Thursday, July 20, 2017

Jim Willie: Global Currency Reserve at Risk – July 15, 2017

Jim Willie: Global Currency Reserve at Risk – July 15, 2017
Related image
Within the US borders, the population remains largely ignorant of the true significance of the global currency reserve concept. It is of paramount importance, yet almost never discussed in the financial press. The public within the United States simply assumes the country operates with the USDollar as its currency, with near blindness to its global role in trade and banking. The end of an era is coming, as the change will be powerful in its effect. The shock wave could hit this year in some form, in a manner to highlight its importance.
The term is tossed around in common manner, often without an explanation of what it means. A strict meaning is followed by a practical meaning. The USDollar serves as global currency reserve, insofar as the USTreasury Bond is the standard for bank reserve core asset usage. Numerous countries have a core foundation to their national banking system. They maintain core assets and ratios. It is not gold bullion, but rather the USGovt debt. It is the USTBond denominated in USDollars. Of course, such practice is upside down and lunatic. Debt operating as core assets in the global banking system is utterly reckless, insane, and bound to force a systemic breakdown. Such is the heresy and risk from the banker cabal.
The practical side of global currency reserve system is that trade payments are standardized as being executed in USDollar terms. A crude oil shipment, a grain shipment, a container vessel shipment, they are paid in USD terms, often with short-term USTreasury Bills. Also, international contracts like for consulting services or for installation of IT systems typically are written for payment in USD terms. As a result, the nations set to pay for a shipment or contract maintain huge USTreasury stores in their banking systems, ready to complete the trade payments.
The King Dollar and its court of financial terror is destined to lose its privileged perch. The abuse to maintain the global USDollar financial system is universal and profound. It all engenders tremendous resentment and backlash in the form of resistance, together with concerted movements toward the non-USD platforms. The movements are emerging from the East. When the global reserve currency status is lost, the American public will face severe problems never before encountered. They will be very confused. They will be lied to in a big way. Consider the import price inflation, the supply chain shortages, and the civil disorder. Running the USEconomy and USGovt on an international credit card, without ever paying the bill, has a certain limited duration. When the reserve status ends, the privilege ends, and the shock begins.
The Eastern nations control significant manufacturing facilities toward the global economic output. Such is the case after a full generation of outsourced industry by Western corporations. At first it was the Pacific Rim in the 1980 decade. Then it was India, Brazil, and a host of other burgeoning nations striving for further development. The West controls the financial markets, with all the elaborate paper instruments, and all the sophisticated market rigging machinery. If it controls anything, the East controls the manufacturing sector. Therefore these nations, led by China and the Pacific Rim, within which is the key player Taiwan, are in a position to dictate the terms of trade payment. The standard as of now is the USTreasury Bill. This will ultimately change, and when it does, the USDollar will officially shed its global reserve status. The impact will be enormous.The Eastern nations, perhaps under the aegis of the Eurasian Trade Zone protective shadow, are in a position to demand alternative forms of trade payment. Consider the Chinese RMB currency, the Ruble currency, or soon the Gold Trade Note. With manufacturing prowess comes the power to dictate trade payment. The risk to the USEconomy is cutoff for supply into the many sectors, most visibly the retail sector. All the while, the One Belt One Road set of massive projects will be conducted outside the USDollar sphere.
The initial impact is most likely to occur within the crude oil market. The key region for the Petro-Dollar defacto standard has been for 40 years the Arab Gulf Region. The OPEC oil cartel has been led by the Saudis, who operate as puppets for the Anglo-American helm and the banker cabal. The Saudis are in heated conflict with Qatar, as the Petro-Dollar has fractured in full view. The Saudis are in an ugly war with Yemen, in order to steal energy reserves. If truth be told, the Saudis are bankrupt and broken. Enter into the void the Natural Gas Cartel, led by Russia, Qatar, and Iran. It is in the formative stage here and now. The key event upcoming is for the Chinese to win the right to pay for Saudi oil in Chinese RMB terms.Following this will be Kuwait, Oman, UAE, and other Arab oil monarchies. The event will mark the final nails in the Petro-Dollar coffin, whose standard structure has been undergoing disintegration for three years.
This is inevitable, a domestic only new USDollar. The Jackass has harped on this topic for two years or more. It is not folly, but rather a reality which approaches closer with every passing month. In time, the Eastern nations will not accept USTBills as trade payment. They will reject the USDollar for its fallacious underpinnings and fraudulent activity and the folly of its management. The King Dollar is backed by the USFed and hyper monetary inflation, called euphemistically Quantitative Easing. It means the rules for limiting the quantity of dollars is relaxed, and African style monetary inflation is permitted. This is reckless and heretical, since the USDollar is the global reserve currency. All national banking systems are undermined by the QE process. The King Dollar is also backed by war, sanctions, and threats of war. The nations which work to sell oil outside the USD sphere have been subjected to war invasion (see Iraq), to sanctions (see Iran), and to global war with conflagration (see Russia).
The rejection of the USDollar in trade payments will mark the beginning of a critical new chapter in modern history. The end of the Petro-Dollar defacto standard will usher in the dawn of the NatGas Cartel and the urgency for launching the New Scheiss Dollar. Given the $550 billion national trade deficit, the USGovt will see massive pressure for devaluation of the New Scheiss Dollar, like 30% every six months. The USGovt will most likely, given its past corrupt history, present a fallacious backing for the new currency. They are likely to present a false gold backing like the infamous ludicrous Deep Storage Gold ledger item. They are likely to present an inadequate oil reserve as partial basis. Keep in mind that the Strategic Petroleum Reserve is worth around $7 billion. Therefore, the trade deficit requires almost 80 such reserves to cover each year’s trade deficit. The USGovt deficit is in the $1.2 to $1.5 trillion neighborhood. It must also be financed. The painful devaluations will be necessary in order to finance the USGovt debt and trade deficit with a cheaper domestic dollar. Washington will be under huge pressure to attract foreign capital. It does not now, since it relies upon the printing press and leveraged machinery. Welcome to the real world, where fundamentals matter. With the higher import prices, will come product shortages and empty shelves from lack of demand. Then comes the civil disorder. The Jackass anticipates three centers will suffer riots and highly disruptive events: supermarkets for food, gasoline stations for fuel, and ATM machines for cash.
The impact felt across the entire financial structural systems will be enormous when the King Dollar loses its prestige and elite privilege, upon loss of the global currency reserve status. With the King Dollar cut off at the knees, the scramble will be on to find a stable core vehicle to serve as the foundation for the global financial system. Enter gold. With the five-fold increase in the monetary supply in the last several years, the solution will be that Gold will seek its proper water level, five times higher in price. It is inevitable. It is as probable as the tide rising in the Bay of Fundy in Maine, the northeastern-most point in the United States. The tide is tremendous in its differentials, in the area among Maine, New Brunswick, and Nova Scotia.
With the arrival of the Gold Trade Note, the gold element will enter into the financial system via the trade payment arenas. Expect China to make the introduction, which will kick the King Dollar in the nuts. The kick will be done with a gold-tipped boot, the gold probably re-hypothecated from stolen gold in London and delivered to Shanghai. The Eastern nations will demand proper payment for shipments, which are honorably supplied. The United States has deeply undermined the USDollar for its role in banking, for its role in trade. Big profound changes are coming. The gold price will in all likelihood experience some fritz on the billboard of prices. Expect perhaps a different gold price in every global region, depending upon the corruption and the honesty. The West will strive until its last breath to keep the price down, while the East will strive with its every ounce of energy to produce an honest price. The gold price will make movements to the $2500 level, then $5000 level, then $8000 level, then $12,000 level. It is inevitable, like the dawn after a long stormy night, like the rising tide.
The USDollar failure in the Middle East is a signpost for every country to bail. The series of wars to defend the crippled toxic USD is a signpost for every country to seek a better leading partner. Europe cannot survive without the One Belt One Road cornucopia of $billion contracts and ample projects. All trade goes through China and Russia, who lead the Eurasian Trade Zone formation and provide its SCO security blanket, which will rival NATO. An important factor, causing consternation to the propaganda artisans in the West, is that Russia is a net debt-free nation while the US is bankrupt and cannot save itself. Germany was bounced from Turkey, which now is splintering off the NATO family of warmongers and heroin distributors. Suddenly Turkey appears more influential than the western Nations, and might soon rent the Russian Military some space at the giant Incirlik Airbase. The Petro-Dollar failure gives Iran, Qatar, and Russia the primary hand. The USGovt sanctions on Russia no longer mean anything. European nations are working to restore relations commercially in defiance. The USGovt sanctions against Iran backfired. It produced the Gold for Oil sale with India.
The Global Currency RESET is not far out. The pricing in financial markets is dictated by derivatives solely for the purpose of keeping the Too Big to Fail Banks solvent. The USFed’s hyper monetary inflation, better known euphemistically as QE, is designed to keep these big broken banks liquid. Without the derivatives of bond purchases, the big banks would all be in failure mode like those in Spain and Italy. But the United States is the exceptional nation. The newly emerging NatGas cartel will primarily deal in CNY, RUB, and EUR currencies, which is why the United States is trying to force expensive NG sales onto Europe. The Washington NeoCons are busy throwing hurdles in the way of Nord Stream 2, as well as Turkish Stream. To use Saddam type of language, the mother of all pipelines will be connecting Iran-Qatar-Iraq-Syria-Turkey to Europe. The King Dollar and its reign of terror is coming to an end. That end is now visible. The excitement will come when Gold enters the payment system picture, and the enduring depression among gold investors will come to a welcomed end.
Dollar Demise

No comments: