Monday, July 24, 2017

Comme l'argent, ses Gens ...

As we view the evolution of the dollar system, it is the Triffin Paradox which ultimately brings us to the end of it's exhausted timeline. It was a good run. In essence, though factors like "military" and "economic strength" come to bear, it was in part the collective perception of "American Exceptionalism" that influenced the thinking at Bretton Woods, which in turn caused the dollar's structural imbalance to grow so large, and for so many years.

Historians will scratch their heads over the dollar choice vs. Keyne's Bancor, the predecessor concept to the SDR. But old money wanted to prove to the world that even the greatest of nations cannot be trusted with the world's money (even though the nation had so little to do with it's management - yes, perception is everything).

Now, the experiments of global "accommodation" have run their course. And the world's confidence in the dollar system is waning. Thoughts about American exceptionalism are also changing. Now, the world will accept a currency with no national ties as "superior" to its own. Every nation will still have a national currency, with a useful "national" value. This has been the way of most currencies all along, except for the dollar, which will soon follow suit.

The world will accept a global currency today under the caveat that all countries contributing to the global economy will be equally represented by this currency, with no single nation having the privilege of managing the world's money.

The United States did have the leverage of it's NYFR, Treasury, ESF and CB/Primary dealers (plus "dark leverage") but it never had complete control of the dollar system, or its "baked-in" destiny. The intended message is clear: a global money, under the management of a public-private global partnership has "got to be better than what America's dollar has become today". Sadly, we must admit that the U.S., its leadership and electorate, appear dysfunctional to maturing generations across the world - and rightly so - a reflection of its currency.

If you have followed these annals over the years, you will have no doubt sensed a common thread or two, running through these thoughts. One of these is the notion that our money is so intrinsic to our character that it is a reflection upon us, our people and our nation. In the case of the US dollar, it's privileged money status changed the money's character, and so went the nation, and the culture. It works the other way around as well - a vicious cycle. The world now sees the example of how a money's character can change the issuing country's character (and generations of its people) over time. And that too is a lesson well learned. It gives a whole new meaning to the term "money changers". And it helps the little people to understand how powerful a money system truly is, and why its managers see themselves as Gods.

Even at the most basic level, it is easy to understand the warning: "Don't fuck with the money!".

Today, as thoughts continue to change, the dollar (as representative of the world economy) is looking more and more like a Ponzi scheme. And of course, all truly fiat currencies function as confidence schemes. This Ponzi is unwinding as investors fear for a return on their capital. They will even pay for a partial return in the ultra conservative sovereign bond market. And so the confidence lost in America, and its dollar system, must be replaced by a more credible scheme.

More than anything else, Corporatism (the preferred method of global reserve management) was further legitimized. This is the true "systemic change" that came with the evolution of the dollar. It will replace Capitalism in a real sense, though the little people won't be shown this, and it will have a different label (since the stigma of its past association to Nazi Germany carries too much baggage).

Those who understand the system and are either "interested in its profits or dependent on its favours" define the true nature of modern currency creation. The corporations profit from it and the governments are dependent on its favors - and this symbiosis is the very definition of corporatism.

The Families recycled many, many dollars through real wealth over these recent "dollar system" generations, and they have much to show for it, though the wisest of them "show" the least. Gold is unpretentious in this way of being easily hidden, even in size.

The new "fiat wealth denominator" that wins "world confidence by consensus" will be one that is represented more equitably among sovereigns that participate in global economic production and consumption. Nations, like their states, will have all the autonomy of any district, as with municipalities today. The system will stand above the sovereigns themselves as it "bails them out". Not such a spectacular feat - it's been done many times before, just never on quite so large a scale.

Such is the price nations pay for relinquishing the indispensable duty of money creation, so intrinsic a duty to its people. To outsource the task to a banking class which has no national pride, no duty to a country or its people - that is the great disgrace of our modern era. Money creation is a sovereign duty - a public utility.

We see similar problems when parents think they are too busy to raise their children, and outsource the task to parties only interested in the payment they receive for surrogating this responsibility. I point this out, because there are people who will read these words, and heed the timeless warning. Evil needs nothing more than for good folk to do nothing, to take root and grow.

But we must understand evil to do something about it. And these annals are "something" in the way of understanding. A flower that takes root perhaps. There are of course larger forces at work - Giants of good and evil, fighting for power over this world - power over the little people ...  for their hearts, mind and souls.

In any event, old wealth will continue to recycle through much real wealth this new and improved global fiat, compounding accordingly, as long as the world accepts its usage. This next supra-national currency will outlast anyone reading these words I think, though it matters little. The little people have very short memories and their lifetimes come and go abruptly, with little continuity.

Generational wealth is the very definition of continuity. Managed succession is the hallmark of world power and the traditions handed down are born of very long memories, and very long positions on tradition. As the Country, its money. As the money, its people.

This we learn from the flower of understanding ...


  1. Monsieur Roacheforque,

    Do you see the gold "paper mkt" breaking as Fofoa describes or can you envision an "official" (gold QE) revaluation of gold to recapitalize the debt laden balance sheets of sovereigns down to the common man's? I may be wrong but it seems to me that you have hinted at this in:

    - "Competition" -

    "Lions and Tigers and Bears, Oh My! With the CBs in need of emotional rescue after the daring and heroic transfer of systemic risk to their balance sheets (in the name of "God's Work") who or what shall rise to the occasion to prevent THEIR disastrous demise?"

    "Perhaps ... that singular general ledger item which promises "payment in full"?"

    for all your "thoughts", merci !!

  2. I cannot say for sure if, when or how the COMEX will default, but I do see a super high dollar price of gold as the only remedy to counteract hyperinflation.

    In other words, through a combination of high inflation and gold hyperinflation (in dollar terms) the world will have the least disruption to supply cycles and real world consumption / production.

    Paper that is hugely overpriced in dollars can be settled (or abitraged) in super high dollar priced gold.

    This deserves a full post, but I am swamped for the time being.

    Than you for your interest!!

  3. PIMCO - Rumpelstiltskin At The Fed

    "the Fed should unleash a massive Fed gold purchase program that could echo a Depression-era effort that effectively boosted the U.S. economy."

    Fed should "emulate a past success by making a public offer to purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce?

    Global consumers are more familiar with gold than the banking system, thus this avenue of monetary expansion might finally lift the anchor on inflationary expectations and their associated spending habits.

  4. Excellent find enough.
    PIMCO effectivelly calling for massive gold revaluation.
    Seems like that specific idea, is finally reaching the street so to speak, instead of just gold bugs.

  5. this is what I meant by "gold QE "

    interesting that the report has been deleted from PIMCO website but I have it in PDF format....