Sunday, January 1, 2017

A Comment

The more I hear Jim Rickards thoughts, the more I perceive them as an understanding of the current world order's desired outcome. Their central banks and primary dealer commercials have managed a Depression for nearly 10 years now and with some social engineering the outcome is nominally "better" than the crash of 29 and it's subsequent collapse in growth (often referred to as the Great Depression). If a third world war can be averted, historians will have a chance to compare.

However ... what the elites desire, and what the world delivers may not be one and the same thing. I have not read his series of books (despite their constant promotion in every related sound bite) but in his articles and videos (most entertaining at times) he does not seem to factor in the potential impact of the Eurasian equivalents to the IMF and World Bank. Yes the IMF has issued far more SDR denominated bonds, and the world holds far more dollar denominated derivative wealth (including bonds and other futures dependent product) than any contender.

But while BRICs currency denominated derivatives are far fewer and less deeply entrenched, we must account for the potential paradigm shift in their relative repricing.

We must ask ourselves (as should Jim) the following: What percentage of the World's producers and consumers (growth) trade in BRICs currencies today, vs.Progressive Currencies (stagflation) and how is that trend likely to change going forward, and how quickly?

The YUAN inclusion in SDR gives a small injection of an equity based growing-market currency into an otherwise majority basket of stagflating-market currencies. How long before the Eurasian equivalent to the IMF is either newly formed, or grows out of recent Eurasian monetary and financial development  ... to issue a counter weighted SDR Equivalent? Something like an ESDR (Eurasion Strategic Drawing Right)?

Imagine a supra national currency which includes Yuan, Euro, Ruble and Dollar, with weights that reflect changing market conditions and a new equity based international monetary and financial system (IMFS).

A true hyperinflation of debt based currencies and their entire "futures based" derivative system could trigger a remarkable change to the inverse relationship between time and debt value. If the SDR is weighted down by hyper inflating currencies how can it save itself? Will Yuan weight change through market value relativity? What will be the "exchange rate" between SDR, OSDR, MSDR (already existing) and new ESDR? Other currency basket derivatives?

You see, a new level of global FX market emerges as the old system deprecates. Depth of debt entrenchment and entanglement becomes irrelevant as all value is inflated away and new bonds are issued of a much higher equity based caliber.

These are just thoughts of course. No one can predict the future.
Until it arrives.

5 comments:

  1. I have extremely mixed feelings about another/foa/fofoa and their line of thought. I feel fortunate to know about it, but it all amounts to a big fat nothing unless it actually happens. Fofoa is extremely toxic, a lover of words and theory mixed into optimistic American style marketing. I highly recommend avoiding fofoa at all costs, once you get past the basics.

    I'm tired of them. I'm only interested in what's happening right now. Always right now. The past is gone, the future has not taken place, and we're all going to be dead.

    Right now, the system muddles along with no change in sight.

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  2. Odd that you would mention FOFOA in a post that says nothing of A, FOA, FOFOA or Freegold. Not even gold is mentioned here, only currencies and alliances.

    Do not worry. The profits you missed will not help the world you live in. True we will all die, but what we leave behind does matter.

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  3. I think Jim Rickards expects a new monetary system based at least partially on the gold standard. Although all the SDR currency backing is currently fiat, he expects each member country's currency will eventually be revalued based on each country's gold reserves. Therefore, he predicts a gold price between $10000 and $50000 per ounce depending on whether backing is 40% or 100%. Of course it will also depend on whether there is 8000 tons of gold in Fort Knox or whether it has already been shipped to China.

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    1. I think you are correct. Derivatives of derivatives of gold need to be backed by something beyond each other. Debt cannot back debt forever, eh?

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  4. I mention fofoa because it's the first time I'm commenting here. Once again I have to say in no uncertain language that fofoa and his blog are a cult. Go down that path and it's a black hole from which you will never emerge. Fofoa actually made fun of people who were commenting how gold was dropping in 2013. He is a deeply disturbed man behind his facade.

    Life is about earning and spending fiat, that's it. Hardly anyone outside of big miners and bullion banks earns anything in gold. This must be true, as gold is currency, and therefore the big profits must go to those that trade it. You don't gain anything by just accumulating.

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