Destruction of the US dollar

[raiha]

I don't know Devil21, your policies have affected the rest of the world; your CIA backed coups; and your strutting around the world stage as King Pin. You bully smaller countries if we don't get in line with your empire building and Military Industrial Complex gameplan. The sooner the average American citizen wakes up to the reason they are not particularly liked (and it is not because we want to be 'over there!' or that we are jealous of your freedom), and take responsibility for consequences to your actions, the healthier the world will be. But I'm not holding my breath. Too much arrogance and sense of entitlement around! Sigh!

[devil21]

I don't know Devil21, your policies have affected the rest of the world; your CIA backed coups; and your strutting around the world stage as King Pin. You bully smaller countries if we don't get in line with your empire building and Military Industrial Complex gameplan. The sooner the average American citizen wakes up to the reason they are not particularly liked (and it is not because we want to be 'over there!' or that we are jealous of your freedom), and take responsibility for consequences to your actions, the healthier the world will be. But I'm not holding my breath. Too much arrogance and sense of entitlement around! Sigh!

Who is this "you" you keep referring to? I didn't bully anybody. I don't control the CIA or act as a King Pin. You confuse the American people with the policies of the government. While I'll never defend the election of most of these criminal politicians, it's hardly fair to call Americans the problem and almost root for our demise. At the end of the day, the people that suffer from the destruction of the dollar are the average citizens, not the people making the decisions. "America" doesn't owe anybody anything. We have as little control over the US government as you or the Polish poster do.

[devil21]

Follow up on a earlier item:
http://news.yahoo.com/s/ap/20091213/...a_leftist_bloc

Dec 13 09
HAVANA – Members of a leftist bloc of nine Latin American nations said Saturday they plan to use a new currency dubbed the "sucre" for trade among themselves starting in January.

No sucres will be printed or coined, but the virtual currency will be used to manage debts between governments while reducing reliance on the U.S. dollar and on Washington in general.

Cuba already signed an agreement on Saturday to pay for a shipment of Venezuelan rice in sucres, according to Rogelio Sierra, the island's deputy foreign minister. He declined to say what the shipment was worth.

That agreement was made even as ever cash-strapped Cuba has fallen behind on its debt to nations and multinational corporations amid the global recession.

The Bolivarian Alternative for the Americas trade group is holding a two-day summit starting Sunday in the Cuban capital.

The group was formed by Venezuela's self-described socialist president, Hugo Chavez, as an alternative to U.S.-backed free-trade consortiums. Member nations are Venezuela, Cuba, Nicaragua, Honduras, Ecuador, Bolivia, Antigua and Barbuda, San Vincent and the Grenadines, and Dominica.

Honduras remains part of the bloc despite a June coup that toppled leftist President Manuel Zelaya. Zelaya's deposed foreign minister is attending the summit, but the acting government in Honduras will almost certainly not abide by any agreements made.

Chavez was greeted Friday as he arrived in Cuba by President Raul Castro. Cuba and Venezuela signed "agreements of cooperation" on 285 bilateral projects in 2010 totaling nearly US$3.2 billion, according to Venezuelan Energy Minister Rafael Ramirez. He provided no details on what those agreements entail, however.

On Saturday, Raul Castro said the cooperation between the countries will allow them to "alleviate the negative impact of the current world economic crisis."

Leftist presidents Daniel Ortega of Nicaragua and Evo Morales of Bolivia are expected to attend the summit.

Funny how foreign socialists are "Leftists" yet domestic socialists are "Democrats".

[denison]

Follow up on a earlier item:
http://news.yahoo.com/s/ap/20091213/...a_leftist_bloc



Funny how foreign socialists are "Leftists" yet domestic socialists are "Democrats".

exactly, MSM hypocrisy.

[devil21]

The hits keep on coming! This is very, very bad for the USD. Oil no longer in dollars?

http://www.telegraph.co.uk/finance/e...-hegemony.html

12-15-09
The Arab states of the Gulf region have agreed to launch a single currency modelled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate.

“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.

Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

The Emirates are staying out for now – irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman.

The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.

The project is inspired by Europe’s monetary union, seen as a huge success in the Arab world. But there are concerns that the region is trying to run before it can walk.

Europe took 40 years to reach the point where it felt ready to launch a currency. It began with the creation of the Iron & Steel Community in the 1950s, moving by steps towards a single market enforced by powerful Commission and European Court. The EMU timetable was fixed at the Masstricht in 1991 but it took another 11 for euro notes and coins to reach the streets.

Khalid Bin Ahmad Al Kalifa, Bahrain’s foreign minister, told the FIKR Arab Thought summit in Kuwait that the project would not work unless the Gulf countries first break down basic barriers to trade and capital flows.

At the moment, trucks sit paralysed at border posts for days awaiting entry clearance. Labour mobility between states is almost zero.

“The single currency should come last. We need to coordinate our economic policies and build up common infrastructure as a first step,” he said.

Mohammed El-Enein, chair of the energy and industry committee in Egypt’s parliament, said Europe’s example could help the Arab world achieve its half-century dream of a unified currency, but the task requires discipline. “We need exactly the same institutions as the EU has created. We need a commission, a court, and a bank,” he said.

The last currency to trade in souks from Marakesh, to Baghdad and Mecca, was the Ottomon Piaster, known as the “kurush”. It suffered chronic inflation as the silver coinage was debased.

There is a logic to an Arab currency. The region speaks one language, has the unifying creed of “Umma Wahida” or One Nation from the Koran, and has not torn itself apart in savage wars – ever – in quite the way that Europe has in living memory.

Yet hurdles are formidable even for the tight-knit group of Gulf states. While the eurozone is a club of rough equals – with Germany, France, Italy, and Spain each holding two votes on the ECB council – the Gulf currency will be dominated by Saudi Arabia. The risk is that other countries will feel like satellites. Monetary policy will inevitably be set for Riyadh’s needs.

Hans Redeker, currency chief at BNP Paraibas, said the Gulf states may have romanticised Europe’s achievement and need to move with great care to avoid making the same errors.

“The Greek crisis has exposed the weak foundations on which the euro is built. The gap in competitiveness between core Europe and the periphery has grown wider and wider. The obvious mistake was to launch EMU without a central fiscal authority and political union, as the Bundesbank warned in the 1990s,” he said.

“The euro was created for political reasons after the fall of the Berlin Wall to lock Germany irrevocably into Europe. It was not done for economic reasons,” he said.

Ben Simpfendorfer, Asia economist for RBS and an expert on the Middle East, told the FIKR conference that the rise of China had paradoxically disrupted the case for pan-Arab economic integration.

There was a natural fit ten years ago between rich oil state and low-wage manufacturers in Egypt and Syria, but cheap exports from China have forced poorer Arab states to retreat behind barriers to shelter their industries. “The rationale for a single currency has become weaker,” he said.

The GCC also agreed to create a joint military strike force – akin to the EU’s rapid reaction force – to tackle threats such as the incursion of Yemeni Shiite rebels into Saudi territory earlier this year.

This is a major breakthrough after years of deadlock on defence cooperation.

The Sunni Gulf states are deeply concerned about the great power ambitions of Shiite Iran and its quest for nuclear weapons, to the point where the theme of a possible war between Iran and a Saudi-led constellation of states has crept into the media debate.

They nevertheless repeated on Tuesday that “any military action against Iran” by Western powers would be unacceptable.

[devil21]

http://www.business24-7.ae/Articles/...c0ee85802.aspx

12-27-09
A new global currency should replace the US dollar as the international reserve currency, as the long-term deterioration of America's economy and the greenback is fuelling a "currency-regime crisis", says Martin Wolf, associate editor and chief economics commentator of the Financial Times.

Wolf, who has honorary doctorates from three universities, bases his argument in part on the Triffin dilemma, an economic paradox named after economist Robert Triffin. The paradox shows that the US dollar's role as a global reserve currency leads to a conflict between US national monetary policy and global monetary policy. It also points to fundamental imbalances in the balance of payments, particularly in the US current account.

Account deficit

Speaking at an event organised by the Singapore Institute of International Affairs, Wolf said Triffin believed that the host nation of a global reserve currency will inevitably run up a huge current account deficit that would consequently undermine the credibility of its currency and adversely impact the global economy. "You can't have an open globalised economy that relies for its ultimate liquidity on the currency of one country. That was his [Triffin's] argument. And, therefore, he said the Bretton Woods system would break, which it did. And exactly the same thing happened with Bretton Woods II, which is the system of pegging.

"So I agree with this. And I'm absolutely convinced now, in a way that I was not three or four years ago, that we cannot continue with a genuinely global economy which relies on national money, and that's not sold by just adding another couple (of currencies). It actually means having a global money."

Indeed, Wolf said he's in complete agreement with China's Central Bank Governor Zhou Xiaochuan, who has argued for a new global currency "most credibly and convincingly".

"On the dollar, there is nothing to support this currency except the Chinese government and a few other governments that are prepared to buy it," said Wolf. "Anybody can look at the arithmetic of the fiscal deficit, the monetary policy, the external balance, which has improved but largely because of the recession, the dollar is not adequately supported." The US currently has a national debt in excess of $12 trillion (Dh44trn) or almost $40,000 per citizen, with a debt to GDP ratio of more than 85 per cent. In the July-September quarter, the US current account deficit rose sharply by 10.3 per cent from the previous quarter to $108bn. In the past year, the US dollar index, which measures the performance of the greenback against a basket of currencies, has also fallen significantly.

Destabilising euro zone

Apart from the economic risks posed by the decline of the US dollar, China's devaluation of its currency is causing "a real problem" for Europe. The "very perverse currency adjustment" is highly destabilising for the euro zone economy and could create a crisis, said Wolf.

"There is nothing to prevent this, unless the Europeans decide they are going to intervene in the foreign currency market to buy dollars and that would be over (European Central Bank president) Jean-Claude Trichet's dead body."

As there is "no chance" of European governments intervening in the foreign exchange markets to improve the competitiveness of the euro, it will result in major currencies such as the euro and Japan's yen becoming "very vulnerable".

"This is simply the American way of shifting the recession from them(selves) to their trading partners," said Wolf.

"What we need are global currency adjustments and it has to include the renminbi and global macro adjustments in those countries which make this less painful."

"In terms of the impact of this on the role of the US dollar as the currency of denomination for international transactions, basically I think it's become very unreasonable."

"Because the dollar, to my mind, given its underlying conditions, is no longer a credible long-term store of value," said Wolf. The decline of the US dollar underscores a phase of global power transition, with the balance of power moving from the US to Europe, China and India, Wolf argues, adding that the greenback's loss of credibility as the dominant global reserve currency is part of this messy transition.

No credible US policy

"The Americans no longer have the means to save themselves, this is what I think people don't understand. There is no credible American policy," said Wolf.

"We need to discuss this globally in a harmonious way. It's not happening, so at the moment the euro zone is a prime victim and it will continue to be, and that will create very big problems for European-based manufacturers, and quite particularly those that are relatively vulnerable to global price effects.

"And it's a tremendous mess, a horrifying mess and that's where we are, I'm sorry. And we've got to get through this transition as quickly as possible to a more stable global monetary system with a lesser reliance on the dollar. We're going to get there over the next 10 years, I'm sure of it. We're going to get there. The only question we have to decide is, how we're going to get there."
US-China trade

Meanwhile, a trade skirmish between the US and China could ensue, if Beijing continues to devalue its currency to bolster export-driven economic growth at the expense of economic recovery in the US, said Wolf.

He says China is working hard to defend the artificially low value of the renminbi in the hope that exports will pick up when external demand recovers. According to China's customs authorities, exports from January to November plunged by 18.8 per cent to $1.07trn from a year ago. However, according to The Royal Bank of Canada, export growth should pick up in the coming months and reach double-digits in early 2010.

China's efforts, Wolf said, will spark a "very vigorous, even vicious" reaction from the US as it's destabilising US efforts to engender an economic recovery.

[devil21]

Chinese bank official admitting they can't finance US deficits any more.

http://www.shanghaidaily.com/sp/arti...cle_423054.htm

12-18-09

IT is getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday.

The comments by Zhu Min, deputy governor of the People's Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of US government bonds.

Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its US$2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets.

China's State Administration of Foreign Exchange reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as the country seeks to diversify its investments.

In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.

He then addressed where demand for that debt would come from.

"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."

"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."

China continues to see its foreign exchange reserves grow, albeit at a slower pace than in past years, due to a large trade surplus and inflows of foreign investment. They stood at US$2.3 trillion at the end of September.

[devil21]

http://www.cnbc.com/id/34848783

Dollar crisis looms if US doesn't curb debt: Experts 1-13-10
The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.

"It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally," said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States.

President Barack Obama's administration will present his budget for fiscal 2011 early next month amid intense pressure to live up to election campaign promises not to raise taxes on middle class Americans, while confronting a record deficit.

As a result, Obama is expected to focus on long-term fiscal discipline, while maintaining policy support for an economic recovery in the near-term as the country rebuilds after its worst recession since the Great Depression.

The two-year study by the panel, assembled by the highly respected National Research Council and the National Academy of Public Administration, said that the White House had some time on its side to restore growth, but must then act.

"In the next year or two, large deficits and more borrowing are unavoidable given the severity of the economic downturn. However, action ought to begin soon thereafter," they said.

The national debt has risen above 50 percent of GDP (gross domestic product) from 40 percent two years ago, and within 20 years will blow past a previous record above 100 percent of GDP set after World War Two without stern official steps.

Mounting debt could sap investor confidence in the economy, and the nation's ability to honor its obligations, pushing up interest rates and causing a steep fall in the value of the dollar as international creditors seek safer returns elsewhere.

Cut Health Care

The committee identified curbing Medicare, Medicaid and Social Security spending as the top challenge, and had a lukewarm assessment of cost containment in health care reform currently before Congress that Obama hopes to sign soon.

Committee co-chair John Palmer said the reforms might lay the foundation for improvements in the future, but he was skeptical about presumed saving levels and said that "passage would not change in any substantial way our analysis."

The committee, which included three former heads of the CBO, outlined a range of options to lower the ratio of the national debt to 60 percent of the size of the economy.

The 60 percent threshold of debt to GDP, a target that is also used by the nations sharing the euro common currency, was a "judgment choice", said Penner, who is a senior fellow at the Urban Institute, a Washington think-tank.

He said it was deemed to be the most that could be borne without incurring debt levels that would drive up long-term interest rates, and the least that was politically feasible in terms of reductions in government spending.

At one end of the options, the committee reviewed a policy mix based on low spending and low taxes. This envisaged payroll and income tax rates staying as they are, around 18-19 percent of GDP, but healthcare and retirement program costs sharply curtailed and defense and domestic spending cut 20 percent.

The other end of the scale looked at a high spending/high taxes policy mix that would maintain the projected growth in Social Security and allow higher spending on federal programs.

However, this would see taxes rise above 40 percent of GDP, or in the neighborhood of Denmark or Sweden, in order to hold the national debt to 60 percent, unless a value added sales tax was also introduced to augment government revenue.

Between the two were several intermediary solutions relying on a blend of higher taxes and lower spending. The committee made no recommendations but warned there was no time to waste.

"If action is taken soon, the country has a wide choice of options to help achieve fiscal sustainability. All are difficult; but if action is postponed, the options will be fewer and the choices even more difficult," they said.

[devil21]

http://www.ft.com/cms/s/0/22f1bd26-0...44feabdc0.html

1-20-10
Russia’s central bank announced on Wednesday that it had started buying Canadian dollars and securities in a bid to diversify its foreign exchange reserves.

Analysts said the move could be a sign of increased diversification of emerging market central bank assets away from the dollar and into investments denominated in other commodity-linked currencies, such as the Australian dollar.

Adam Cole at RBC Capital Markets said if taken in isolation, Russia’s announcement that it was buying Canadian dollars was not significant, but if it was part of a broader trend, then it was an important step.

“If it is a barometer for the activity of other central banks, then its is structurally positive for the currencies of countries like Canada and Australia that have a commodity bias in their economies,” he said.

Although not officially confirmed, traders said that other emerging market central banks, including some in Asia which hold large foreign exchange reserves, have also been active in the foreign exchange market in recent weeks buying both Canadian dollars and Australian dollars.

Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said that it would invest in Canadian dollar-denominated deposits and bonds.

“The Canadian financial market is not very deep, so we can invest in deposits in significant volumes, while the bond market is limited,” he said.

Although the central bank did not specify how much of its reserves it was allocating to assets denominated in the Canadian dollar, analysts estimated that the central bank could put up to $9bn, or 2 per cent, of its foreign exchange reserves into the currency.

Russia’s foreign exchange reserves, the world’s third largest, stood at $439bn at the end of December. These stockpiles have grown by 14 per cent since the start of the rally on global asset markets in March as rising commodity prices have boosted mineral-rich Russia’s coffers.

Ahead of Wednesday’s announcement, Russia’s foreign exchange reserves were evenly split between dollar and euros.

Alarmed at the plummeting value of the dollars in its holdings, Russia has been at the vanguard of countries calling for the US authorities to stem the fall of its currency. Last year, along with China, Russia urged the creation of a new supra-national currency to replace the dollar as the world’s reserve currency.

The dollar has fallen more than 12 per cent on a trade-weighted basis since March. Commodity-linked currencies have rallied strongly, however, with the Canadian dollar up 24 per cent against the US dollar over that period and the Australian dollar 40 per cent higher.

This has prompted Russia to diversify its holdings. Indeed, in addition to its plans to buy Canadian dollars, Sergei Ignatiev, chairman of the Russia’s central bank, said last month that its was “discussing the possibility” of buying Australian dollars.

But some analysts warned that emerging market central banks might be in danger of buying commodity-linked currencies at the top of the market.

“In the long run it makes perfect sense for emerging market countries to diversify into commodity linked currencies,” said Simon Derrick at Bank of New York Mellon.

“But in the short-term, I would urge caution given that many commodity-linked currencies currently stand at extremely high levels on a historical basis.

[Zippyjuan]

A weaker dollar will help slow the flow of jobs outside the country (of course China has to let it go lower relative to its currency as well) as it causes the price of our imports to go up but the price of our exports to go down. This will help the trade imbalances we currently have. Having a strong dollar for a long time helped start the jobs exidus many years ago as manufacturers sought out cheaper labor to produce their goods.

[devil21]

A weaker dollar will help slow the flow of jobs outside the country (of course China has to let it go lower relative to its currency as well) as it causes the price of our imports to go up but the price of our exports to go down. This will help the trade imbalances we currently have. Having a strong dollar for a long time helped start the jobs exidus many years ago as manufacturers sought out cheaper labor to produce their goods.

The catch is that as the trade deficit shrinks, foreigners have less dollars to buy Treasuries with! Who's going to fund the gov't debt?

[Zippyjuan]

If you have more domestic production you have more wages being paid to workers in this country instead of China and India so you should have more tax revenue coming in- even if tax rates remain unchanged. China holds about seven percent of our total debt (about $800 billion out of some $12 trillion in debt).

Would it be your preference to keep the dollar strong and send jobs and money to China so that they can lend some of it back to us?

[devil21]

If you have more domestic production you have more wages being paid to workers in this country instead of China and India so you should have more tax revenue coming in- even if tax rates remain unchanged. China holds about seven percent of our total debt (about $800 billion out of some $12 trillion in debt).

Would it be your preference to keep the dollar strong and send jobs and money to China so that they can lend some of it back to us?

My preference would be to drastically cut federal spending so it's no longer a this-or-that choice. Neither Americans nor China can finance the deficits the feds are racking up these days so it's a moot point.

[swirling_vortex]

A weaker dollar will help slow the flow of jobs outside the country (of course China has to let it go lower relative to its currency as well) as it causes the price of our imports to go up but the price of our exports to go down. This will help the trade imbalances we currently have. Having a strong dollar for a long time helped start the jobs exidus many years ago as manufacturers sought out cheaper labor to produce their goods.

That's true from a theoretical standpoint, but realistically the dollar would have to go down quite a bit for it to make any kind of significant impact. China also keeps their currency pegged 7:1 with the dollar, so no matter where the dollar goes, the Yuan follows with it. Also, a weak dollar means that we're much more susceptible to inflation, which would basically negate any gains that we made.

[devil21]

http://abcnews.go.com/Business/wireStory?id=9958995

2-26-2010
Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar.

"That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now," he said in a speech on the future mandate of the 186-nation Washington-based lending organization.

Strauss-Kahn said such an asset could be similar to but distinctly different from the IMF's special drawing rights, or SDRs, the accounting unit that countries use to hold funds within the IMF. It is based on a basket of major currencies.

He said having other alternatives to the dollar "would limit the extent to which the international monetary system as a whole depends on the policies and conditions of a single, albeit dominant, country."

Strauss-Kahn, a former finance minister of France, said that during the recent global financial crisis, the dollar "played its role as a safe haven" asset, and the current international monetary system demonstrated resilience.

"The challenge ahead is to find ways to limit the tension arising from the high demand for precautionary reserves on the one hand and the narrow supply of reserves on the other," he said.

Several countries, including China and Russia, have called for an alternative to the dollar as a reserve currency and have suggested using the IMF's internal accounting unit.

Strauss-Kahn said the IMF also needs to do a better job of tracing how risk percolates through the global economy.

"Here it will be essential to improve our ability to monitor several dozen large complex financial institutions that make up the `plumbing' through which global capital flows," he said, while leaving national regulators the job of monitoring the solvency of individual institutions.

[devil21]

The beginning of the end

http://www.businessinsider.com/now-b...pletely-2010-3

3-17-2010
original blog source: http://theeconomiccollapseblog.com/a...nts-completely

Up until now, the United States has operated under a "fractional reserve" banking system. Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest. But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says "impose costs and distortions on the banking system". At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

That simply does not make any sense. But it is right there in black and white on the Federal Reserve's own website....

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

If there were no minimum reserve requirements, what kind of chaos would that lead to in our financial system? Not that we are operating with sound money now, but is the solution to have no restrictions at all? Of course not.

What in the world is Bernanke thinking?

But of course he is Time Magazine's "Person Of The Year", so shouldn't we all just shut up and trust his expertise?

Hardly.

The truth is that Bernanke is making a mess of the U.S. financial system.

Fortunately there are a few members of Congress that realize this. One of them is Republican Congressman Ron Paul from Texas. He has created a firestorm by introducing legislation that would subject the Federal Reserve to a comprehensive audit for the first time since it was created. Ron Paul understands that creating money out of thin air is only going to create massive problems. The following is an excerpt from Ron Paul's remarks to Federal Reserve Chairman Ben Bernanke at a recent Congressional hearing....

"The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit created out of thin air can provide sustainable economic growth has delivered this crisis to us. Instead of economic growth and stable prices, (The Fed) has given us a system of government and finance that now threatens the world financial and political institutions. Pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn’t work, quadrupling it won’t work either. Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile."

The truth is that the financial system that we have created makes inflation inevitable. The U.S. dollar has lost more than 95 percent of the value that it had when the Federal Reserve was created. During this decade the value of the dollar will decline a whole lot more.

That doesn't sound like a very good investment.

But that is what happens when you give bankers power to make money up out of thin air.

And things are only going to get worse.

Especially if Bernanke gets his way and reserve requirements are eliminated entirely.

The U.S. economy is a giant mess already, and we have got a guy at the controls who simply does not have a clue.

It's going to be a rough ride.

[devil21]

bump

The destruction of the USD is still very much on the agenda.

http://www.zerohedge.com/article/wil...serve-currency

[devil21]

http://www.reuters.com/article/idUSTRE65S40620100629

6-29-10
(Reuters) - A new United Nations report released on Tuesday calls for abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value.

But several European officials attending a high-level meeting of the U.N. Economic and Social Council countered by saying that the market, not politicians, would determine what currencies countries would keep on hand for reserves.

"The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency," the U.N. World Economic and Social Survey 2010 said.

The report says that developing countries have been hit by the U.S. dollar's loss of value in recent years.

"Motivated in part by needs for self-insurance against volatility in commodity markets and capital flows, many developing countries accumulated vast amounts of such (U.S. dollar) reserves during the 2000s," it said.

The report supports replacing the dollar with the International Monetary Fund's special drawing rights (SDRs), an international reserve asset that is used as a unit of payment on IMF loans and is made up of a basket of currencies.

"A new global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency," the U.N. report said.

The report said a new reserve system "must not be based on a single currency or even multiple national currencies but instead, should permit the emission of international liquidity -- such as SDRs -- to create a more stable global financial system."

"Such emissions of international liquidity could also underpin the financing of investment in long-term sustainable development," it said.

MARKETS DECIDE

Jomo Kwame Sundaram, a Malaysian economist and the U.N. assistant secretary general for economic development, told a news conference that "there's going to be resistance" to the idea.

"In the whole post-war period, we've essentially had a dollar-based system," he said, adding that the gradual emission of SDRs could help countries phase out the dollar.

Nobel Prize-winning economist Joseph Stiglitz, who previously chaired a U.N. expert commission that considered ways of overhauling the global financial system, has advocated the creation of a new reserve currency system, possibly based on SDRs.

Russia and China have also supported the idea.

But Paavo Vayrynen, Finland's Foreign Trade and Development Minister, told reporters that he doubted it was possible "to make any political or administrative decisions how to formulate the currency system in the world."

"It is based on the markets," he said. "I believe that the economic players in the market are going to have the decisive influence on that issue."

European Union development commissioner Andris Piebalgs said it would be a bad idea to dictate what the reserve currency should be.

"It is markets that decide," he said. "Any intervention would just create additional challenges and make things even less predictable."

[tpreitzel]

The destruction of the US dollar is readily apparent in electronic components using plated gold. Try buying a 6' HDMI cable with connectors plated in 24k gold and copper shielding. In one purchase, you'll witness the destruction of the US dollar.

[devil21]

IMF Document illustrates plan to turn SDRs into global currency

http://rawstory.com/rs/2010/0805/imf...obal-currency/

8-5-10
It's no secret that many of the world's largest industrialized nations are somewhat eager to ease their reliance on the U.S. dollar. For months China and Russia have pushed ever subtly, for a new "global reserve currency," to give governments around the world enhanced economic stability in the event of greater fluctuations in the dollar's value.

But what wasn't known, until recently, is how far along the International Monetary Fund was in the planning of elevating its so-called "special drawing rights" from mere international agreement to an actual, legitimate global currency.

The report examines what it calls the "imperfections" of the global reserve banking structures, and how hoarding of reserves by sovereign nations can subject the system to risk and occasional shocks.

In 35 pages of extrapolation and footnotes, the IMF's Strategy, Policy and Review Department lays out the how and why of a global currency, which would move from an "inside money" as the SDR to an "outside money" that is traded by governments.

However, they conclude that "the ideas discussed are unlikely to materialize in the foreseeable future absent a dramatic shift in appetite for international cooperation."

The PDF document appeared to have been taken offline at time of this writing, but a cached version was still available. The document is from April, but was only recently noticed by Financial Times.

"[In] the eyes of the IMF at least, the best way to ensure the stability of the international monetary system (post crisis) is actually by launching a global currency," they note.

"And that, the IMF says, is largely because sovereigns — as they stand — cannot be trusted to redistribute surplus reserves, or battle their deficits, themselves."

The IMF goes on to explain:

Reserve accumulation has accelerated dramatically in the past decade, particularly since the 2003-4. At the end of 2009, reserves had risen to 13 percent of global GDP, doubling from their 2000 level, and over 50 percent of total imports of goods and services. Emerging market holdings rose to 32 percent of their GDP (26 percent excluding China). Twenty-seven of the top 40 reserve holders, accounting for over 90 percent of total reserve holdings, recorded doubledigit average growth in reserves over 1999-2008.

Holdings have also become increasingly concentrated, with over half the total held by only five countries. These numbers exclude substantial foreign assets of the official sector not recorded as reserves, including in sovereign wealth funds (SWFs), and yet invested in liquid, dollar denominated financial instruments, that have grown even more in recent years.
The global currency IMF envisions, they simply call "bancor". They continue:

though an SDR-based system would move away from a dominant national currency, the SDR’s value remains heavily linked to the conditions and performance of the major component countries. A more ambitious reform option would be to build on the previous ideas and develop, over time, a global currency. Called, for example, bancor in honor of Keynes, such a currency could be used as a medium of exchange—an “outside money” in contrast to the SDR which remains an “inside money”.
Were the industrial nations of the world to agree to the IMF's prescription for the global financial system, the fund would undertake a new realm of responsibilities. It describes them as:

Encouraging reserve holders to adjust the currency composition of reserves onlygradually and discourage any “active” currency management that could potentially causelarge swings between reserve currencies.

Requiring all reserve holding members to report their reserve composition to the Fund (possibly confidentially) including information on reserve holder’s benchmark for the currency composition of reserves. Using this information, the Fund could advise reserve holders on the pace of reserve diversification (if and when the latter express interest inadjusting the currency composition of their reserves) to maintain stability in theadjustment process, including during the transition phase to a balanced reserve system. For instance Truman and Wong (2006) propose an international reserve diversificationstandard comprising two basic elements: (i) routine disclosure of the currency composition of official foreign exchange holdings; and (ii) a commitment by reserveholders to adjust gradually the actual currency composition of its reserves to any newbenchmark for those holdings.

Engaging with potential major reserve issuers to help remove obstacles to broader use oftheir currencies, if the authorities so desire.

Considering mechanisms to facilitate the use of emerging market assets to draw liquiditywith greater certainty to attenuate their demand for hard-currency reserves.
The report was issued months before a recent United Nations Economic and Social Council called on nations to move away from the dollar as their reserve currency. The U.N. based its advice on the adverse effects felt by developing nations that were hit especially hard during the 2008-2009 U.S. economic instability.

President Obama, Treasury Secretary Geithner and Federal Reserve Chairman Ben Bernanke have steadfastly maintained that the world does not need a new reserve currency.

To the contrary, Russia has predicted the world is a mere decade away from that inevitability.

“There is a need to make the IMF a true representative of the world’s leading economies. It’s not there right now,” said Russian Finance Minister Alexei Kudrin during a June 2009 economic forum, noting that China had a lower representation quota than Switzerland or Belgium.

Here's the IMF pdf doc link. It'll probably be gone quickly so apologies if link dies.
http://www.imf.org/external/np/pp/eng/2010/041310.pdf

Here's commentary on the document contents from FT
http://ftalphaville.ft.com/blog/2010...cy-yes-really/

[devil21]

http://www.dailyreckoning.com.au/the...ar/2010/08/06/

8-6-10
more at link - long article

It's all worth pointing out that an asset market crash of that size - greater than 90% - while not unprecedented (see also Great Depression) - would be massively socially disruptive. Frankly, it would be the end of the civilised world as we know it and a long, miserable descent into poverty, violence, lawlessness, and death. That's why, in today's day and age, a printing press armed by Depression student Ben Bernanke will crank into action well in advance of a prolonged deflation.

We'll leave aside the issue of what the best investment strategy is for such a scenario today. Instead, we want to take on the point that the Fed can't actually cause inflation. Not yet, that's true. Banks must lend and borrowers must borrow for the velocity of money to increase, as well as the quantity.

But as we live in extraordinary times, massively destructive monetary policy measures call for extraordinary measures. And in Title XII of the new "Wall Street Reform and Consumer Protection Act" we think we've found a smoking gun that reveals how the Feds will shoot up the economy with more junk credit: by funneling Federal grant money through FDIC-regulate banks upon pain of death.

more at link

[devil21]

http://www.rte.ie/news/2011/0214/g20-business.html

France will help the transition to a global financial system based on 'several international currencies', the French Economy Minister said today.

1 of 1 Christine Lagarde - Wants changes on world's finance system Related Stories
G20 vows to tackle economic 'vulnerabilities'
France, as current head of the Group of 20 countries, will help the transition to a global financial system based on 'several international currencies', French Economy Minister Christine Lagarde said today.

Lagarde, speaking ahead of a G20 finance ministers meeting in Paris on Friday and Saturday, said the world had to move on from the 'non-monetary system' it now has to one 'based on several international currencies'.

Accordingly, France wants to see less need for countries, especially the emerging economies, to accumulate huge foreign reserves, she said.

At the same time, international capital flows should be better regulated and the role of the Special Drawing Rights issued by the International Monetary Fund should be reinforced by the inclusion of China's yuan in the system.

China, whose booming economy now ranks second only to the US in size after overtaking Japan, has accumulated massive forex reserves of more than $2.5 trillion on the back of its sustained trade surpluses and foreign fund inflows.

Washington says the build-up reflects an unfair undervaluation of the yuan, a charge Beijing rejects.

France has previously said it wanted to see the global financial system reduce its reliance on the dollar for a more broad-based arrangement.

No no, go back to sleep. There's no New World (Financial) Order plan underway. Don't worry. Your dollars will still be worth something when they're no longer wanted overseas Time to protect yourself and your family!

[HOLLYWOOD]

3-17-2010
original blog source: http://theeconomiccollapseblog.com/a...nts-completely

Up until now, the United States has operated under a "fractional reserve" banking system. Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest. But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says "impose costs and distortions on the banking system". At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

Why Not? It's all a PONZI SCHEME. The Federal Reserve got their backs... go ahead Bernake pull another $10 TRILLION out of the old chocolate whizzbang hole. They have a majority of the puppets on Capital Hill in their back pockets.

[Seraphim]

Ironically enough Canadian banks have ZERO reserve requirments and world leaders have repeatedly stated the Canadian banking system should be mirrored...so this does not surprise me.

[devil21]

George Soros taking it upon himself to remake the global economy, with the US taking a back seat, and presumably the dollar too.
(Kudos to Fox News for reporting this in the MSM)

http://www.foxnews.com/opinion/2011/...res-reporting/

4-6-11
Apparently, megalomaniacs need schedulers.

Just ask George Soros. The left-wing billionaire is helping fund two major conferences that start on the same day, in two different locations just a three hours apart by car. Two liberal events packed into one long weekend. God created the world in six days. Apparently, Soros, who sees himself as “some kind of god,”needs just a long weekend to start remaking today's world in his image.

The emphasis of both conferences is a familiar one to American voters – change. Soros wants to begin changing the global economy in one event. In the other, his flunkies want to “Change the world. Change the media.”

Now that is change you can believe in. Sadly, those who actually report the news must believe in it because they sure as heck aren’t reporting on Soros or either event. And that’s even though staffers or even executives from Reuters, the Financial Times, NPR, PBS, The Washington Post and other major media outlets are speaking at one event or the other.

The first gathering in Bretton Woods, N.H., is an economic conference Soros once described as “a grand bargain that rearranges the entire financial order.” In October 2009, Soros committed $50 million to the Institute for New Economic Thinking (INET). A week later, the glib lefty investor wrote a column calling for a new Bretton Woods event, to recreate the one that helped design the post-WWII economy. Only he wants this one to knock America down a peg or three.

Now, it's been a little over a year later and the group he funded is making King George’s wish come true – bringing together a whole slew of important people to discuss how to change the global economy. In Soros speak, that means “establish new international rules” and “reform the currency system.”

The announced speakers include a lot of prominent lefties, globalists and economists on the board of the organization he has throwing the event – more than two-thirds of the overall total have ties to Soros. To underscore their connection to history, INET is hosting the conference at the Mount Washington Resort, the very same hotel that held the first gathering.

INET Executive Robert Johnson defended his event in a March 31 interview with Lou Dobbs. Johnson, a former managing director at Soros Fund Management, who is on the Board of Directors for the Soros-funded Economic Policy Institute, avoided saying “Soros” despite Dobbs mentioning Johnson’s boss several times. In his last response, he tried to rationalize the Soros connection, by saying “I have a group of funders including George Soros.” With $50 million, Soros alone makes a pretty big group. Of course, Soros will also be speaking in Bretton Woods about “The Emerging Economic and Political Order.”

Just down the road in Boston, a Soros-funded media conference is trying to manipulate that emerging order as well. Close to 350 left-wingers from a variety of organizations are gathering there for the National Conference for Media Reform.

That “change the world” conference includes two commissioners from the FCC, House Democratic leader Nancy Pelosi, Sen. Bernie Sanders, four Democratic representatives, the head of Columbia University, and assorted left-wing journalist types, from Salon’s Glenn Greenwald to disgraced former MSNBC host David Shuster, who now works for a Soros-funded investigative operation.

The rest of the list reads like a "Who’s Who" of left-wing organizations and talking heads, including the president of PBS, a senior vice president with American Public Media, an Al Jazeera English executive, the president of the Newspaper Guild – CWA and Washington Post columnist Rob Pegoraro. Many others have Soros connections, such as:

Common Cause, which has been going after conservative Supreme Court justices who have some connection to the Koch brothers. Common Cause seems immune to similar investigations of their own gravy train.

Columbia Journalism Review’s Dean Starkman. He is chief of the review’s “The Audit” section and a 2006 Katrina Media Fellow with the Open Society Institute, the primary Soros charitable foundation.

Free Press, which is holding the conference. Free Press has received more than $1 million from Soros since 2003 and has 18 presenters pushing for things like “strong public media” or an extremely expensive national broadband plan they quaintly describe as “universal access to communications.”

Think Progress’s Koch-hating Lee Fang. Think Progress is a project of Democrat John Podesta’s Center for American Progress, which was founded with Soros money. Fang is on the panel for: “Real Issues vs. Astroturf: Confronting the Koch Brothers,” and makes the laughable claim “this is not about liberals versus conservatives” when the entire goal of the left is to shut down the Kochs to defund the right.

Everywhere you they go in Boston, they’ll be making more left turns than NASCAR. It’s an event filled with lefties dissatisfied that the news media aren’t even more liberal, and their goal will be to make that happen. Whether it’s “Beyond Pronouns: Creating Real Stories About Transgender and Gender Non-Conforming People” or pushing for illegal immigrant rights, the conference is a predictable liberal take on pretty much everything.

But the over-arching theme is getting government to fix the media. Columbia University President Lee Bollinger, whose school also includes the well-known and partly Soros-funded Columbia School of Journalism, is one of several speakers advocating for increased government funding for media. He called for federal funding of the media in a 2010 Wall Street Journal piece with the terrifying headline: “Journalism Needs Government Help.” Bollinger pushed for the creation of a public media that combines NPR, PBS and Voice of America. He also wants to “end to the regulation of ‘indecent’ language and images in broadcast programming” and return to the Fairness Doctrine.

Two other speakers, Free Press founder Robert McChesney and co-author John Nichols, have been pushing for $35 billion a year to fund media. Though their solution has gone from $20 billion a year for three years to $35 billion indefinitely, they are consistent in wanting U.S. media to be more like it is in Europe and oppose the “fantasy of a free-market solution.”

That’s not surprising. Nobel Prize-winning economist Joseph Stiglitz, who is speaking at both conferences, is wildly critical of people who support free markets, or what he calls “free market fundamentalists.” Free markets are directly in opposition with the Soros-funded group think that sees Big Government as merely a starting point for Ever Bigger Government.

This weekend, we get two visions of taxpayer-funded solution, only most in the news media are too short-sighted to see them.

[devil21]

BRICS nations agree to abandon US Dollar for internal matters. 20% of global GDP there not using dollars for credit. Not good.

http://articles.economictimes.indiat...cal-currencies

4-14-2011
SANYA: Brazil, Russia, India, China and South Africa - the BRICS group of fastest growing economies - Thursday signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other.

The agreement, the first-of-its-kind, was signed at the 3rd BRICS summit here attended by Indian Prime Minister Manmohan Singh, China's Hu Jintao, Brazil's Dilma Rousseff, Russia's Dmitry Medvedev and South Africa's Jacob Zuma.

"Our designated banks have signed a framework agreement on financial cooperation which envisages grant of credit in local currencies and cooperation in capital markets and other financial services," Manmohan Singh told reporters at a news conference with other BRICS leaders.

But the agreement is confined to credit and not trade. BRICS economies hold 40 percent of the world's currency reserves, the majority of which is still in US dollars.

The BRICS summit is being held in the coastal city of Sanya in China's Hainan island.

The joint presser was held after the leaders held deliberations on the international situation, and financial, development, climate and security issues.

Manmohan Singh said: "We have had very fruitful discussions. We have reviewed the international situation, discussed international economic, financial and trade issues, the challenges of sustainable development, food security, energy security and climate change."

The grouping is significant because it is expected to have a healthy global presence in the future as the member-countries are the fastest growing economies and are projected to contribute 48 percent to the global economy in the next decade.

At present they account for 40 percent of the world's population and 20 percent of the global Gross Domestic Product (GDP).

[Acala]

George Soros taking it upon himself to remake the global economy, with the US taking a back seat, and presumably the dollar too.
(Kudos to Fox News for reporting this in the MSM)

http://www.foxnews.com/opinion/2011/...res-reporting/

Soros is not to blame for the condition of the US dollar or for our impending collapse. WE did it to ourselves, or allowed banks, military contractors, politicians, unions, and other fat cats to do it to us.

[devil21]

China taking custody of US gold stashed in Hawaii?

http://www.ronpaulforums.com/showthr...-of-USA-s-gold

[Libertomics]

Bretton Woods or the modern US economy, inflation has been ever present. And it has had recessions in 1948, 1953, 1957, 1960, 1969, 1973, 1980, 1981, 1990, 2001 and 2007, but atleast it is not the recessions, panics and depressions of 1869, 1873, 1879, 1884, 1887, 1889, 1891, 1893, 1896, 1901, 1907, 1910, 1913 and chronic deflation.

[Bern]

China taking custody of US gold stashed in Hawaii?
...

Thread title is correct. Question posed above is not.