Monday, December 8, 2014

BIS Reports, Reuters Ratifies

So as discussion's of the role of the petrodollar wax and wane, we see the official study by the BIS which provides instructive insight into the role of "use value" far eclipsing the original impetus of the petrodollar. True, at one time, oil denominated and traded in dollars added much to the dollar's pre-eminence as an FX currency reserve asset.

But today, the reserve status of the dollar owes more to its relative stability with local currencies of dollar holders, than to its oil linkage. Reuters (the news agency owned by the owners of the BIS) more or less offers the obvious ramifications of this view as a geo-political recommendation, one which has already been clearly understood and acted upon in recent agreements between Russia and China.

Forgive me for repeating myself, or overstating the obvious (though apparently, certain dead horses do bear further kicking) ... but ... the BIS does NOT support a conventional third world war as presently being fomented by certain "color revolutions" or coups, and FX attacks, designed to undermine emerging Sino-Russian economic relationships or potential currency blocs.

Clearly telling also is a certain expectation by the BIS: "A stable dollar zone share of global GDP is at first puzzling, given that the euro's influence has extended east in Europe (ECB (2014)), to commodity currencies and even as far as emerging Asia."

It has been noted time and time again that the BIS does see the euro as the "relief valve" for de-dollarization, and this study, along with certain other opinion papers emanating from Basel (neatly linked to from this articleshould come as no surprise to advocates of Freegold, as well as readers of Reuters.

As such, the following is more of an observation than a recommendation, though it serves too as a ratification of the newly emerging status mutationem:
By contrast, if the renminbi at some point showed substantial independent movement against the major currencies and if its neighbours' and trading partners' currencies shared that movement, then it might be said that 'the renminbi bloc is here'
Undoubtedly, certain readers of the annal have seen my comments elsewhere alluding to an alternate FX market (seen perhaps as heresy) but would an emerging currency bloc that only trades with each other's participants not render the current version irrelevant? One should be careful what one sanctions, as necessity is the mother of invention.

Understanding that the "dollar experiment" was incubated out of the destruction of WWII, we witnessed it's evolution, and saw further that war does water these "fertile grounds" in which to "escape reality" with the idea of continuing to hold the empire's long term debt as a money asset.

But even the worst of us, as generational dynasties go, will not pay tribute to a 3rd World War, in order to sustain a monetary system whose currency replacement is capable of transitioning us to that "old world, gold economy, as viewed thru modern eyes" currently unfolding in the emerging economies, centered around the evolving gold-centered economy of Eurasia.

Again it should be all too obvious to any and all who are not completely blinded by arrogance (or perhaps an overabundance of misplaced confidence) that this is where we are going ... based on where we all know we have been.

The pieces of the big picture puzzle, as they present themselves more and more clearly, all form a possible future, without death and destruction under false pretenses. This possible future, is indeed based upon "past ideals of building solid, enduring, long term wealth."

And best of all, the families are well prepared for it, the ruling class will grow stronger for it, and a great many of the nouveau riche will find the true value of their holdings to reflect their appropriate status in the scheme of tradition.

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