Sunday, April 13, 2014

What do we keep an eye on now?

With the April meetings concluded and no progress on the IMF reforms, a good question is what should we keep an eye on now regarding issues that could cause major monetary system change?

It does not appear that the IMF reforms will be approved this year. We think those a big key to open the door for major change coming from within the IMF. Of course, events could change and cause the US Congress to reconsider at any time. If that happens, we will report it here.

Until then however, here is a list of the other issues that could lead to change that we will continue to watch. These are listed in no particular order, but any of them are possible.

- a ramping up of tensions over the situation in the Ukraine. So far this is really a non event in terms of instigating any major monetary system change. In order for this to make an impact the conflict between the US and Russia would have to intensify quite a bit. The US would have to impose much more serious sanctions and Russia would have to respond by attacking the US dollar instead of just talking about it. I don't take rhetoric all that seriously until it is followed up with serious actions. So far, neither side is taking any serious actions. This could change though. If it does, then it could lead to a problem for the US dollar this year.

-an unexpected sudden failure of a too big to fail financial institution. This is what started the 2008 crisis. If it happened again this time the numbers are even bigger and the FED is not in a position to bail things out again. This is probably the #1 event that could cause a sudden crisis that might cause the US Congress to quickly approve the IMF reforms and funding. The IMF might then step forward as the only entity left with a clean balance sheet to deal with the crisis. This is what Jim Rickards is actually forecasting. So we will continue to watch this and continue to post Rickards interviews as he does them.

-the BRIC nations finally just give up on the IMF and move aggresively forward to build a new monetary system that bypasses the US dollar. It appears they will give the US at least the rest of this year before moving aggressively. But they will continue to keep building their structure at a steady pace I have no doubt. They will use this as leverage to try and pressure the US to give them what they want at the IMF. If that doesn't work they will be in position to move forward without the US. This looks like something that will happen over an extended period of time right now, but events can change. This will no doubt lead to an end of sole reserve status for the US dollar eventually. The only question is over what period of time. 

These are the 3 most likely scenarios we can see that can lead to major change right now. We think the US dollar will lose sole reserve status eventually. We may see clear evidence of it by the end of this year or it may take several years. But we think it will happen. We will continue to keep an eye on all the above here until things change. We may post less frequently unless events unfold that suggest change is imminent. We want to only post articles that are relevant and meaningful to monetary system change. If that change happens over several years, the events will get spread out over quite a bit of time and are less likely to be "breaking news" type events. But if events speed up, we will post them here.

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