In the last 12 hours I have read two very good articles on the demise and replacement of the American dollar as the reserve currency for world trade.I have just completed “The Death of Money” by James Richards and a related article on Zero Hedge website. Richards is a Washington insider and many of the thoughts below are his…
We all know America has to debase its currency to escape its debt trap. We know they will not raise taxes but will take the easy way out. That road is now confirmed. What this means for the rest of the world is that themUS currency will depreciate markedly over the next decade, after having lost 1/3 of its value in the last decade. They are determined to inflate away their debt mess.
Because of this dilemma, the rest of the world is growing impatient with our only super power, and they are outsmarting it too. China and Russia know that when the global currency reset finally comes, that those who have a strong currency backed by gold will have plenty of bargaining chips at the poker table. China is also playing catch up in the gold-to-GDP ratio stakes in readiness to deal firmly with the Americans. The Chinese sit on a mountain of depreciating US bonds that they would like to get rid of, so the Americans are incentivising the Chinese to keep their bonds by suppressing the price of gold to facilitate China’s build-up of its gold stock on the cheap. When this is complete the Americans will then get on with the job of inflating away their currency and bonds which will give the Chinese a huge capital gain on their gold. This is a win-win scenario for both. The Americans also have no choice as they fear having a bond market fire-sale on their hands, which would wreck their economy.
Power is slipping away from America. The central bankers are already planning their next move to keep their central role as kings of finance. After all, it has been 42 years since this floating and gold-free US$ reserve currency paradigm was built, which is the average lifespan for a reserve currency.
But what is to replace the US$? The International Monetary Fund, the Bank of International Settlements, the central banks of the world and the elite in political spheres are already years into the planning for the next currency. Enter the “Special Drawing Right” or SDR for short. This is a little-known unit of account used by the International Monetary Fund from time to time to make its actions distinct from that of the Americans. Planning is running at full steam to bring this unit into the centre of the action when the time is right, probably during the next crisis when the Fed will be too tapped out to help the rest of the world.
The SDR is the logical next step in the evolution of money, at least in the eyes of the global elites. It allows Russia, China, Japan, Britain and the EU to take seats at the financial poker table as equals to America, and I t smoothly deals with a decaying dollar and imploding US economy, and it gives the banking cartel another 40 years control over global finance.
The transition is going to unfold in one of four ways; 1, smoothly over the next 10 years (which I doubt); 2, chaotic, in response to deteriorating economic and social conditions, either manufactured or real. I think this scenario plausible, as they need a crisis as cover for bringing it into play: 3, with gold as the foundation of the system (this option will be forced upon the westerners by the eastern powers if they gain the upper hand in negotiations); 4, complete breakdown of the global social order and the onset of fascism, in which case the elites totally lose control and we await the rise of the next Hitler from the ashes of economic meltdown.
This is not a think-tank scenario. even Frederic S. Mishkin, Ben Bernanke’s mentor, sees it coming in his paper titled “Crunch Time: Fiscal Crisis and the Role of Monetary Policy”. The GFC was the opening act in the transition drama to this new world order. Politicians are behaving exactly as scripted and the central bankers are pulling the strings. When will the curtain fall for the US dollar?