Thursday, January 23, 2014

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.



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