency has been advanced by the monetary and fiscal response to the coronavirus. Financial markets have yet to discount the possibility of such an outcome, but in the coming months they are likely to awaken to this danger.
The question arises as to what will replace fiat currencies. In the past the answer has always been gold but today there are cryptocurrencies as well, whose enthusiasts are more aware than most of fiat money’s failings.
This article describes the basics about money, what it is and the role it plays in order to understand what will be required by the eventual replacement for fiat. It concludes that gold will return as the world’s medium of exchange, and secure cryptocurrencies, unable to provide the scalability and stability of value required of a medium of exchange will be priced in gold after the demise of fiat. But then the rationale for them will be gone, and with it their function as a store of value.
“Next five years is not about winning but surviving.” This is the headline of an article I wrote in early August 2019. At that point I was primarily thinking of economic survival. But now the world is facing multiple threats and multiple failures. As I have already stated, the Coronavirus is not the cause of global market crashes but the catalyst.
But even if I have been totally certain that the world will see an economic collapse greater than any crisis for 100s of years, this is the worst catalyst that anyone could have expected. Yes, a global virus was always one of the potential risks but of all triggers, this one was certainly the most unwelcome and horrible.
By Richard M. Ebeling – Re-Blogged From Savvy Street
Money is not a creation of the State. A widely used and generally accepted medium of exchange emerges spontaneously.
Carl Menger (1840-1921), the founder of the Austrian School in the 1870s, explained in his Principles of Economics (1871) and his monograph on “Money” (1892), that money is not a creation of the State.
A widely used and generally accepted medium of exchange emerges “spontaneously”—that is, without intentional government plan or design—out of the interactions of multitudes of people over a long period of time, as they attempt to successfully consummate potentially mutually advantageous exchanges. For example, Sam has product “A” and Bob has product “B”. Sam would be happy to trade some amount of his product “A” for some quantity of Bob’s product “B”. But Bob, on the other hand, does not want any of Sam’s “A”, due to either having no use for it or already having enough of “A” for his own purposes.
Tennessee Ernie Ford sang about the plight of coal miners decades ago. His song remains relevant in today’s increasingly crazy world.
“You load sixteen tons, what do to you get
Another day older and deeper in debt
Saint Peter don’t you call me ‘cause I can’t go
I owe my soul to the company store.”
The owners paid in script which coal miners used as currency. Script had no intrinsic value and was only good at the company store. The owners increased profits by coercing miners to buy goods at higher prices. Script cost next to nothing to produce.
We use dollar bills (paper and digital) that have no intrinsic value as currency in the U.S. The dollars cost next to nothing to produce and are used because of ‘legal tender’ laws.
[Views may differ, but why would any sane person want to keep rates around 2% or lower, well below market clearing levels? -Bob]
Following months of cajoling by the White House, the Federal Reserve finally cut its benchmark interest rate. However, the reaction in equity and currency markets was not the one President Donald Trump wanted – or many traders anticipated.
The Trump administration wants the Fed to help drive the fiat U.S. dollar lower versus foreign currencies, especially those of major exporting countries.
Instead, the U.S. Dollar Index rallied throughout July ahead of the expected rate cut and continued rallying after Fed chairman Jerome Powell made it official on Wednesday.
“Shanghai Gold will change the current gold market with its ‘consumed in the East but priced in the West’ arrangement. When China has the right to speak in the international gold market, the true price of gold will be revealed.” – Xu Luode, Chairman, Shanghai Gold Exchange, 15 May 2014
The price of gold has jumped 5.8% in a little over 3 weeks. This is a big move in a short period of time for any asset. Two factors fueled the move. The first is the expectation that Central Banks globally will revert back to money printing and negative interest rate policies to address a collapsing global economy. The second factor, more technical in nature, pushing gold higher is hedge funds chasing the upward price-momentum in the Comex and LBMA paper gold markets.
This article is a wake-up call for those who do not understand the true purpose of monetary inflation, and do not realise they are the suckers being robbed by monetary policy. With the world facing a deepening recession, monetary inflation will accelerate again. It is time for everyone to recognise the consequences.
All this year I have been warning in a series of Goldmoney Insight articles that the turn of the credit cycle and the rise of American protectionism was the same combination that led to the Wall Street crash in 1929-32 and the depression that both accompanied and followed it. Those who follow statistics are now seeing the depressing evidence that history is rhyming, though they have yet to connect the dots. Understandably, their own experience is more relevant to them than the empirical evidence in history books.
In what has become a four-part series, we are looking at the monetary science of China’s potential strategy to nuke the Treasury bond market. In Part I, we gave a list of reasons why selling dollars would hurt China. In Part II we showed that interest rates, being that the dollar is irredeemable, are not subject to bond vigilantes. In Part III, we took on the Quantity Theory of Money head-on, and showed the counterintuitive property that, the more dollars are out there, the greater the demand.
Now in this essay, we will tie this all together.
You could say it in one sentence: the regime of irredeemable currency has unintended consequences. We often say that we do not prefer the term “unintended consequences” because it puts the emphasis on the alleged intentions of those who perpetrated it. As we discussed in another recent article, John Maynard Keynes’ intentions really were evil.
US leaders are demanding the rest of the world recognize economic sanctions and stop buying Iranian oil. The U.K., Germany, France, Russia, China, and India are among the nations who don’t fully support the sanctions and would rather not pay higher prices for oil elsewhere.
American officials more and more often resort to delivering ultimatums, both to adversaries and allies alike. Nations that do not follow orders stand to lose access to the US financial system and could face trade sanctions of their own. That is a serious threat.
The huge majority of international trading is underpinned by US. banks and the dollar. Other currencies and banking systems cannot offer the same level of liquidity and convenience.
We are just a moment away from a significant achievement. If the current US economic expansion lasts until July 2019, it will reach 121 months, becoming the longest ever. The extended duration of the prosperity begs the question of when the next downturn will occur. Many analysts believe that its days are numbered, but we dare to disagree.
You see, we do not focus on the mere headlines, but always investigate the underlying factors behind the changes in specific data series. That’s true that the current expansion will likely be the longest on the record, but the reason for this is the softness of the recovery. The present expansion has been weaker than historical recoveries. Indeed, the real GDP has jumped just 24 percent since the end of the Great Recession. That’s a very disappointing result by historical standards: on average, the GDP rose by 33 percent during the previous three economic expansions, even though they were shorter.
- The dollar steps on the rally with a bullish reversal last week.
- Issues around the world warn not to get too bearish.
- Technical levels to watch in gold on the up and the downside.
- Gold mining stocks are waiting for gold to make a move – GDX is likely to outperform gold if the price breaks higher.
Gold is a safe haven asset that market participants tend to flock to during periods of fear, uncertainty, and inflation. The yellow metal is both a commodity and a financial asset, making it unique. Along with its many industrial and ornamental uses, gold serves as an asset for countries around the world that hold the metal as part of their foreign currency reserves. Not only do central banks, governments, and monetary authorities hold gold, but they have been net buyers of the precious metal over the past few years. China and Russia are both absorbing their domestic production and purchasing the metal in the international market to build reserves.
By Alasdair Macleod – Re-Blogged From Gold Eagle
Introduction and summary
The monetary, financial and political weaknesses of the EU are about to be exposed by the forthcoming global credit crisis.
This article assumes the combination of end of credit cycle dynamics and the rise in trade protectionism in 1929 is a valid precedent for gauging the scale of a developing global credit crisis today, as described in my earlier article published here. Then, it was heavier tariffs coinciding with a less destabilising inflation cycle than we face today, a combination that saw stock markets collapse. Today, we have the additional factors of far greater monetary inflation, far higher levels of government debt, low savings coupled with record consumer borrowing, and unbacked fiat currencies likely to lose purchasing power instead of gold-backed currencies which increased their purchasing power.
Declining international trade has already become evident in only a few months, and prescient observers detect early signs of a rapidly developing global recession. In response, the ECB has announced it will target lending to non-financial businesses with its TLTRO-III programme from September onwards.
Last week, in Is Capital Creation Beating Capital Consumption, we asked an important question which is not asked nearly often enough. Perhaps that’s because few even acknowledge that capital is being consumed, and fewer tie it to the falling interest rate (perhaps that is because the fact of the falling interest rate is, itself, controversial). At any rate, we showed a graph of Marginal Productivity of Debt.
We said that this shows that consumption of capital is winning the race. And promised to introduce another new concept to explain why.
China increased its gold reserves for a third straight month in February, data from the People’s Bank of China (PBOC) showed this morning.
The value of China’s gold reserves rose slightly to $79.498 billion in February from $79.319 billion at the end of January, as the central bank increased the total amount of gold reserves to 60.260 million fine troy ounces from 59.940 million troy ounces.
Powell’s testimony before the Congress is behind us. The ECB meeting is ahead of us. Will Draghi support the gold prices after recent declines?
Gold Falls Below $1,300
Gold bulls might be disappointed. The upward trend apparently ended. As one can see in the chart below, gold fell below $1,300 on Friday.
Chart 1: Gold prices from March 1 to March 4, 2019
By Gary Christenson – Re-Blogged From Silver Phoenix
We know the acronym MAGA – Make America Great Again. A different description of MAGA is MYTHS ASSOCIATED with GOVERNMENT ACTIONS.
THE MYTH OF GOVERNMENT SHUTDOWN. Some parts of the U.S. government close. The employees are not paid and hardship blankets the land. Well, NO! The government employees are paid retroactively and most business continues as usual. It is good political theater. The D.C. circus never stops.
By Keith Weiner – Re-Blogged From Gold Eagle
Last week, we joked that we don’t challenge beliefs. Here’s one that we want to challenge today: the dollar doesn’t work as a currency, because it’s losing value. Even the dollar’s proponents, admit it loses value. The Fed itself states that its mandate is price stability—which it admits means relentless two percent annual debasement (Orwell would be proud). So there is no question that the dollar loses value. The only mainstream debate is whether this is good or bad.
Our focus today is whether this is why the dollar doesn’t work, why it’s failing.
Prices have been rising for 100 years. There is no reason why they couldn’t go on rising for another 100. Or 1000. The inflation argument, as we call it, does not reach anyone other than those who already think the dollar is failing. The rest shrug it off. Most people really care only if their income goes up slower than prices go up.
Liquidity is becoming of central importance once again. It is frequently mentioned in mainstream media articles, interviews, and ‘educational’ programs. It was a central point of discussion during the financial market blowout in 2008.
The killing off of a little-known (until it was dead!) data series earlier this year by the not-so-USFed has gotten the beehive buzzing once again about a liquidity crisis – or the possible aversion of one in the short term. It has also gotten things buzzing about the longer term as well.
Late in 2017, the St. Louis Fed stopped publishing interbank loan data. Period. Just prior to that, the amount of interbank loans on a weekly basis dropped to zero:
Re-Blogged From Newsmax
The U.S. currency is at its strongest level in 30 years, according to the Economist newspaper’s January 2019 “Big Mac Index.”
The newspaper’s “lighthearted guide to exchange rates” measures the purchasing power of currencies against each other. The gauge also compares the prices of McDonald’s flagship hamburger, the Big Mac, in different countries with the actual exchange rate between the currencies to determine whether a currency is over- or undervalued.
For example, “a Big Mac costs 3.19 pounds in Britain and $5.58 in the United States. The implied exchange rate is 0.57 [pound per dollar]. The difference between this and the actual exchange rate, 0.78, which suggests the British pound is 27% undervalued,” the Economist said.
By Keith Weiner – Re-Blogged From Silver Phoenix
We could also have entitled this essay How to Measure Your Own Capital Destruction. But this headline would not have set expectations correctly. As always, when looking at the phenomenon of a credit-fueled boom, the destruction does not occur when prices crash. It occurs while they’re rising. But people don’t realize it, then, because rising prices are a lot of fun. They don’t realize their losses until the crash. So we want to look at stocks when they’re high, before people realize what’s happened to them.
How do you value a stock? The classic methodology, proposed by Benjamin Graham and Warren Buffet, is to discount future free cash flows. Let’s leave aside the problem of how to predict future revenues much less cash flows in our crazy resonant system with positive feedback. For purposes of this discussion, we will just assume that a stock generates a known and constant cash flow of, say, $1 per year, in perpetuity.
By Alasdair Macleod – Re-Blogged From GoldMoney
This article is an overview of the principal factors likely to drive the gold price in 2019. It looks at the global factors that have developed in 2018 for both gold and the dollar, how geopolitics are likely to evolve, the economic outlook and how it is worsened for the dollar by President Trump’s tariff war against China, the availability and likely demand for bullion, and the technical position in paper markets. Taken together, the outlook is bullish for gold.
For gold bulls, 2018 was disappointing. From 11 December 2017, when gold made a significant bottom against the dollar at $1243, it has ended virtually unchanged today, after being 4.2% up. Gold had to struggle against a rising dollar, whose trade-weighted index rose a net 3.7% over the same period, and as much as 9.4% from its mid-February low.
By Jeff Clark – Re-Blogged From Gold Eagle
I read a mainstream report about a decline in gold imports into Hong Kong, with the journalist concluding that gold demand in China is therefore down.
The interesting thing about the article is that the figures stated were accurate; Hong Kong imports into China are down. But here’s the thing: the message is wrong. It’s incomplete, misleading, and as I show below, misses the forest for the trees on what’s really happening with gold inside China. If an investor makes a decision because of that article, they may not be basing it on false raw information, but on an entirely faulty conclusion.
By Keith Weiner – Re-Blogged From Gold Eagle
A major theme of Keith’s work—and raison d’etre of Monetary Metals—is fighting to prevent collapse. Civilization is under assault on all fronts.
The Battles for Civilization
There is the freedom of speech battle, with the forces of darkness advancing all over. For example, in Pakistan, there are killings of journalists. Saudi Arabia apparently had journalist Khashoggi killed. New Zealand now can force travellers to provide the password to their phones so the government can go through all your data, presumably including your gmail, Onedrive, Evernote, and WhatsApp. China is now developing a “social credit” system, to centrally plan the economy and control citizen behavior. Canada has made it a crime to call someone by the wrong gender pronoun. Even in the US, whose First Amendment has (mostly) stood as a bulwark against censorship now has a president who threatens antitrust action against Amazon, because its CEO Jeff Bezos owns the Washington Post, which prints things he does not like. On college campuses, professors are harassed if they say one thing that the professional sensitives are sensitive to. If a controversial speaker is invited, he risks an angry mob coming to disrupt his talk (or worse).
Mr. Market the Great Deceiver
Markets are deceptive…but we all know that. Beyond deceptive, markets are actually down right diabolical. Mr. Market operates through his two most trustworthy lieutenants Mr. Bull and Mr. Bear. He has tasked Mr. Bull to climb and reach the top of the mountain using investors buying power to fuel the rise. But he has also instructed Mr. Bull to not allow those same investors to complete the journey themselves, he wants to reach the top without them. It’s a hard job to pull off and Mr Bull needs to use every trick in the book to throw off these investors after they use their money to power the trend upward. It’s a process that takes time and Mr. Bull’s prime tools are greed and fear in the minds of investors.
By Alasdair Macleod – Re-Blogged From Gold Eagle
Are the Chinese Keynesian?
We can be reasonably certain that Chinese government officials approaching middle age have been heavily westernised through their education. Nowhere is this likely to matter more than in the fields of finance and economics. In these disciplines there is perhaps a division between them and the old guard, exemplified and fronted by President Xi. The grey-beards who guide the National Peoples Congress are aging, and the brightest and best of their successors understand economic analysis differently, having been tutored in Western universities.
By Keith Weiner – Re-Blogged From Gold Eagle
There is a popular notion, at least among American libertarians and gold bugs. The idea is that people will one day “get woke”, and suddenly realize that the dollar is bad / unbacked / fiat / unsound / Ponzi / other countries don’t like it / <insert favorite bugaboo here>. When they do, they will repudiate it. That is, sell all their dollars to buy consumer goods (i.e. hyperinflation), gold, and/or whatever other currency.
By Keith Weiner – Re-Blogged From Gold Eagle
Let’s continue to look at the fiasco in the franc. We say “fiasco”, because anyone in Switzerland who is trying to save for retirement has been put on a treadmill, which is now running backwards at –¾ mph (yes, miles per hour in keeping with our treadmill analogy). Instead of being propelled forward towards their retirement goals by earning interest that compounds, they are losing principal. They will never reach their retirement goals. If you disagree, we encourage you to model it.
By Clint Siegner – Re-Blogged From Gold Eagle
Some of last week’s weakness in the stock market was attributed to surprisingly week jobs report on Friday. Non-farm payrolls came in significantly below projections.
However, much of that weakness was explained by Hurricane Florence. And the headline unemployment rate dropped to 3.7% – the lowest in almost 50 years.
Much was made of that, while almost nothing was made of the rate of employment at 60.4% – also near 50-year lows.
By Mark O’Byrne – Re-Blogged From Gold Eagle
– The U.S. government is “missing” $21 trillion between the Department of Defence (DOD) and Department of Housing and Urban Development (HUD)
– Investment advisor and former Assistant Secretary of Housing, Catherine Austin Fitts, predicts the global financial system “will take some big hits before the end of the year” (see video below)
– They can publish financial statements that are”complete fiction with no accountability to you and call it national security”
– Gold is one of the “primary real assets” and a “core holding” … “I love gold … I am also a silver fan”
– “I am getting reports that silver is getting hard to find … go and try to buy a bunch of silver. It’s tough…”
– “But make sure wherever you hold your gold” that the “custodian relationships” and where you have gold and silver stored are “absolutely safe”
– Own “real assets” and “have as little leverage and debt as possible…”
By JP Cortez – Re-Blogged From Gold Eagle
Americans no longer carry gold and silver money in our pockets and purses as our grandparents did. But we still carry the history, legacy, and spirit of those gold and silver coins in our language.
“Sound money” embodies a clear message recognized for centuries around the world. It describes the musical, metallic ring of a gold, silver, or copper coin dropped on any hard surface of glass, stone, wood, or metal.
Sound money literally refers to real wealth, with a natural, unmistakable signature of authenticity, as opposed to the paper, plastic, and electronic debt instruments used almost exclusively today.
By Bloomberg – Re-Blogged From Newsmax
The currency war has arrived.
So say some of the best and brightest in the $5.1 trillion-per-day foreign-exchange market. U.S. President Donald Trump on Friday accused China and the European Union of “manipulating their currencies and interest rates lower.” The comments came after the yuan plunged to its lowest level in a year, with little sign of China’s central bank intervening to stem the slide. They also follow a decline in the euro this year and add to the calculus that European Central Bank policy makers might need to consider when they meet next week.
By Daan Joubert =- Re-Blogged From http://www.Gold-Eagle.com
When two opponents are locked in a quite evenly balanced bitter and struggle, the balance tends to sway first one way and then the other as either side manages to find and exploit an opportunity until the other counters it then pulls out all stops to regain any lost ground. Typically there is no clear victor and the result looks like a stalemate. Sometime, though, one side receives reinforcements to suddenly change a pending stalemate into victory. Wellington experienced that at the Waterloo. Wall Street can tell a similar tale.
Re-Blogged From Stratfor
- Argentina’s request for a standby loan from the International Monetary Fund will force the country to carry out tighter fiscal measures, such as reducing the transfer of funds to the provinces.
- As a result of his decision to negotiate a deal with the IMF, President Mauricio Macri will have a more difficult time gaining congressional support for economic and labor reforms.
- Although divisions persist in Argentina’s political opposition, worsening economic conditions will encourage Macri’s rivals in the next quarter, hurting the president’s chances of winning re-election in 2019.
(EITAN ABRAMOVICH/AFP/Getty Images)
By Jim Willie – Re-Blogged From http://www.Gold-Eagle.com
TIMBER!! That is the standard cry in the forest industry among loggers who cut down giant trees, the warning to step aside for the great impact. GET READY FOR THE SIMULTANEOUS BANKING CRISIS IN THE THREE BIGGEST EUROPEAN ECONOMIES: GERMANY, FRANCE, ITALY. The United States and the London Centre will not be able to avoid the crisis.
Try that again. TIMBERRRR !! An event of monumental importance and impact is on the verge of occurrence. The largest bank in Europe is Deutsche Bank. Its credit default swap is rising in cost, while its stock price has entered single digits in a powerful decline. The great D-Bank, site of the European office in management of the multi-$trillion derivatives, is on the verge of financial failure. It is the largest bank in all of Europe. All of its business segments are impaired and losing money in a hemorrhage. Furthermore, it is a big bond holder for Italian Govt Bonds. The Italian banking system is in the death throes, which has finally been recognized. Their recent elections openly debated pathways in the face of banking system failure, which the Jackass has been expecting for over a year in steady coverage with analysis. However, the bigger bond holder for Italian debt is France. Expect a massive bank crisis to emerge very soon that wrecks Societe General and BNP Paribas, its two largest banks.
Back in 2016, the Hat Trick Letter warned of very high Non-Performing Loans among the Italian banks. The HTLetter warned of rising government bond credit defaults swap rates. It is the insurance rate on a standard government bond, in coverage for default of the bond. It was this CDSwap rising rate which warned at least three months in advance of the Lehman Brothers failure (killjob by JPM and GSax). But the contagion for the Italian banking failure is the main point. Notice that back two years ago, the French big banks had triple the size of exposure to Italian debt, versus the German banks. The Spanish and US banks will also suffer from the impact. The graph below is from July 2016.
GLOBAL CURRENCY RESET
The Global Currency RESET has begun, hardly with fanfare and parades, or even formal public statements by the main players. Many are the events and steps toward the planning and execution of the RESET, which will be very disruptive, and make the Lehman failure seem rather minor by comparison. The Jackass has consistently called what comes to be the Systemic Lehman Event, since major sovereign bonds have become subprime in quality, kept sustained by central banks with their QE. Another better name for Quantitative Easing is hyper monetary inflation with debt monetization of the unsterilized type. See Zimbabwe and South America for the wondrous outcomes in national economic wreckage, poverty, and bank insolvency, just two examples. The Jackass has been preaching for several years that the QE monetary policy has saved the big banks, or at least through bolstered official liquidity having bought them some time. But the consequence has been to render severe damage to the tangible economies. QE has essentially killed the economies. The feedback loop has struck the banks, which suffer great damage from the chronic recession which has never stopped since the year 2006. Business failures have combined with lower energy prices to cause a wrecking ball to hit the big banks. They also have been hurt by the rising bond yields for the USTreasurys. The lie on economic growth has been about 5% to 7% every year, from severely gimmicked price inflation. See Shadow Govt Statistics with John Williams for proof. Therefore, the true inflation adjusted GDP has been minus 2% to minus 4% every year since before the Lehman failure.
The RESET is in progress. Many are its elements. Like the Gold-Oil-RMB futures contracts in Shanghai. Like the Cross-Border Interbank Payment System (CIPS) which will function as the SWIFT alternative for Eastern nations. The entire Belt & Road Initiative forms a massive $6 to $8 trillion conference table of projects, mostly construction, all in the Eastern Hemisphere, and none conducted in USDollar terms. Many are the non-USD platforms under development, some of which have been around for a while like the BRICS Development Bank. Lately, a new piece has been put in the picture, with the BRICS Gold Platform. My suspicion is that Turkey might soon play a role with it, in conversion of sovereign subprime (toxic) bonds like the USTreasurys and EuroBonds. Keep in mind that Italian Govt Bonds deserve a 10% yield, like the Greek Govt Bonds, except that the Euro Central Bank has been subsidizing these toxic (in) securities.
TWO KEY EVENTS
An astute and very well-informed source with solid connections has provided important direction on the development. Timing is always difficult. He looks toward two key events that soon will trigger a global financial crisis, complete with a wave of reforms and solutions sought, all amidst great changes in financial markets. Expect a complete restructuring of the financial world we know it, as in debt restructure. The result will be a gold-centric financial structure, with central banks honoring finally the Gold Standard and the gold asset in banking reserves. The shift will be seen toward not only implementation of the Gold Standard, but also the Chinese RMB and possibly a key role for crypto-currencies. Confirmation is coming from the mainstream media. During the Systemic Lehman Event, otherwise called the bust of the Everything Bond Bubble (from QE squared), some sovereign bonds will be defaulted upon, with painful consequences from the failures. During the upcoming bust, certain entire national banking systems will collapse.
At the same time, next-generation technology will be unleashed. It will be both disruptive to monopoly corporations, and society also. It will act as a wrecking ball to many energy companies who have suppressed the technology. In the RESET expect some hardline rules (if not games) exerted by the banker cabal, with respect to war on cash and negative rates. They will attempt to maintain their centralized power and absent transparency. The Elders of China are driving the RESET process, after having abandoned support for many key institutions of power in the West. A gold-backed Chinese Yuan is anticipated as part of the new framework.
In the upcoming chaos, tremendous changes will come, as part of the Global Paradigm Shift. In the reforms and much needed solutions, the suppression controls and shackles for Precious Metals will be shoved aside. The source has expectations of key events unfolding rapidly, with no prospect of much delay or favorable outcome for the USDollar, since Gold cannot hold back any longer. Bear in mind the gigantic Egyptian gold investor, where something like 50% of his wealth was invested in gold bullion metal. The shrewd investors expect only PM to survive the big burn that comes, and not much else, surely not paper assets when the King Dollar suffers its fate. The source is not certain how much longer the suppression of price and news can be maintained. It surely will not last another year, more like at most several months. Events are picking up in accelerated speed and breadth for the non-USD platforms. By the way, the source is not Santa himself, Mr Sinclair.
Then the source emphasized this. He awaits two key globally important events, which are set to occur. Nothing can stop them, and both will be powerful. He knows what they are, but is not at liberty to offer further details, very clear events in development. They are near-term triggers, which will release Gold & Silver prices. Once gold is released, silver will take flight. He stressed how the Global Currency RESET will have some very visible unexpected aspects in a complete restructuring of the financial world versus its present form. He seems to be part of the planned restructure, planning, testing, and implementation, if not the upcoming crisis management.
The Jackass tried to guess on the key trigger events with Saudi oil sales taken in RMB payments. He was evasive but admitted that is a certainty already to occur between the Chinese and Arabs. My next gambit guess was to describe the development of non-USD platforms. He repeated that two key events are in the near-term schedule in progress. Before the Jackass could mention the near-term chaos with Deutsche Bank and the entire Italian banking system, he offered more details, but still somewhat general.
This will unfold as an event schedule sequence. He gave emphasis that silver metal was in dire shortage, the deficit growing worse with each passing month. Upon further reflection, the Jackass believes a widespread shutdown of principal globalist cabal banks might occur, which would alter the entire global financial framework, and unleash the gold demand. The remaining banks could then replace a large swath of their USTreasury Bonds, EuroBonds, UKGilts, and JapGovtBonds in favor of Gold bullion for the formally held assets in reserves. The RESET would then dictate how global banking systems must migrate toward gold and away from sovereign debt in their reserves management systems. The rising Gold price in the following years would ensure the banks of healthy solvency. Or at least gold will aid the central banks in their struggle toward survival, which have made disastrous decisions in the accumulation of $9 trillion of toxic sovereign bonds just in the USFed and EuroCB.
Here are several potential key events to force a grand grotesque disruption. The others pertain to deep impact events, also certain to continue the disruption. The Jackass guess on the two events are first a combination of Deutsche Bank failure with Italian banking system collapse. The second guessed event would be the introduction of the Gold Trade Note, designed to sit atop the Shanghai Gold-Oil-RMB futures contracts, with a possible announcement of interchangeable Chinese Yuan with the Gold Trade Note in a caretaker temporary transition role. Be sure to know that Jackass conjecture on the two key events is a much better descriptor, since guess seems flimsy flighty and conjecture seems educated calculated.
LIST OF POTENTIAL KEY EVENTS
VERY SERIOUS MAJOR GLOBAL GAME CHANGERS
- Deutsche Bank failure, talk of restructure, with rupture of derivative complex
- Italian banking system collapse, complete with numerous bank runs
- Italian sovereign currency announced as new Lira currency in EU exit
- London Metals Exchange launches RMB-based metals contracts
- COMEX & LBMA rupture from lost control of integration with oil & currencies
- Formal launch of Gold Trade Note atop the Shanghai G-O-R contracts
- Saudi oil sales in RMB to China, adopted by other Arabs and other Asians
- London flips East, with RMB Hub development, following their AIIBank membership
DEEP IMPACT DISRUPTIONS
- Flourishing non-USD platforms, led by Chinese design and efforts
- Germans and French formally end Russian sanctions, thus flipping East
- CIPS bank transaction system gains wider adoption, even among Western nations
- BRICS Gold Platform announces conversion of sovereign bonds to Gold
- China pre-announces gold-backed Yuan in form of convertible Gold Trade Note
- China announced Yuan backed by basket of currencies, Gold, other commodities
- Introduction of a new IMF SDR basket that includes gold, crude oil, iron
- EU opens door to Euro payments in external trade with trading partners
- Emerging Markets rupture on debt defaults, due to currency crisis
- NATO fractures in the open and EU pursues independent military security
PROOF OF MONETARY POLICY FAILURE
The Global RESET has already begun. The USFed has brought about a chronic slowdown in money velocity, which reveals the horrendous chronic recession. Damage has been done for over six years during the heretical QE monetary policy. The chart is only through end of year 2018. The malinvestments are hitting the wall. Add to the discussion on the bond market, aside from the USTreasurys, where much distress is seen. The USFed cannot manage the entire asset backed securities (mortgage bond) market and the corporate bond market, let alone the high yield (junk) bond market. Far afield is the Emerging Market arena, with scary damage. The Quantitative Tightening has caused severe problems already. It all seems like a scuttle project. Thus the new chairman of the USFed is certainly not a banker cabal player, with no Wall Street experience.
The following is from the Voice, with minor edits for flow. The chart is for data ending January 1st. “Chaos has entered many parts of the lateral portions from the bond market, but more visibly worse to the center of the tangible economy. It is all much simpler than you think. The Velocity of Money has slowed down dramatically and in some sectors of the economies have gone close to zero. It is much like cutting off oxygen from a passenger jet, where the passengers suffocate. Refer to the Austrian School of Economics describing the Crackup Boom scenario where malinvestments finally collapse. It is much like an earthquake triggered
By Peter Schiff – Re-Blogged From Euro Pacific Capital
This week, market watchers around the world are justifiably fixated with the high-stakes, high-drama political developments unfolding in Italy. While a political crisis in the world’s 9th largest economy (International Monetary Fund figures, 4/17/18) would normally not be enough to cause an international meltdown, given how thin the global economic ice has become as a result of ever-increasing debt loads, even small disruptions can create systemic problems. But from my perspective, what makes the Italian drama so interesting is that it parallels so precisely developments in the United States. It’s amazing that more Americans do not realize, that when looking at Italy, they are looking at a fun house mirror reflection of the United States.
By Gary Christenson – Re-Blogged From Deviant Investor
- Federal Reserve and U.S. government policies devalue the dollar—down about 98% since 1913.
- U.S. government spending is out of control, increases every year, regardless of revenues, and shows no sign of plateauing or declining.
- Few people encourage balanced budgets and LESS spending. All government agencies, lobbyists, congresspersons, military contractors, and many corporations encourage MORE spending, and by necessity, more debt.
- Debt based fiat currency units “printed” almost without limit enable deficit spending.
By Michael Bllanger – Re-Blogged From http://www.Gold-Eagle.com
There is a famous quote about short-selling that comes from Olde English business folklore that goes something like this:
“He who sells what isn’t his’n.
Must deliver or goes to prison!”
That old horse chestnut was used to frighten the Rothchildian short-sellers that used to hang out on the old New York “curb” back before governments and influence- peddling lobbyists conspired to change the rules. I used to love to find overvalued stocks or commodities and get our trading desk to call over to the loan post to see what it would cost to borrow a few thousand shares of some pumped up bowser of a stock and then attempt to catch it on an uptick in order to sell it. The entire concept was rather civilized because everyone would know that there was a highly visible bear out there trying to get short something and invariably, the principals like the CEO or CFO would find out and then the ancient game of cat-and-mouse would begin.
By Keith Weiner – Re-Blogged From http://www.Gold-Eagle.com
Back in the drug-soaked, if not halcyon, days known at the sexual and drug revolution—the 1960’s—many people were on a quest for the “perfect trip”, and the “perfect hit of acid” (the drug lysergic acid diethylamide, LSD). We will no doubt generate some hate mail for saying this, but we don’t believe that anyone ever attained that goal. The perfect drug-induced high does not exist. Even if it seems fun while it lasts, the problem is that the consequences spill over into the real world.
By Rick Mills – Re-Blogged From http://www.Gold-Eagle.com
Gold’s safe haven status was tested this week as Donald Trump’s economic war threatens to turn into a shooting war, with a number of global flash points getting hotter. At the time of this writing the precious metal moved from a close of $1325.69 an ounce on April 5 to $1337.90 on April 12, dipping on Thursday after reaching a high of $1364.50 during Wednesday morning trading – the highest it’s been since Feb. 14.
On April 11 gold rose to $1365 and silver to $16.85 as the possibility of a war in the Middle-East took center stage. Libor rose for the 45th consecutive day to 2.35% on April 12 indicating the tightness in the US dollar market and increased uncertainty re the trust between banks.
It looks like the Libor chart is wanting to break out on the upside boosted by an increasing budget and trade deficit and reduced recycling of US dollars.
By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com
Regular readers of Goldmoney’s research will be aware that we were among the first to alert western financial markets that China would introduce a new oil futures contract priced in yuan, months before it was officially admitted that the plans for the contract were being finalised and a date for trading was being planned.
Trading in the new Shanghai oil future commenced last Monday, and on the first three days trading there were 151,804 contracts traded with a turnover value of 65bn yuan. It is the first futures contract listed on China’s mainland available to overseas users, putting them on the same footing as domestic investors. There are 15 benchmark contracts for different delivery dates between September next and March 2019.