Over the last few days, I have been reading, and hearing some concerning stories, that suggest the end of the Dollar as World Reserve Currency is merely weeks, or at most months away.
As of late, certain banks were recently being bailed out, because the banks loaned out currency to people to buy property, which collapsed in price in the aftermath of the 2008 crisis – Italian Banks were the most recent recipients of ECB largesse. But most large Western Banks, are in an impossible position, Deutsche Bank being the most recent one facing the threat of failure, but perhaps even one of Wall Street’s grand-daddy banks.
That bank, even now, according to one economic and geopolitical forecaster is on the brink of failure with a derivatives book of 349:1 leverage on its assets – If you were aware and remember, Lehman Bros, was a mere, a MERE 73:1 when it finally failed.
BUT, as to how this dollar problem has affected the International Trade scene, has remained largely ignored by the financial media and journalists.
Countries who sell to the U.S., have been getting paid in, as one commentator put it – “toilet paper”. Indeed, Fed Chairman Ben Bernanke said as much, at the time of the 08 crisis, when he said that they have a printing press, that can create dollars essentially at zero cost, which means, that that, is ultimately their value. But, those dollars, because of the Bretton Woods agreement, are used to settle International Trade agreements, between for example Saudi-Arabia (for its oil) and India for its I.T. services, or Brazil, and its coffee, in exchange for Australian wine. As a result, China has told the U.S. that the International dollar has to go, and a U.S. treasury dollar has to replace it, but that its value will have to be halved over a period of approximately 2 years.
I hear that circa 20 International Container Ships are anchored off-shore in the Pacific, because the providers of those goods, now do not want the U.S. dollar in payment, and that other reasons are being given for the lack of access to Port Authorities in Los Angeles and points north.
In its place for International Trade, will be the SDR, which will be partly (circa 40%) backed by Gold, as I mentioned in my last piece, the Americans, who have been trying to control the price of Gold on the COMEX, will have to have Gold revalued on International Markets, and as at this particular point in time, the price is under negotiation. However, my finger in the air best guesstimate, would be circa $5,000/oz, with a rise to closer to $10,000 as the world economy adjusts, and people rush to buy.
The revaluation will be an overnight affair, rather as FDR’s gold revaluation took place once it was safely stored at the Fed, after he issued his now famous Executive Order 6102 on 3rd April 1933, confiscating the nation’s gold, forcing Americans to surrender their gold (excluding jewellery) on pain of a $10,000 fine, and/or 10 years in the pokey. Silver was also confiscated the following year. But even then, it is estimated that barely 30% fully complied.
However, because of International Trade, this revaluation of Gold and SDR currency introduction, needs to take place in a safe, secure, standard way to minimize shocks to the world economy, and trade.
In the wider world, all International Trade would now be carried out in SDRs, which would include the Chinese Yuan, and as stated would be valued based on a basket of currencies as per my previous post, but backed ultimately by Gold.
It is not widely known, but there are families in the Far-East, who collectively, like the Rothschilds and Rockefellors, have huge dynastic wealth, which some estimates put at 100,000 to 150,000 tonnes of Gold. (I think this is slightly exaggerated but not by much)
In fact one Japanese Army officer, claims to have discovered some of this wealth hidden, in a cave system, when they invaded other islands and nations in the second world war. A solid gold buddha of circa 24″ high, and weighing hundreds of pounds was one such piece, reputed to have been discovered. Details of all such finds are obviously viewed suspiciously by those behind the veil, and generally have scorn poured on them, in efforts to hide these truths that might embarrass the legal owners, if nothing more than but for their sheer ostentatious displays of wealth.
When these events unfold, the price of both Gold and Silver, and to some extent all commodities, will shoot up on international markets, at least when priced in Fiat currency terms. But derivatives books, will also be affected, meaning banks will undoubtedly be affected. Bank Accounts that in Britain and America are currently backed by insurance, that the British Banking Regulator – the FSA – has been pushing on local radio, and the FDIC supposedly insures for Bank accounts in the U.S., may be “bailed in” as happened in Cyprus, as banks fail, and we are likely to see a change to International trade of the major contracts into the SDR, to make trade more equitable.
America currently has a $500 billion annual trade deficit. Britain too, has just suffered a further imbalance to our trade book, and costs and inflation, can only go one way, if events transpire as I suspect. But at least Brexit, will make things easier for us to adapt as a nation.
In the events leading up to this introduction, we could see an overnight re-valuation of gold, to an unprecedented level, with further rises as those with huge sums of money, rush to transfer their wealth from Federal Reserve Notes, to Gold (and silver). Rumours suggest an initial price of circa $5,000/oz, but if that occurs, we may see a stampede towards precious metals from other asset classes. And what price silver? Possibly $400-$500 per oz.
Which brings me to the other concerning development suggesting these events are moving apace. It has come to my attention that Bank Accounts with large sums of money in them, are being frozen by the Banks, and their “Anti Fraud” departments. Two such acquaintances of mine have informed me that they cannot access their accounts and when questioning this, they have been told, that they are under investigation. Nothing else is divulged. No further information given.
Is this the first step in the events leading up to the re-liquidating of the Western Banking System to stop those with large sums from spreading them around several banks, and thus limiting the FSA’s and the FDICs liabilities? We can at this point but guess…
BUT… are the Banking elite, attempting to ensure that the banks remain in service post crisis? Moving large sums from one account to another, could be the straw that breaks the camel’s back… Is that why access has been frozen?
Imagine for a moment, you are unable to access your bank account, and your salary for a moment…
How would you fare if your Bank-Card and your Credit card stopped working?
How would you buy groceries, purchase milk, bread, fuel for your car? Pay the children’s school meals bills? How would you pay the Window Cleaner? The Taxi Driver? The Bus Company? Would these people and companies, still provide their services and goods, on a credit basis until things get back to normal?
For one person, they perhaps could do that, but when the whole local economy is cashless… How do they, and you just survive?
Whilst I am not advocating mass panic, it would be prudent to have available (however you define that) at least one month’s money (currency) at your disposal. If you haven’t bought Gold or Silver, in a reasonable quantity yet, there may be still a little time. Crypto-currencies too, because a banking collapse is a very real possibility, on the scale of 2008 or worse, much worse.
The people of America will feel the pain the hardest, but Britain, Japan and Europe too – excepting perhaps the northern germanic nations, and close neighbours, who will suffer considerably less. We even may see a figure similar to Donald Trump, advocating that he (or she) alone has the solution, all the people need to do is follow them, and then we will have travelled back in time to 1932, when Adolf Hitler arose to great acclaim, and sealed the west’s and his nation’s fate.
Of course, having sufficient staple foods, water, perhaps fuel – like bottles of Gas for camping stoves etc. – tanks of fuel for the car, and candles, matches, canned fruit, vegetables, and batteries as well as water purification tablets, will all make life more liveable, if the SHTF moment arrives.
Time to prepare, and that is not an idle request.