Scratching Below the Surface - Global Monetary Power Struggle?

In an earlier post we looked at a sign post to watch for that can lead to global monetary system change. In this post I want to explore that idea more in depth as regards a possible ongoing power struggle that can be seen if you dig a little below the surface.

We noted that there is a strong effort being made by what we will call the developing or emerging nations to gain more say at the IMF and other global institutions. In 2010 reforms that would give the BRIC nations a voting voice were introduced. But they have not been passed by the US Congress yet. I found this interesting article that goes into this issue from the perspective of those who feel their interests are not represented well enough under the present power structure.

Let's note this paragraph in the article linked above:

"The failure so far of the US Congress to ratify the IMF reform package agreed to by G-20 finance ministers and central-bank governors in 2010 is the latest breach of trust – one that makes the promise of adequate representation for emerging economies seem like a shell game. America’s unwillingness or inability to ratify the package – which includes doubling the IMF’s funding quota and shifting 6% of the new total, together with two directorships, to developing countries – undoubtedly contributed to the decision by the BRICS (Brazil, Russia, India, China, and South Africa) to establish their own development bank."

Most people don't follow things like this and probably have their eyes glaze over when you start talking about it. They just don't see how any of this would matter to them. But if you understand the depth of the bitterness building around the world against the US and western nations at the IMF, you realize that all this is leading to things that could cause BIG changes in the global monetary system. One way or another. And it will eventually impact us all quite directly.So we need to learn and try to understand.

These developing/emerging nations have lost patience with the US and the IMF. They feel the big financial crisis that hit the world a few years ago was started by us. And then our FED bailout has caused the US dollar and US bonds to lose value and become higher risk to hold. Meanwhile, they are told that we understand how they feel and we want them to have more say about things at the IMF. But time goes on and nothing changes. 

This leads to a natural reaction. When ignored, people move on and start thinking about protecting their own interests first. As pointed out in the article I linked above, the eastern world has decided if we are going to ignore them and don't care how actions by our FED hits them, they will just start working on ways to bypass us and go it alone. They have been making new trade deals excluding the US dollar. As noted in the article, they have setup their own version of a "World Bank". They are buying gold in record amounts. They are taking US bonds in their reserves and buying up tangible assets all over the world. They are slowly but surely positioning themselves to tell us to go jump in the lake when they no longer need our US dollars. 

There is a popular (and I think somewhat arrogant) attitude in the West that goes something like this. The BRIC nations don't have the nerve to leave the dollar. It would cause them to take a huge hit on our bonds that they hold. So we kind of have them held financial hostages. 

Maybe that has been true in the past, but they are tired of being treated like hostages. Just this week we have seen how one little US FED announcement of further tapering has clobbered currencies all over the emerging world. India is not happy about it.  Lots of other nations agree. At some point they will get pushed too far. They may make a calculation that whatever hit they take is worth getting free of our dollar risk. There is a reason they have been working all these years to bypass us. There is reason they are buying gigantic quantities of gold. 

All this is why we think major monetary system change is coming, one way or another. Either by mutual agreement to make major changes in the system (that everyone will feel around the world) or by disorderly, uncontrolled change when the current system breaks down due to overwhelming debt loads. 

This is why trying to guess timing on this is so tricky. In some scenarios, change might take place in a more controlled orderly fashion. It might happen over a period of years. In other scenarios (things break down and its everyone for themselves), change might come very quickly and probably very unpleasantly. There will be winners and losers no matter how it happens.

It's why we have this blog. It's why it is important for all of us to follow this issue and try to understand. It is not nearly as much fun as the Super Bowl for sure. But it is going to impact us a lot more than who wins this year (Denver is my choice). We'll keep an eye on it here as best we can for as long as it takes (unless Google decides to close down Blogspot :)

Paul Craig Roberts - Save the Dollar or Save the Banks?

Paul Craig Roberts is a former Assistant Secretary of the Treasury under the Reagan Administration. You can read his bio from this page on his blog site.

He publishes commentary on financial matters regulary. Today he has done an interview with the alternative news media site King World News. His comments in this interview relate directly to the topic we cover here. He thinks 2014 will see some major events that would obviously lead to major monetary system change. His big question, Will the FED save the banks or save the dollar?

Here are a couple of quotes from the interview:

"The biggest financial danger is the collapse of the dollar as the world’s reserve currency.  This would bring about a far greater crisis than the collapse of 3 or 4 big banks.  So that’s what the Fed has got to figure out:  Can it save the banks without bringing the dollar down?" 

"Now since the Fed is really run more by the banks than by the public policy interests, we can’t assume the Fed would make the right decision.  But that is the choice it would face.  And I think it may face that choice before the year is out.  So that is the big financial danger:  What does the Fed do?  Save the dollar, or save the banks.  It can’t do both.”

When Central Bankers can't get along

While some people in the world are busy working on trying to bring the world together using a single global currency, others are concerned that we don't seem to get along any more. India Central Bank Governor Rajan feels the FED isn't cooperting these days. If these guys aren't getting along, that indicates stress in the system. 

Here is the link:

http://www.bloomberg.com/news/2014-01-30/rajan-warns-of-global-policy-breakdown-as-emerging-markets-slide.html

A few quotes:

Rajan, a former chief economist at the International Monetary Fund, called for greater cooperation among policy makers weeks before finance chiefs from the world’s top developed and emerging markets gather in Sydney. The Fed’s Jan. 29 statement made no mention of developing economies.

“International monetary cooperation has broken down,” Rajan, 50, said yesterday in an interview in Mumbai with Bloomberg TV India, noting how emerging markets helped pull the global economy out of crisis starting in late 2008. “Industrial countries have to play a part in restoring that, and they can’t at this point wash their hands off and say we’ll do what we need to and you do the adjustment.”

“Fortunately the IMF has stopped giving this as its mantra, but you hear from the industrial countries: We’ll do what we have to do, the markets will adjust and you can decide what you want to do,” Rajan said. “We need better cooperation and unfortunately that’s not been forthcoming so far.”

added comment by me: On the one hand we hear those in global financial institutions talk of lofty goals of bringing the world together to solve all these tough problems. But when push comes to shove in the real world, it seems they are quite ready to go their separate ways. Stress does that. And we always have to keep an eye out for monetary system change that comes from sudden, uncontrolled events when cooperation is not in place. 

More China Daily: Can the US Dollar Stay Strong?

China Daily offers an opinion on propects for the US Dollar.

It is always interesting to see how countries around the world are viewing things from their perspective. For now the dollar is world reserve currency. If that changes, major monetary system changes will be taking place.

I have to add this note of irony. As read this opinion piece, it strikes you as example of how the world has changed in my lifetime. Never thought I would read a Chinese media source criticizing the US authorities for intervening in free markets and saying the US should allow the fundamentals of supply and demand to function instead of trying to manage markets. So this week have Jim Rickards and China criticizing central planning. :)

China Daily: Time to "Replace the Dollar with a Supercurrency"

This article in China Daily certainly fits our theme here about keeping an eye out for global monetary system change. It quotes a former World Bank economist as calling for "a single global super currency".

Here are a few good selections from this article. After that we will tie this in to our earlier posts about Klickex and its new GSD cryptocurrency 2.0.


"The dominance of the greenback is the root cause of global financial and economic crises," Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. "The solution to this is to replace the national currency with a global currency."

"Lin, now a professor at Peking University and a leading adviser to the Chinese government, said expanding the basket of major reserve currencies — the dollar, the euro, the Japanese yen and pound sterling — will not address the consequences of a financial crisis. Internationalizing the Chinese currency is not the answer, either, he said."

"Arguments in favor of a global currency resurfaced during October's US budget impasse, which forced the government to shut down."

"It is perhaps a good time for the befuddled world to start considering building a de-Americanized world," a Xinhua News Agency commentary said on Oct 14. The piece argued that creating a new international reserve currency to replace reliance on the greenback, would prevent government gridlock in Washington from affecting the rest of the world."

"In March 2009, China's central bank governor, Zhou Xiaochuan, called for the creation of a new "super-sovereign reserve currency" to replace the dollar. In a paper published on the People's Bank of China's website, Zhou said an international reserve currency "disconnected from individual nations" and "able to remain stable in the long run" would benefit the global financial system more than current reliance on the dollar."

"Pierre Defraigne, executive director of the Madariaga College of Europe Foundation in Brussels, said of Lin's infrastructure proposal, "It is excellent, but the problem is how to implement these plans to link those countries that need such infrastructural construction and those with enough foreign reserves, by using an effective global mechanism."


My commentary: Let's see if I can detect a recurring theme here. Yes I do. A lot people demanding a new global reserve currency (a super currency) not tied to any nation (or even tied to a basket of nations currencies). It apparently needs to be "disconnected from individual nations".

But there is a problem. How to implement all this? We need some kind of "effective global mechanism" to get this done. Where in the world can we find the technology that would give us a global reserve currency not tied to any nation or nations? That seems impossible?

Let me think. What was that Klickex is quietly and steadily working on again? I think it was a new candidate for a "global reserve currency". Something called a GSD. (I remember now, the CEO said "SWIFT loved our idea for a new Global Central Bank.")

It would be not tied to any nation or nations. Something different, Something new. Like the SDR, but better. It's going to be "asset backed". The older, traditional generation will like that. It's also a cryptocurrency. The younger generation will like that (they like Bitcoin). Funny, just by chance it kind of sounds exactly like what all these people are calling for in this China Daily article. Probably just coincidence.

Greg Hunter interviews Doug Casey

Greg Hunter is an independent journalist who spent 9 years in the mainstream media at ABC and CNN. Here is a link to his background.

Here Greg interviews Doug Casey. Mr. Casey has a proven track record of making good forecasts regarding economic trends. If his forecast in this interview comes true, we will definitely be seeing major monetary system change in the next couple of years. I honestly hope he misses this one.

Jim Rickards - New OP-ED piece out today

Jim Rickards writes an Op-Ed article that appears today in the Darien Times of Connecticut. Rickards lives in Conneticut. This article is chock full of things that could end up causing major monetary system change. As usual, Jim does a good job of anlayzing what could go wrong with Central Planning. And why we have to keep an eye on it.

Some excerpts from the article:

" In order to make money under the Fed’s zero interest rate policy, banks are engaging in hidden off-balance sheet transactions, including asset swaps, which substantially increase systemic risk. In an asset swap, a bank with weak collateral will “swap” that for good collateral with an institutional investor in a transaction that will be reversed at some point. The bank then takes the good collateral and uses it for margin in another swap with another bank. In effect, a two-party deal has been turned into a three-party deal with greater risk and credit exposure all around."

"The Fed is now insolvent. By buying highly volatile long-term Treasury notes instead of safe short-term treasury bills, the Fed has wiped out its capital on a mark-to-market basis. Of course, the Fed carries these notes on its balance sheet “at cost” and does not mark to market, but if they did they would be broke. This fact will be more difficult to hide as interest rates are allowed to rise. The insolvency of the Fed will become a major political issue in the years ahead and may necessitate a financial bail-out of the Fed by taxpayers. Yellen is a leading advocate of the policies that have resulted in the Fed’s insolvency"

my comment: this last paragraph is something most people do not realize that Rickards has been explaining for years. If the FED is "successful" interest rates will have to rise. This will cause the FED itself to take a gigantic hit on all these long term US bonds they now hold (purchased in QE). The FED itself will be insolvent using normal accounting rules. Of course, they will not show the losses. They will carry these bonds as if they are still worth what the FED paid for them. Regardless, an unstable FED could surely lead to major global monetary system changes.

Contagion - Another signpost to keep an eye on

This is another signpost to watch that can impact the global monetary system.

Currency problems in emerging nations that lead to drastic actions. Like say Turkey raising their interest rate to 12% over night. The word of the day in the mainstream media is Contagion. We can never know if one of these mini crisis will expand into a global crisis because the global monetary system is so connected these days. It's why we have to keep an eye on it.

Some more articles of interest:

http://www.cnbc.com/id/101373426

http://www.cnbc.com/id/101373692

http://www.cnbc.com/id/101371922

http://www.foxbusiness.com/markets/2014/01/29/wall-street-hit-by-emerging-market-anxiety/

http://www.reuters.com/article/slideshow/idUSBREA0S17W20140129#a=1

Buillon Baron on Monetary System Change

Got an email from the Buillon Baron pointing me to an excellent article he has written on his blog site. It basically lists several prominent people who have discussed how the monetary system may change in the future. Also what role gold might play in that change. 

Here is the link.

Here is a quote from one of the prominent people he reviews. It may surprise you said this.

"The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today."

Evaluating Credibility over Time

In the previous post I mentioned the need to stay informed and evaluate sources of information over time to establish their credibility.

We will use this as real time example.

One of my links on this site is to Jim Rickards twitter. I link to him because I have watched his forecasts over time. He has a good track record for forecasting in my view so I think his views are worth keeping an eye on.

Let's test him on this small item. If you follow his twitter account you know he was in Vail last week and talked with some high officials at the FED. Someone on his twitter asked Jim if the FED will continue to taper.

Here is what Jim replied on 1-25-2014 on his twitter site:

"Tapering next week is a done deal, but there's more uncertainty around the following meetings than markets have priced"

So, let's see if he gets this one right. He usually does in anything related to the FED.

This is how I evaluate what people and articles I will put on this site. They have to show some results and establish credibility at some level. No one gets everything right, but over time a trend tends to emerge. Rickards has been a consultant to US intelligence services to do forecast models on these macro economic issues.

UPDATE (1-29-14): This is not a big surprise, but Jim hit this one as expected.

More Sign Posts for Monetary System Change

If there is going to be major monetary system change such as a major global currency reset, something major is going to have to happen to shake up the status quo.

I get asked, What things do we watch for (keep an eye on so to speak)?

That is the purpose of this blog. To watch and report anything we see that might matter. We have already noted in a post below that keeping an eye on what happens with the vote to change the power structure at the IMF is something to keep an eye on. That assumes the present monetary system stays in tact and is changed in an orderly fashion over time.

But what events might alter that? What things could speed up the time frame and result in a disorderly change? Things like a sudden unexpected crisis. A derivatives blow up at major financial institutions. A stock market crash. Sudden volatile currency movements all over the world. These type events.

We can keep an eye on some things that might hint ahead of time if something significant and unexpected is headed our way.

Right now there are reports that there are large amounts of cash being taken our of large US Banks. That bears watching. Recently, there was un uproar that HSBC started limiting cash withdrawals from customers and required a letter of explantion to take out cash over a set limit. Some later reports indicate HSBC reversed this policy after taking heat about it. If you see widespread reports of many banks limiting cash withdrawals, keep an eye on that news. What is your bank doing?

Large movements of physical gold bear watching as well. While western Central Banks don't think much of gold publicly, it is still a very important reserve asset around the world at Central Banks. Large amounts of gold are reported moving to China. Koos Jansen tracks the movement of gold out of the Shanghai Exchange for example. Mainstream media like Bloomberg also reports the flow , but tints its articles along the lines that the gold bull in the West is over despite demand from China and India.

Who is right? That is what you need to keep an eye on! Stay informed, follow events, and see who gets it right over time. That is what we intend to do here.

Will the SDR replace the US Dollar as Reserve Currency?

Here is a good article about whether or not the SDR could replace the US dollar as global reserve currency. It is by Charles Hugh Smith and posted at FinancialSense.com:

http://www.financialsense.com/contributors/charles-hugh-smith/will-dollar-lose-its-reserve-currency-status

German Bundesbank proposes private wealth tax

Monetary system change can take a lot of different forms.

Here is one proposal that tells us we are far from out of the woods with problems in the current financial system.  The German Bundesbank today calls for a private wealth tax (bail in) for countries that are in trouble debt wise. This follows a very similar IMF proposal in October last year. Another signpost to watch for. A financial system not under stress does not need to impose a one time private wealth tax. A stressed system would be the precursor to major changes. 

Here is quote from the article:

"The International Monetary Fund discussed the option in a report in October and said that reducing debt ratios to end-2007 levels for a sample of 15 euro area countries, a tax rate of about 10 percent on households with positive net wealth would be required."


Meanwhile, China is clearly behind the curve. They are still doing the old fashioned bailout thing. Bail outs, Bail ins, Currency devaluations, all signs of stress. It's why we are keeping an eye on things here.

Some More Details about Klickex

Our post about Klickex and its recent announcement of a new cryptocurreny (the GSD) in November of last year has created quite a bit of reaction and interest.

Since this company is still a relatively small startup in the South Pacific region, many are unfamiliar with it of course. In our post we raised the idea of whether they might be a beta test to see how a cryptocurrency might work in the real world. Because the company has not released a lot of details yet, there are obviously a lot of questions. What would back this cryptocurrency? How would it work? How would it impact the average citizen if adopted globally? etc.

The first thing I suggest doing is to become more familiar with the company. There is a fair amount of information available on the internet about them. Below are links you can use to learn more about them. We have dug out this information for you because that's we do here. :)

I will also add a permanent link to their twitter site so anyone interested in following their progress can do so. Here are good links for more info:

Where do they get their funding? The company indicates they partner with the UN.

Here is an article which talks about that some. It discusses the partnership between Klickex and Digicel Mobile Money. The last sentence says "Digicel Mobile Money is supported by PFIP, UNDP, and AusAID". The PFIP is a regional organization in the Pacific. They list their donors here.

The company mentions that they have been recognized by SWIFT. Here is an article on that. Who is SWIFT and what do they do? Read here. This article also quotes Robert Bell as follows "“SWIFT loved that we want to set up a new global central bank to eliminate global FX risks and costs… and have already done it in the Pacific with United Nations Capital Development Program funding.”

What has Klickex been doing? Here is an article related to that. They have been a peer to peer money transfer system in the South Pacific. They help the unbanked access money and be able to transfer it. Or anyone else for that matter.

So is this company's new cryptocurrency headed for bigger things in the future?

Here is what we know right now:

They have developed the technology to create a system based around an asset backed cryptocurrency. They state it can be used by Central Banks. They have stated they have a goal to "set up a new global central bank".

They have been funded by the UN and other NGO's.

They have won awards for their technology by prestigious organizations like SWIFT (top startup award).

So, the potential is clearly there for something to unfold over time. We'll keep an eye on it.
This story will probably develope over a few months to a couple of years. 

Update 2-6-14: Here is some more information I was able to locate on this topic.

The Big Reset Part 2 - Willem Middlekoop

Koos Jansen adds Part 2 to his blog site related to the new book from William Middlekoop about a coming Reset. Middlekoop believes major change will happen within a few years at most.

http://www.ingoldwetrust.ch/the-big-reset-part-2

Klickex - The New IMF Approved Bitcoin?

The Bitcoin buzz is all around. So is the idea that some kind of global currency reset is in our future. Klickex enters stage left.

Debate rages over whether Bitcoin is the future. Hard asset proponents say Bitcoin is just another unbacked currency. No better than any other fiat currency. Bitcoin proponents say Bitcoin will thrive because of the way money can be moved without paying bank fees. 

Well, what if some powerful entities in the global financial structure have been quietly moving towards a digital currency unit that IS asset backed? Impossible?

Take a look at this video and see what you think:

http://www.finovate.com/asia13vid/klickex.html

Then take a look at this November 13, 2013 press release on Klickex:

http://finovate.com/2013/11/klickex-launches-crypto-currency-20-a-new-global-asset-backed-currency.html?utm_source=dlvr.it&utm_medium=twitter

An asset backed backed Cryptocurrency 2.0? But who is backing these guys?

Lets paste this in from the press release link above:

Key Investors: SWIFT, EU, AusAID, United Nations Capital Development Program (UNCDP/PFIP), HM NZ Treasury, Private Investors, Friends and Family & Management

Key Partnerships: SWIFT & The United Nations Capital Development Program

Some pretty heavy hitters there. And in the video they mention the IMF and World Bank are on board as well in complimenting their technology.

I think we better really keep an eye on this guy. An IMF approved asset backed version of Bitcoin already up and running at several banks in the Pacific?  A test run before it goes global?

And I have to wonder what assets are backing it?

editors note: I want add that Klickex is clearly not associated with Bitcoin. I would imagine that Klickex would consider its GSD a much superior form of digital currency for many reasons. We will keep an eye on this story going forward. I have a feeling Klickex may have a future worth following.

Update (1-27-14): for some added info go here.

Art Cashin on CNBC - Currency Worries

Art Cashin comments about currency worries on CNBC near the market close on Friday.

I note as he mentions the currency problems that hit the markets Friday he says "today we are worried about currencies" and "nations use weekends to adjust their currencies". He adds, "they usually do it on a Sunday when no one is around".

While Cashin is just talking about a few countries that got hit with currency devaluations, his statement does include a point for us to keep in mind regarding how nations do things.

In the event we do have a "global currency reset" someday, we can expect that they will use a weekend to do it because they prefer to handle things like this "when no one is around". And we can also expect that no prior warning will be issued ahead of time. Which is why we need to keep an eye out and stay prepared.




added update (1-29-14): Cashin offers a written commentary to the alternative news site King World News. Here is his latest one posted there. What we note in this article are his comments about gold titled "Is Something Strange Brewing in the Gold Market?" We have said that large movements of gold are one of the signposts we should keep an eye on. Cashin points out some here. Since his article was written, another huge withdrawal of gold from the JP Morgan account at Comex has taken place.

Christine Lagarde talks Reset in Davos

At the World Economic Forum in Davos, Christine Lagarde of the IMF spends a few minutes giving her overview of the world financial situation.

She starts around the 5:30 mark of this video. She talks about 6 minutes. Interestingly, she spends that last couple of minutes talking about a RESET that needs to take place going forward. She does not use the term global currency reset. However, she does say a reset involves a reset in monetary policies, financial sector reforms, and "structural reforms necessary in all parts of the world".

You can decide what structural reforms in all parts of the world might include for yourself.


She also lists deflation and unknown market reaction to QE tapering as global risks.

The terms reset and deflation risk were tossed around quite a bit by the panel.

What signs of a global monetary change do we look for?

We are talking about the premise here that major global monetary system change is coming at some point. So what signs should we look for before it gets here? What events might indicate progress is being made towards global monetary system change?

Most people do not keep track of what the IMF is doing. For that matter most people in the US don't even keep up with what the FED is doing. But it is in these halls of financial power that plans are discussed, modeled, and eventually implemented. So long as our system empowers these organizations (Central Banks, the IMF, etc), they will be in control of whatever change takes place. So we look there. 

Here is a link to a recent press conference held by IMF spokesman William Murray on 1-9-14. Here is section from the Q&A part of that press conference:

QUESTIONER: In the December of 2013, the U.S. Treasury Secretary Jack Lew has pushed the Senate and the House to pass the IMF Code of Reform. So after that it's being a month, so does the IMF have any follow-up work on that? And do you have an idea that when the U.S. Congress will probably vote for this reform? Thank you.

MR. MURRAY: You basically covered the ground that I would. I mean, the U.S. has a legislative process in place, which will help implement the 2010 Governance reforms. I'll explain that a bit for those who aren't familiar with it.

The legislative process is underway right now. We want the reforms to be adopted expeditiously. It's really the U.S. Treasury, Jack Lew and his team that's taking the lead on getting these measures through the U.S. Congress that are required to implement the 2010 reforms.

Just to remind you what those are. The 2010 reforms do a couple things. One, they bring four dynamic emerging market countries into the top 10 shareholder ranks or what we call quota ranks of the institution. China, Brazil, Russia, India. It also doubles our permanent capital, the quota. And it also creates a fully elected Executive Board. Those are among the key measures. And at the same time it protects the voice and vote of the world's poorest countries and institutions. So we've been working on this for some time, and we'll see how it goes. Beyond that I don't have anything to offer on quota.

Ok, why do we care about the above? The reforms he is talking about are the first steps that could lead to a global currency reset whereby the US dollar loses its status as world reserve currency. It could give way to a basket of currencies. It could lead to the use of SDR's as global reserve currency. That is why we care. The IMF wants to bring the BRIC nations into a position more equal with the western nations. They would get a say in whatever changes are made. They would get voting power by virtue of their "quota" within the IMF power framework. We already know China is calling for a new global reserve currency. With a powerful seat in the IMF Boardroom, they and the other BRIC nations can move the world in that direction.

So one key signpost is to watch to see if the US Congress votes for this. So far, they have not.  Meanwhile the BRIC nations led by China are moving on their own to bypass the US dollar around the world wherever they can. One can assume that this means the behind the scenes power struggle will continue.

Will Bitcoin play a role in a currency reset?

Whether Bitcoin would play a role in monetary system change is a hot topic of discission.

Some say yes. Some say no. Some say maybe, but be careful.

I don't know, but CNBC runs this story today which tells you how key establishment players are thinking about Bitcoin.

Here is the link: http://www.cnbc.com/id/101357809

And here are a couple of quotes from the story.

Treasury Secretary Jack Lew:

"From the government's perspective, we have to make sure [bitcoin] does not become an avenue to funding illegal activities or to funding activities that have malign purposes like terrorist activities," Lew said. "It is an anonymous form of transaction. And it offers places for people to hide."



JP Morgan Chief Jamie Dimon:

"The question isn't whether we accept it. The question is do we even participate [with] people who facilitate bitcoin?" he said. "The people who are going to eventually really get upset with it will be governments."

Bitcoin will eventually be made to follow the same standards as all other payment systems, Dimon predicted. "That will probably be the end of them."  (editors note: but just in case JP
Morgan has its own form of Bitcoin ready to go)

---------------------------------------

And here is a credible viewpoint on Bitcoin from an alternative media site for comparison to the above reaction from establishment sources.

http://www.financialsense.com/contributors/charles-hugh-smith/could-bitcoin-or-equivalent-become-global-reserve-currency

-----------------------------------------
One more view from a mainstream media source in the UK:

http://www.theguardian.com/technology/2013/nov/25/is-bitcoin-about-to-change-the-world-peer-to-peer-cryptocurrency-virtual-wallet

------------------------------------------
And here is one last one from an advocate of Bitcoins for the future:

http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/?_php=true&_type=blogs&_r=0

Bill Holter (Miles Franklin) talks about a reset

Bill Holter of Miles Franklin has written an opinion piece worth the time to read and consider.

In my view he does a good job of talking about the real world implications of the battle between inflation and deflation currently underway. Near the end he gives his take on how a reset could happen. The time frame is an unknown. Others see a similar end game, but done in stages over time rather than a sudden one time event. Either way the dollar loses a significant portion of its purchasing power when all the dust settles (probably after a lot of volatility drama in all markets). That is the key point for most people to understand and prepare for ahead of time.

Here is the link:  http://blog.milesfranklin.com/here-we-go-again

Why we care about Monetary System change

There is a lot of information pouring out everywhere concerning this idea of a global currency reset. The goal here is to monitor media sources (mainstream and credible alternative media) for news on this topic. We will attempt to sort through all the variety of news and post here only items we feel are credible enough to be worth reading. Posting it here does not mean we agreee or disagree. It means we feel the source and the content of the information is good enough to get on here. 

We do think major change is coming, but do not claim any ability to predict timing  or exactly what form the change will take. Right now official sources such as the IMF, the FED, etc are not giving any indication that anything substantial is imminent. But we do see credible sources reporting a lot of news related to this topic that could be significant such as the statements by China, small hints at the IMF etc. Some think change could be coming this year. Some think over several years.

Our intent is to follow this topic to conclusion one way or another. A major global currency change will impact everyone so we think this is the most important issue to keep track of. It will impact the whole financial system, precious metals prices, real estate, inflation, interest rates, etc. If it happens, it will be important to try and see signals ahead of time if possible. We'll keep an eye out here and post anything we think might be important.

China to Announce 5,000 tons of gold reserves?

Arabian Money runs this story claiming there are rumors China will announce they have accumulated 5,000 tons of gold reserves. The story indicates these are rumors so we will await the facts. The rumors say the news comes out this spring. We'll see.

http://www.arabianmoney.net/gold-silver/2014/01/22/china-set-to-hike-official-gold-reserves-to-5000-tonnes-next-to-combat-its-growing-internal-financial-crisis/comment-page-1/#comment-52208

Chinese view of future monetary system

Here Koos Jansen (of the Netherlands) provides a translated article from Zu He Liang. He is a director at the Chinese Global Market Research center. In this article he talks about how to stabilize the global  monetary system. He references both SDR's and gold in his article. 

Here is the link to the article on Koos Jansens web site:

http://www.ingoldwetrust.ch/china-accumulates-gold-world-dream

This article kind of combines thoughts from the previous two posts.

China pegs the Yuan to Gold Contract

China is clearly steadily moving to get its currency setup to challenge the dollar going forward.

http://www.mineweb.com/mineweb/content/en/mineweb-africa?oid=226026&sn=Detail

Here is a quote from the article linked above.

"China continues to not only liberalize and internationalize the gold market there; it is tying a new gold ‘spot’ contract to the Yuan. The new Yuan priced gold contract on the Shanghai gold exchange is a step towards a greater use of the Yuan internationally as foreigners who wish to buy this product must sell dollars to buy Yuan so they can buy this gold contract.

In this context we need to see how this contributes to the big picture of China’s arrival center stage in the world. China’s aim is eventually to stand alone without the dollar. How big is this story? In the past the developed world took 80% of global income. In the next six years this will drop to 35% with the emerging world taking 65%. The turbulence that accompanies this change favors gold."

Alternative to US dollar not a new idea

While there is lots of talk lately about a global currency reset and a new monetary system where the US dollar is not the sole global reserve currency, this is not something new.

As you can see from this artice from 2011, this idea has been floating around in the background awhile:

http://money.cnn.com/2011/02/10/markets/dollar/

The SDR is always lurking behind the scenes.

And thanks to Koos Jansen for pointing me to this 2009 paper written by a Governor of the People's Bank of China. In it he makes a case for moving towards SDR's as a global currency.

http://www.bis.org/review/r090402c.pdf

While we are at it, here is a UN think tank paper picking up on the idea of using SDR's as a global reserve currency written in 2011. Again, these ideas are always floating out there in the background.

http://www.un.org/esa/desa/papers/2011/wp104_2011.pdf

Jim Rickards latest interview with Matterhorn Asset Management

http://www.youtube.com/watch?v=X7lGBFJCn-w

Link to latest Rickards interview with Matterhorn Assets of Switzerland.

A quote on the interview contents from Matterhorn:

"In this January 2014 Matterhorn Interview , Jim Rickards talks to German investigative journalist Last Schall. Jim is the author of bestseller Currency Wars and soon to be released sequel The Death of Money.

The brilliant economist, lawyer and entrepreneur Jim Rickards is again in very good form in this podcast as he discusses the failure of the Fed, as well as the Fed’s suppression of gold. He explains why gold must rise to at least $7,000 – $10,000. Rickards also discusses China’s gold purchases and that the people with the most gold will have the most to say in regard to a new monetary system."

Bloomberg on new world reserve currency

Bloomberg puts out this presentation in pdf format outlining the case for a new monetary system no longer using the US dollar as world reserve currency:

http://www.sharpspixley.com/uploads/bloomberggoldresearchreport.pdf

I see these type artices popping up more and more in mainstream media sources.

The premise of this blog is that major changes are coming in the US and global monetary systems. We believe the current system is overwhelmed with debt and cannot be sustained long term. This is a quality 20 minute video presentation by Egon Von Greyerz of Matterhorn Asset Management in Switzerland. It does a good job in a short time of laying out the problem and offering a potential solution. So, here is the link to the presentation:

https://www.youtube.com/watch?v=R1kB1pUxR7k

Reuters: German authorities investigating price fixing of gold

Reuters reports today the German authorties are in an ongoing investigation into price of precious metals by banks. Link to story here:

http://www.reuters.com/article/2014/01/17/markets-precious-idUSL3N0KR2R720140117

Germany had asked to have its gold reserves that are stored in New York by the US FED returned to Germany. So far they have only been able to get a small fraction of the gold back. Now we see reports that they are investigating price fixing of gold by banks.

Here is a quote from the article linked just above:

"The market was surprised by news of Deustche Bank 

withdrawing from gold and silver benchmark setting, or fixing,
as German regulators investigate suspected manipulation of
precious metals prices by banks."

More on this story from Bloomberg:

http://www.bloomberg.com/news/2014-01-16/metals-currency-rigging-worse-than-libor-bafin-s-koenig-says.html

The Big Reset coming by 2020?

A new book titled "The Big Reset" has just been released by William Middlekoop (who has been called "the Dutch Jim Rickards"). This book lays out a very detailed plan to reset the world monetary system which Middlekoop says is coming by 2020. This link leads to an interview with Middlekoop worth reading on this topic:

http://www.ingoldwetrust.ch/the-big-reset-part-1

Middlekoop sees a change coming in well planned stages that will first see the US dollar lose its status as world reserve currency against competing currencies. He then lays out the case for the IMF to introduce a new global reserve currency based on their SDR (Special Drawing Rights). He shows where leading international financial figures talk openly about how gold can be brought back into this new system in a new way to restore confidence in currencies that is being lost worldwide.

This information ties in very closely to what Rickards and other key US financial insiders have been predicting now for several years. But Middlekoop provides more detailed evidence that this plan is being carried out very intentionally over a period of years by world financial leaders.

Again, what we want to do is identify the signposts ahead of time showing that this reset is underway so that we can prepare ahead of time for it.

Rickards new TV interview

Rickards appears on RT today with Erin Ade. Click link below to watch:

https://www.youtube.com/watch?v=-lw6B6-rYjc&feature=youtu.be&noredirect=1

Interview starts around the 4:20 mark.

Amerman articles on Inflation

Daniel Amerman is sending me free articles as part of his advertising for an investing course he sells.

The articles are  well written and worth reading, so I am posting the links here as I get them for anyone interested.

Here are the first two articles he sent me:

http://danielamerman.com/course/akONEb2c.html

http://danielamerman.com/course/bwTWOj3x.html

Fourth article:  I got skipped on the 3rd article somehow:

http://danielamerman.com/course/dmFOUR4ph.html

http://danielamerman.com/course/efFIVEws3.html

http://danielamerman.com/course/fqSIXm8v.html

http://danielamerman.com/course/guSEVEN3pv.html

http://danielamerman.com/course/hzEIGHTm82.html

http://danielamerman.com/course/ikNINE14q.html

http://danielamerman.com/course/jcTENwj4.html

http://danielamerman.com/course/kgELEVEN3b7.html

http://danielamerman.com/course/lrTWELVEb22.html


This is all  the articles in the series (except #3 which I never received)

6 Reasons why the FED wants to devalue the dollar

This article is one of the better ones I have seen on this topic.


http://danielamerman.com/articles/2014/SixD.html

It explains in some detail what Rickards has been saying for years now. The policies  being used by the FED are designed to intentionally devalue the dollar. The trick is that they want this to be an orderly process. They want to chip away at the dollar at a controlled rate of speed. This article explains why they benefit short term from doing so.

Rickards believes this process will eventually pick up speed and the FED/Treasury will lose the ability to manage the process. When that day arrives is when we can expect  a major overhaul to the world monetary system where the US dollar is replaced as world reserve currency.

If you connect the dots, you can see where China and the BRIC nations are preparing now for the change. China is importing massive amounts of gold and officially encouraging its citizens to build up a reserve of gold in each family. The intent is clearly to eventually take the legs out from under the petro dollar and then replace it with a new gold backed yuan. Alternatively, the IMF may try and convince China to allow them to create a new global currency that is partially gold backed.

But the point is that it is important to see the megatrends ahead of time and prepare for the changes coming.

Rickards on Blooomberg TV

Jim Rickards latest interview on Bloomberg:

http://www.bloomberg.com/video/fed-tapering-into-weakness-tangent-s-rickards-says-cYc~gR9dSmSqz2gdI7i0Ig.html

Jim Rickards - Worth your time to follow.

Over the years I have come realize there are some people who are better at forecasting likely future events than others. Jim Rickards is one of those guys. His ability to see future megatrends well before they arrive has been amazing to me. When trying to consider how best to plan for the future, this can be a very helpful skill to access. Follow Jim on his twitter feed here:

https://twitter.com/JamesGRickards

To get a feel for his presentation abilities try this speech he did for a group of intelligence community analysts at Johns Hopkins University. The Pentagon hired Jim to forecast potential future scenarios for their planning purposes.


https://dnnpro.outer.jhuapl.edu/rethinking/VideoArchives/MrJamesGRickardsPresentationVideo.aspx