Tuesday, April 15, 2014

The Retreat

We have a gold market which grossly mis-prices the worlds most important non-paper sovereign wealth asset as a paper based, non-essential, commodity derivative, traded on the currency markets. And we have a currency market, based on factors and influences so distorted by exorbitant privilege, manipulation and deception, that the management of that sovereign wealth asset has no significant bearing on the exchange at all.

What could possibly go wrong with a system already so intrinsically wrong at its foundation, that confidence in the greed and exploitation of senior capital is the only glue that holds it together? Indeed, those who understand the system are so interested in its profits, or so dependent upon its favours, that there is no opposition from the class that perpetuates it - an old adage which bears another: "The more things change, the more they stay the same." Yet ... all things do change, in time.
You have heard the phrase, "money is moving into real estate, land, oil, stocks or bonds". It is a bad meaning, as it does not what it says. All modern digital currencies do not go into an investment, they move THRU it. The US unit is only an exchange medium to acquire assets valued in dollars ...
The major problem today, is that digital currencies have erased the currency denominations of all government/nation debt holdings! Even thou a debt is marked as DM, USA, YEN, they are in "real time" / "marked to the market" and cross valued in all currencies! No currency asset, held by CBs today are valued in the light of a single issuing country, rather "all currencies are locked together". To lose one large national currency, is to lose the entire structure as we know it!
The first part of this quote has baffled so many, that perhaps the importance of the second part has lost its meaning. Simply put, when gold was used as money it completed the trade. Today, when paper or digital currencies are used to acquire assets these extend the trade out into the future (of debt performance). This is the short answer to Anothers reference of  "into" versus "through", an important concept to be sure, but what is meant by, "valued in the light of a single issuing country"?

Here, I think, intentionally or unintentionally, Another was referring to the "globalization" of the system, a critical concept to understand in light of recent events. No currency is truly valued today "in light of" the currency management, the energy resources and the gold reserves of a single issuing country, rather they are all valued in light of their interdependence to one another, "locked together" for profit and favour.

But there is a catch. Today there is one issuing country which has a distinct advantage over the others, an exorbitant privilege that allows it to exploit global wage arbitrage, and to manipulate, distort or control those traditional factors and influences (linked to above) which should freely impact any legitimate forex market. Today, everything is "rigged". Otherwise, fundamentals would render the dollar worthless, as many have lamented time and time again.

And other countries are growing weary of this system that is becoming "more inimical to their interests" as the "profits and favours" to the privileged nation grow unbound. The European Union, in essence, is a retreat from true globalism into a form of regionalism, partly as a move to counter the impact of the now dollar-centric system of global corporatism. The seemingly anachronistic variations in monetary policy are a small but meaningful step away from this system, but the pressures of even a carefully considered move weigh heavy upon the EU. It is not enough to sustain or be meaningful on its own.

But when Mayer Amschel Obama threatens to sanction The Impaler with removal from the "profits and favours" of the system, Vlad responds with, "what great profits? what great favours?" For we are a country whose gold reserves and energy resources allow us to manage our currency with powerful regional trading partners outside this system, which has grown inimical to the interests of ALL like countries, who similarly share a "real world" advantage over the global dollar "confidence" trap.

So a currency bloc more tightly aligned than the EU will form from this separation from the current gold, commodity and forex markets. They will not allow their currencies to be destroyed by the present construct, rather they will withdraw and regroup in a retreat from globalism into interdependency's that are more tightly and equitably aligned ... with the EU as the prize. Within this regional system, monetary policy, inflation rates, balance of payments, interest rates, and those influences and factors that should affect exchange rates will do so equitably, thereby promoting meritocracy, and true growth.

Yes, this is a departure from the prediction of a grand collapse and rebirth of an equitable global system. As the pendulum swings, we will see the gradual decline and separation from the current system, as competing regional systems continue to form and grow, as with the European Union. Producer nations will have their own commodity exchanges, and their own currency trading arenas, valued in the light of each issuing nations gold reserves, currency management and energy resources, with no illegitimate privilege to be subordinate to. In its success, the like minded will be locked together for greater value and attract new participants from the old system as it withers and dies of neglect and irrelevance.

Again, Europe is the grand prize to "win over" as the technological advancement, the military might and the meritocracy of the new equity based system proves its worth, and challenges the succeeding generations to protect its legitimacy by adopting the Freegold concept as its foundation. We can only hope that the lessons of today are not as easily forgotten as the lessons of the past.

And consider too that this will not be without a fight from the privileged nation, whose military might, and the proven hubris to use it - no matter what the cost - is the last remaining "underlying asset" of the current debt-based derivative system. Though the privileged debtor nation could change its ways and align regionally, or even contribute equitably to the coming changes, I fear it cannot willingly go along with this plan, even though that narrative has been laid out and that regional union proposed.

I fear that all Narrators are not created equal, nor are they all of a like mind. A strange love of the status quo, could easily be its undoing.

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