Sunday, April 2, 2017

CONfidence Burns

As we all know, many have made the same case made here for years, and we all tire of the many times that "THE END" seemed "NIGH" by the standards of times past.

But in fact ... we must accept that.CONfidenence alone indeed CAN maintain any Ponzi scheme indefinitely (even a global one) as long as new participants continue to support it. Case in point, the current equity bubble. It has long ago departed any common belief of "being real".

Let's face it, a growing number of "investors" today do not enter the stock market under the presumption that incredible fundamentals and economic prosperity are the engine that drive valuations - many speculate that the DOW is a systemically necessary bubble, and that central banks will manufacture a steady rate of gains indefinitely. They reason that as soon as buyers show slack, our CBs themselves will buy assets merely to prove them wrong long enough to gain the incredulity (if not confidence) of new speculator "pull".

So Daniel Lang's closing comment, which we agonizingly hear so often, that "Hope and confidence can only prop up a bubble-ridden economy for so long" is not exactly true. What everyone seems to miss is that the world's markets are a bit bigger than their own back yard

As A, FOA and FOFOA have stated so often, the rest of the world was perfectly fine with playing the "Dollar Debt Ponzi Game", accepting the tax on real production it imposes. But even Another would have been surprised to find the US imposing sanctions, political extortion, social engineering and flagrant military adventurism on top of that tax - upon its dollar vassals.

As a result, it is the geopolitical policies of the Dollar faction itself which has so fully reversed foreign support for the global dollar Ponzi, as we now see here. It will be said in fact that it was OVER confidence in the US Dollar that was it's undoing, such that it's issuers would treat sovereign countries like Russia and China as mere colonies of its dollar system.

Thus, to qualify Lang's statement - if the whole world happily agreed to have hope and confidence in the dollar's issuing authority - the USA - this bubble ridden system could soldier on for centuries.

The whole world does not happily agree.
The Industrial and Commercial Bank of China (ICBC) officially started operating as a Chinese renminbi clearing bank in Russia ... this past Wednesday.
Step by step, month after month, our global paper markets and their dollar-debt-derivative system face increasing competition from a gold-equity-derivative system which dramatically reduces support for it's competitor system (by its very existence). We have seen the flow of gold for years from West to East. What did anyone really expect to happen next. Nothing of any import?

Trade agreements, loans, financial instruments and derivatives denominated in currencies backed by physical gold (not dollar debt) are in essence derivatives of an equity based (gold-backed) system, not a debt based (dollar backed) system.

The formation and rapid maturing of such a much-needed and increasingly favored equity based system is the true Waterloo of the dollar Ponzi. As Giants move their wealth from the old system to the new, all subordinate wealth will rapidly follow suit.

Bring your sunblock, hand fans and ice water. The heat from the dollar denominated paper debt inferno that approaches will be searing indeed.


  1. We have a renminbi exchange and clearing platform right here in America.I don't understand why it involves some many heavy weights and what it's doing here in America.

  2. "Money" knows no borders, no national allegiance. What is surprising is the US/China trade "relationship". It appears more confrontational than constructive. We won't live to see it, but long after the center of power shifts, so will alliances.

  3. Indeed, the current US/China relationship doesn't make much sense.
    I suspect “The Working Group” is a platform to be used for liquidity swaps rather than smaller scale trading, clearing, and settlement. While central bank liquidity swaps and currency swaps are structurally the same, currency swaps are commercial transactions, while central bank liquidity swaps are emergency loans to overseas (U.S. to China or China to U.S.????) markets.
    Perhaps the confrontation which we are seeing is nothing but mere part of the ritual of haggling or negotiation - Donald Trump style.

    1. International commerce is complex. I spoke to a client yesterday who has to resource Vietnamese suppliers in particular because of China tariff issues, and that is just the tip of iceberg. A small business but still in the 10's of millions. In the end, governmental intervention into commerce is a problem. They should stick to prosecuting actual fraud and theft and leave the mechanisms of trade to free markets. What FREEGOLD is all about after all.