Friday, February 1, 2019

Earning Your CONfidence

Yes, as time passes, we watch the slow-motion version of the global economic event unfolding - toward some form of closure perhaps in its second decade? So many people are wanting to know "WHEN?" when in fact they should be focusing on "how".

It's seldom acknowledged publicly, but large dollar denominated contracts are in fact being renewed, rewritten or rolled over into euro. You won't hear about the cumulative effect, but you'll notice an article here or there where someone decided to mention that little change to the agreement. Watch and see the EU practicing the dying art of "rule of law" in order to keep the euro credible as an established IMF/SDR currency ... one which has the depth and precedent required. The hand above does not rush out of a currency overnight, as that benefits no family, nor the system.

But clearly, the contrast between dollar and euro factions could not be more evident. The dollar, it's government, and by usage extension, it's monetary and financial faction are regressing into third world style acts of desperation, from self-defeating economic sanctions to abandonment of the most basic rules of gold custodianship.

One might wonder why an article written more than three months ago is suddenly now receiving such attention. Some things take time to make their point, just as it does take time to "change expectations". This Brexit thing after all, is quite a thorn in the side.

Confidence, consistency and rule of law are important factors which affect exchange rates in the currency markets. Some inputs to the standard "exchange rate valuation formula" are less public than others, and also more important to those who matter. We might think of how confidence and influence work to change sentiment and expectations. The importance of these impacts are not lost in the minds of CB chairpersons, nor the directors of the BIS. They will not arm the nuclear option of gold ... not while a long, drawn out strategic draw of shifting sentiment and juggled expectations can still be maintained. But when CONfidence is lost, all is lost. Such is the fragility of debt.

The dollar faction has long past abandoned the practice of earning confidence. It seems in fact intent upon either destroying world confidence, or bolstering it with the sheer brazenness of its own machismo (or the market's perception of that). Is it a desperation move or is there a brilliant method to the madness of leveraged over-confidence?

This is the burning question which the market (the hand that takes) would kill to know. Of course, above the markets, the hand that gives already does.


  1. My take on this is a bit different. I contend currencies are trading in a false paradigm and it is the coordinated collusion of the major central banks that have allowed this charade to exist. It is important to understand that wealth is contained within a rather closed system.system of fiat money by laws and rules that discourage freedom of movement into tangible assets. This has sheltered currencies from a storm of volatility

    The failure of any of the world's four major reserve currencies will destroy the myth that major currencies are immune to the same fate that has haunted so many currencies throughout history when the nations granting them have proven unable to control their budgets and been crushed under the weight of debt. The article below explores why investors should get ready for a rude awakening caused by major changes in currency values.

  2. I do not know of any laws or rules that restrict the freedom of currency movement into tangible assets. Perhaps I am misunderstanding your meaning. As for the 4 major currencies, if any one fails they all fail. I sometimes wonder if this is the dollar's hold card - the big bluff. As in "let the dollar fail and your currency is going down with the ship".

  3. Since most ordinary folks don't see gold as money, BoE or the Anglo-America faction can get away with not obeying the rule of law in regard to the basic rule of gold custodianship.
    The ones who know or understand what has happened are captured by the current system, they are not going to protest too loudly until they have an alternative currency system in operation to conduct trades. There really isn't much they can do other than stockpiling gold and wait.

  4. If you haven't seen this yet... thought you might like it. An agreement seems imminent. No more "currency manipulation". What are they gonna do? Say that WEIGHTS can't be so easily manipulated, perhaps? "A gram is a gram." The transition never looked so close to me.

    1. As long as currencies are "tied to the dollar for value" manipulation is guaranteed. The dollar system is the very essence of manipulation, but that is changing as global dollar usage falls.