Archive for the Petrodollar Category

World War E Breeds Bretton Woods III;  BW II And The PetroDollar Will RIP? (March 14, 2022)

Posted in Bretton Woods, BRICS, CIPS, Petrodollar, PMC, SCO, SPFS, SWIFT on March 14, 2022 by e-commentary.org

. . .

K          “Sounds like a preppy.  Exorbitantly privileged.  His middle name is surely ‘Heathcliff’ or some such.”

J          “Soon to be wearing ‘BWH III’ cum serifs on his sleeve.  Very well bred.”

. . .

K          “Bretton Woods I was born on July 22, 1944 and died on August 15, 1971.  BW I was a modified Au [gold] standard that suspired for 27 years.  On a hot lazy Sunday in August in D.C. when the Ruling Class and the PMC were returning from the Shore, Nixon terminated convertibility of the U.S. dollar for gold with as much hype and fanfare as an announcement of the construction of a new water treatment plant.”

J          “I do not remember the event, yet I sense that the action was more of a unilateral breach without consulting other nations rather than a polite and proper termination of a long-term relationship and a statement that it is temporary.”

K          “Right.  Not to fear, BW II was hatched.  In the next few years, Nixon and others agreed to provide protection to Saudi Arabia in exchange for the Saudis pricing oil in the newly concocted ‘PetroDollar’ protection money.  The scheme allows the U.S. to conjure figment money at will and demand and take resources, services and products from every other country on the planet without providing anything in return other than . . . the figment money.”

J          “The U.S. spent three cents to print a 100 dollar bill and then demanded 100 dollars of things from other countries.  And latter saved the printing costs by just shuffling electrons.  It is a perpetual motion money machine, until it is not.”

K          “Resistance was futile.  The BW II system replaced an ‘Au system’ with a ‘Fe and Pb system’ that commits the iron and lead of the U.S. military to impose and enforce its will on others.  Over fifty years of international economic terrorism followed.  So few get it.” 

J          “I hear you.  I get it.  I got it.  Years ago.  We as a society are going to get it.  In short order.  In the shorts.  My friends the good old Chinese are encouraging members of the Shanghai Cooperation Organisation (SCO) and the BRICS nations to bypass the SWIFT financial system and settle cross-border international payments in digital yuan using the CIPS or possibly SPFS.  That changes everything.”

K          “The ‘PetroDollar’ has had as much influence on civilization as the implementation of the wheel, the creation of the printing press and the discovery of electricity.  Yet, the ‘PetroDollar’ and BW II are dying a slow but accelerating death.  In a stupendous irony, U.S. stupidly killed BW II which had served it so well and has now spawned an uncertain BW III.” 

J          “The U.S. actions are indeed killing the golden goose that did not require any gold to lay golden eggs.”

. . .

K          “The emerging BW III appears to be a mix of gold and commodities rather than printed figments.  The new economic system for the multipolar political world is founded on gold and commodities and headquartered and centered outside America and Western Europe.”

J          “We are substituting one empire that has done much evil for another far, far, far more evil empire without even a clue or a question about what is happening.  By the way, I have a few more Mandarin language tapes for you.”

. . .

K          “There are books on Cod and Salt and Paper and the like.  If he does not write the book on the PetroDollar, I may get it done.”

J          “And don’t forget the piece on fly fishing.”

. . .

[See “Is the Dollar in Danger?  China and Russia may be working to take away America’s ‘exorbitant privilege.’” dated March 13, 2022 by Andy Kessler in the “Wall Street Journal”.  That is two citations to the “WSJ” in a row.]

[See the e-commentary at The China-Russia Affair: Advancing The Petro-Yuan; Dictating The Future (March 26, 2018), World’s Reserve Currency War I = Cold War 2.0 = WW III (?) (September 8, 2014), AIIB: China: 1; U.S.A. 0? (April 6, 2015), The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016), USA + FRN/PD — > IMF + SDR — > NDB + UMU? The “Universal Monetary Unit” . . . Coming To a Planet Near You (January 2, 2017) and One World Currency? (January 8, 2018).]

Bumper stickers of the week:

Post-World War Two Standards:  From Au . . . to Fe & Pb . . . to Au & Commodities

Dragon < Eagle > Bruin; Dragon + Bruin > Eagle

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“This Tweet can’t be replied to, shared, or liked.”

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The Cuban Missile Crisis And The Monroe Doctrine Today (February 28, 2022)

Posted in China, CIPS, Currency, Gold, MIC, MICAC, Money, Neoconservatives, Petrodollar, Russia, Sanctions, SPFS, SWIFT, War, World's Reserve Currency on February 28, 2022 by e-commentary.org

. . .

K          “America failed.”

J          “Russia failed.”

. . .

K          “The American Foreign Policy Effete pushed with both hands to goad, badger, harass, disrespect and humiliate Russia and circumvent and undercut any reasonable and peaceful resolution.  They have blood on those hands.  They intentionally provoked Russia and cynically sacrificed Ukraine.” 

J          “Russia invaded.  Putin is a thug, a bully, a criminal and a psychopath.  Russia and Putin are responsible.”

. . .

K          “Let the record reflect that the U.S. decided to deploy nuclear weapons first.  The SWIFT system should be isolated from politics and serve as the neutral financial infrastructure for the world.  The U.S. weaponized SWIFT and cut off Russia’s ‘financial e-mail’ from the world.  Wait until the dimwits discover that Russian financial interests cannot be surgically excised from the world financial community without creating potentially cascading contagion.”

. . .

K          “If China and Russia agree to use the CIPS or the SPFS or some amalgam of the two, they can expand their efforts to circumvent the SWIFT.  The financial infrastructure is the ‘pipe’ and at this time PetroDollars are the ‘flow’ which could become superfluous if everyone is not forced to use the pipe.  And then America becomes Bulgaria.”

. . .

K          “What if Russia proclaimed that 1,000,000 Rubles can be exchanged for one ounce of gold.  And one ounce of gold can be exchanged for 1,000,000 Rubles.  Let the market respond.” 

. . .

K          “The U.S. decision to declare ‘World War E’ as they say could descend into World War Three.  The U.S. refuses to abide by a rules-based international system and instead does whatever it wants to do.  Russia may have declared war on Ukraine by default; the U.S. declared war on Russia and the world by design.”

. . .

K          “Don’t forget that when you have someone trapped in a corner, you are also in the same corner.”

. . .

K          “America no longer produces intellectuals.  Except for [Stephen F.] Cohen and [John J.] Mearsheimer and a few others [Michael Brenner], the American Foreign Policy Effete advances its own private, personal and professional interests even when those are contrary to America’s best interests.  They are treasonous.”

. . .

K          “Life presents many insoluble situations.  This was soluble.  This is the Cuban Missile Crisis played out in Eurasia rather than North America three score years later.  This is the Monroe Doctrine advanced in another region.  The solution was simple and obvious.  And remember that genius is simple and obvious.”

J          “Putin invaded.  Period.”

. . .

J          “China?  China owns the U.S.  Lock, stock and sinker.  Hook, line and barrel.”

K          “Okay, so we really do agree quite often.  What is the U.S. thinking when it antagonizes a country that should be neutralized and neutral and self-destructively drives that country closer to China.  Everyone should agree to leave Ukraine as a neutral buffer with NATO returning to the original borders.  Let’s focus on the real problem.”

J          “I know I am.  I am learning Mandarin so that I can interpret the conversations of the prison guards at the re-education camp.”

K          “This undertaking in Ukraine is a beta test for China.  They are taking notes.  When you are done with them, send over a few of the language tapes.” 

. . .

J          “Putin’s War.”

K          “Biden’s War.”

. . .

[See “Experts Warned For Years That NATO Expansion Would Lead To This” dated February 25, 2022 by Caitlin Johnstone, the recipient of the Fourth Annual Pushitzer Prize In Commentary For 2019 (April 15, 2019), in www.caitlinjohnstone.com and also the articles in Consortium News.]

[See the e-commentary at Cuba – October, 1962 (October 22, 2012), Washington Wants War In The Worst Way:  Dust Off The IOSAT Or Return To The Status Quo Ante Bellum? (January 24, 2022), Dragon < Eagle > Bruin; Dragon + Bruin > Eagle (April 19, 2021), Sanctions:  Stupid, Absurd, Futile?  Oh, And Happy Armistice Day / Remembrance Day / Veterans Day! (November 11, 2019) and The China-Russia Affair: Advancing The Petro-Yuan; Dictating The Future (March 26, 2018).]

Bumper stickers of the week:

Putin’s War

Biden’s War

Stop War: Stop Putin

Stop War: Stop Biden

I like J

I like K

Dragon < Eagle > Bruin; Dragon + Bruin > Eagle

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Dragon < Eagle > Bruin; Dragon + Bruin > Eagle (April 19, 2021)

Posted in AIIB, China, CIPS, Cryptocurrency, Currency, NATO, Petrodollar, Pushitzer Prize In Commentary, Russia, Sanctions, SWIFT on April 19, 2021 by e-commentary.org

[The announcement of the 2021 recipient of the Pushitzer Prize in Commentary is postponed from today to June 7, 2021.]

. . .

J          “China won; China one; U.S. none; U.S. done.  With each passing day, the Chinese military is outflanking the bloated pork barrel project that is the U.S. military without touching off a round or launching a missile.  CIPS is swiftly circuiting and circumventing SWIFT.  National currencies, gold, silver and cryptos are supplanting the PetroDollar.  Technology that was lifted is now legally acquired.  Critical resources that were purloined are now purchased.”

K          “For decades, the Eagle kept the Dragon and the Bruin in their corners.  Now the Dragon and the Bruin have found common ground to overcome their considerable differences, challenge their common enemy and push the Eagle into a corner it does not even recognize.  The vote in 2015 on the AIIB was the most revealing of the ultimate winner and the ultimate loser.”

. . .

K          “The U.S. is desperate to start and expand more wars and is looking to fight Russia or use proxies to fight Russia.  The Bruin is going to be a bear.”

J          “I am as uneasy about Russia as I am about China, but the U.S. should not go knocking on the Russian door and starting a fight on the Russian door step.  When I walked the streets in different cities, I was struck by the steely resolve of the people that is totally absent in the U.S.”

. . .

K          “Our goose is cooked.”

J          “We are dead ducks.”

. . .

[See the e-commentary on China at “Seeing 2020: Panda + Bruin > Eagle. Oh, And Happy Chinese New Year! (January 27, 2020)”, “China:  “The Silent Takeover” Overtakes Silently.  Oh, And Happy Chinese New Year! (February 4, 2019)”, “The China-Russia Affair: Advancing The Petro-Yuan; Dictating The Future (March 26, 2018)”, “AIIB: China: 1; U.S.A.: 0? (April 6, 2015)”, “The Silent Takeover (May 23, 2011)”, “The Odd Couple – China & The U. of S.A. (January 12, 2009)” and “China, The 800(0) Lb. Panda (November 20, 2006)”.]

[See the e-commentary on Russia in particular on the inefficacy of sanctions at “Sanctions:  Stupid, Absurd, Futile?  Oh, And Happy Armistice Day / Remembrance Day / Veterans Day! (November 11, 2019)” and “Russian Interference; Russian Collusion (February 26, 2018)”.]

[See the e-commentary on the threat to world peace posed by NATO at “NATOExit? NATOExeunt? (July 4, 2016)”.]

Bumper sticker of the week:

Dragon < Eagle > Bruin; Dragon + Bruin > Eagle    

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Fourth Annual Noble Prize In Eco-nomics (October 14, 2019)

Posted in Awards / Incentives, Economics, Economics Nobel, Gold, Nobel Prize, Noble Prize in Eco-nomics, Petrodollar, Silver on October 14, 2019 by e-commentary.org

. . .

K          “An award acknowledging and celebrating the work of someone on the planet who really knows something about eco-nomics.  Eco-nomics is about making and sharing; e-con-omics is about taking and stealing.”

J          “The Noble Prize in Eco-nomics is a delightful and playful replacement for the discredited and misnamed ‘Nobel’ Prize in Voodoo E-con-omics.  And I get it.  You get what you reward.  You need to reward what you want to get.  Who gets it this year?”

K          “The recipients of the fourth annual Noble Prize In Eco-nomics are . . . Professors Mark Skidmore and Laurence  J. Kotlikoff who have contributed immensely and with little credit to an undertaking that tracks and analyzes federal expenditures and properly and honestly accounts for them in reconstructed books.”

J          “Solid work.  Crafting a book that chronicles and corrects the government crooks’ collective efforts to cook the books.”

. . .

J          “They shined a bright light on government accounting and may have prompted the Federal Accounting Standards Advisory Board (FASAB) to shift government accounting further into the shadows.  Late last year, the FASAB unleashed the ‘Statement of Federal Financing Accounting Standards 56 (Standard 56)’ that replaced laxly enforced government accounting and reporting standards with official obfuscation and concealment of government financing and spending.” 

K          “Catherin Austin Fitts and the Solari staff [Michele Ferri and Jonathan Lurie of The Law Offices of Lurie and Ferri] prepared a spell-binding and best-selling document “FASAB Statement 56: Understanding New Government Financial Accounting Loopholes” that provides a comprehensive explanation of the history, amendments and consequences of the changes to FASAB Statement 56.  Everyone should leave a copy in the bathroom for light reading.”

J          “The upshot is that the government is now officially no longer accountable to the public.”

. . .

[See the “Intergenerational Financial Obligations Reform Act” (INFORM Act), “Has Our Government Spent $21 Trillion Of Our Money Without Telling Us?” in “Forbes” by Laurence Kotlikoff and Mark Skidmore dated December 8, 2017, “The Tyranny of Economists  How can they be so wrong, so often, and yet still exert so much influence on government policy?” in “The New Republic” by Robin Kaiser-Schatzlein dated September 30, 2019, the book titled “The Nobel Factor: The Prize in Economics, Social Democracy, and the Market Turn” by Avner Offer and Gabriel Söderberg and “Heretics welcome!  Economics needs a new Reformation” in “The Guardian” by Larry Elliott dated December 17, 2017.]

[See the e-commentary at “Third Annual Noble Prize In Eco-nomics (October 8, 2018)”, “Second Annual Noble Prize In Eco-nomics (October 9, 2017)”, “First Annual Noble Prize In Eco-nomics (October 10, 2016)”, “Announcing The First Annual Noble Prize In Eco-nomics (May 2, 2016)”, “Award Deadlines (Livelines?) (July 25, 2016)”, “From e-con-omics to eco-nomics? (August 1, 2011)”, and “Skip the Nobel in Economics (October 6, 2009)”.]

Bumper stickers of the week:

The United States of Anger backed its currency with Au (until August 15, 1971) and transacted in part in Ag (until July 23, 1965) and now backs its concoction d.b.a. the PetroDollar with Fe and Pb by bombing any country and killing any person who demurs to the US hegemony.

Boycott banks; support credit unions

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Debt Insouciance.  Does Debt Really Matter In The “Debt Age”? (February 25, 2019)

Posted in Debt/Deficits, National Security, Noble Prize in Eco-nomics, Petrodollar, Population, Supernova Dollar on February 25, 2019 by e-commentary.org

. . .

K          “A billion a day, they say, in interest alone.”

J          “Folks should show more interest in this development, I’m just saying.”

. . .

J          “The National Debt is now officially over twenty two Trillion dollars ($22,000,000,000,000.00).  And we spent the electrons producing plastic and plundering the Planet.”

K          “Most of it was spent bombing countries and killing people.  I suspect that if we could sub poena God to testify and muse on the situation, we would discover that the real National Debt accurately calculated is over sixty six Trillion dollars ($66,000,000,000,000.00).”

. . .

K          “Twenty two Trillion dollars ($22,000,000,000,000.00) in Debt are on the books and an additional twenty two Trillion dollars ($22,000,000,000,000.00) are not on the books but were devoured by just two Departments (DoD and HUD).  I suspect there are probably another twenty two Trillion dollars ($22,000,000,000,000.00) off the books at other Departments.”

J          “So what do we make of the economic theories that correlate debt and domestic product if the real Debt-to-GDP ratio is not hovering at 100+% but really exceeds 300+%?”

K          “Or way above 400+%, if there is another twenty two Trillion dollars ($22,000,000,000,000.00) in ‘dark money’ that is additionally off the books.”

. . .

K          “There are at least a dozen ‘ten’ets that provide the only perspective on debt, public and private, and should be memorized by heart:

1. Debt matters.

2. Debt matters.

3. Debt matters.

4. Debt matters.

5. Debt matters.

6. Debt matters.

7. Debt matters.

8. Debt matters.

9. Debt matters.

10. Debt matters.

11. Debt matters.

Reagan was wrong.  Cheney was wrong.  Most babblers are wrong.  In the private and public sectors alike, Deficit – the rate – and Debt – the total – spending serve to accelerate, yank and suck ‘consumption’ from the future into the present.  No one polls those whose future consumption is being stolen.  However, the unborn are saddled with the debt.  This amounts to the greatest inter-generational crime in history.”

J          “That may be the only acceptable tattoo.  ‘Debt matters.’  Those who opine on the greatest threat to our national security do not understand the greatest threat to our national security but are nonetheless allowed to opine on the greatest threat to our national security.  Despite almost complete silence by those who are allowed to make public noise, the greatest threat to our national security is . . . the unsustainable national Deficit and Debt.”

K          “Unless the Federal Reserve keeps interest rates near zero, the Debt will not even be paid in part.  Low interest rates devastate the lives of millions of those at the other end of the life cycle who have been born for a long time – retirees – who reasonably anticipated a rate of return of 6 to 8 percent on their money in their final years.” 

J          “The unborn and long born are the targets and the victims in America today.”

. . .

J          “To explain the growing cacophony of Debt insouciance, explore the sub-sub-conscious.  Most comment makers across the political and economic spectrum are unable to admit that the Debt will never be repaid, so they contend instead that the Debt does not really matter.”

. . .

[On page 136 of Andrew McCabe’s book, recounting a 2017 Oval Office meeting, he observes:  “Then the president talked about Venezuela.  That’s the country we should be going to war with, he said.  They have all that oil and they’re right on our back door.”]

[See the e-commentary at “Over Over-Population:  10 Billion Little Miracles (And Counting) (And Costing) (January 26, 2015)” observing that accelerating consumption from the future to the present results in a much greater “effective world population” today that is closer to 10 billion miracles effectively punishing and pummeling the Planet even more ruthlessly than the 8 billion miracles of record.  “Deficits Do Matter (January 7, 2008)” discusses the concern with Debt and Deficits in more clinical detail.  “Forgiving American Debt? (March 3, 2008)” eleven years ago notes that the United States will never pay off the national Debt and yet all economic models and forecasts assume that the national Debt will be paid off.  “America The Bankrupt:  Economics 210 in the Land of the Freeway and the Home of the Wave (January 17, 2005)” more than fourteen years ago addresses the impending bankruptcy of the United States.  “National Financial Literacy Month: Teaching Financial Literacy In The ‘Debt Age’ (April 25, 2016)” asks whether there is any serious interest in teaching financial literacy in the “Debt Age”.  “Venturing A Few Unfounded And Unwarranted Predictions (July 13, 2015)” provides some further analysis and discussion of the ”Supernova Dollar” and other concerns.  “Third Annual Noble Prize In Eco-nomics (October 8, 2019)” discusses the missing money in the federal budget, among other concerns.]

Bumper stickers of the week:

Past, present and future walk into a bar.  It was tense.

Debt matters.

Not all debt is repaid, but all debt is paid.

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One World Currency? (January 8, 2018)

Posted in Banks and Banking System, Cryptocurrency, Currency, Cyberactivities, Dollar - World's Reserve Currency, Magazine Reference, Money, Petrodollar, Special Drawing Rights (SDR), Universal Monetary Unit, World's Reserve Currency on January 8, 2018 by e-commentary.org

. . .

K          “Thirty years ago tomorrow, The Economist magazine uploaded an article titled ‘Get Ready for the Phoenix’ with a cover proclaiming ‘Get ready for a world currency’ and featuring a rising Phoenix.”

J          “Get ready.  The Phoenix, the Bancor, the S.D.R., the Universal Monetary Unit, the Bobcoin, the Something Else is likely to replace the PetroDollar in the near future.  Stay tuned.” 

. . .

K          “On a simple level, ‘cryptocurrencies’, etc. are digital and gold, etc. is analog.  Blockchain technology underlying ‘cryptocurrencies’ is likely to be supplanted by a fast, fair, sustainable, scalable, guaranteed Byzantine fault tolerant consensus digital technology using gossip protocols and virtual votes such as Hashgraph.  And Hashgraph is likely to be supplanted by even more advanced and sophisticated technologies.” 

J          “That’s what everyone is saying.  Get ready.  Stay tuned.”

. . .

[See a related and more recent article “One world, one money” in The Economist magazine dated September 24, 1998.  First published as a five-part series punctuated with reprints of paintings by Gustave Courbet, “Bitcoin Doesn’t Exist – The Full Story” written by “Dr. D” for “The Automatic Earth” project/site provides some perspective on the phenomenon known as ‘cryptocurrencies’.  The comments to the series and the comments on the sites that reprint the series provide some robust ideas and opinions.  Much is happening quickly.]

[See the e-commentary titled “‘Bitcoin’, ‘Ethereum’ . . . ‘Blockchain Technology’  Say What? (July 3, 2017)”, “The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016)” and “USA + FRN/PD — > IMF + SDR — > NDB + UMU? The “Universal Monetary Unit” . . . Coming To a Planet Near You (January 2, 2017)”.]

Bumper stickers of the week:

Want to improve your love life?  Change your handle to “Blockchain”

. . .

The Economist, January 9, 1988, Vol. 306, pages 9-10; Cover:  “Get ready for a world currency”; Title of the article:  “Get Ready for the Phoenix”

THIRTY years from now, Americans, Japanese, Europeans, and people in many other rich countries, and some relatively poor ones will probably be paying for their shopping with the same currency.  Prices will be quoted not in dollars, yen or D-marks but in, let’s say, the phoenix.  The phoenix will be favoured by companies and shoppers because it will be more convenient than today’s national currencies, which by then will seem a quaint cause of much disruption to economic life in the last twentieth century.

. . .

At the beginning of 1988 this appears an outlandish prediction.  Proposals for eventual monetary union proliferated five and ten years ago, but they hardly envisaged the setbacks of 1987.  The governments of the big economies tried to move an inch or two towards a more managed system of exchange rates – a logical preliminary, it might seem, to radical monetary reform.  For lack of co-operation in their underlying economic policies they bungled it horribly, and provoked the rise in interest rates that brought on the stock market crash of October.  These events have chastened exchange-rate reformers.  The market crash taught them that the pretence of policy co-operation can be worse than nothing, and that until real co-operation is feasible (i.e., until governments surrender some economic sovereignty) further attempts to peg currencies will flounder.

. . .

The new world economy

The biggest change in the world economy since the early 1970’s is that flows of money have replaced trade in goods as the force that drives exchange rates.  As a result of the relentless integration of the world’s financial markets, differences in national economic policies can disturb interest rates (or expectations of future interest rates) only slightly, yet still call forth huge transfers of financial assets from one country to another.  These transfers swamp the flow of trade revenues in their effect on the demand and supply for different currencies, and hence in their effect on exchange rates.  As telecommunications technology continues to advance, these transactions will be cheaper and faster still.  With unco-ordinated economic policies, currencies can get only more volatile.

. . .

In all these ways national economic boundaries are slowly dissolving.  As the trend continues, the appeal of a currency union across at least the main industrial countries will seem irresistible to everybody except foreign-exchange traders and governments.  In the phoenix zone, economic adjustment to shifts in relative prices would happen smoothly and automatically, rather as it does today between different regions within large economies (a brief on pages 74-75 explains how.)  The absence of all currency risk would spur trade, investment and employment.

. . .

The phoenix zone would impose tight constraints on national governments.  There would be no such thing, for instance, as a national monetary policy.  The world phoenix supply would be fixed by a new central bank, descended perhaps from the IMF.  The world inflation rate – and hence, within narrow margins, each national inflation rate – would be in its charge.  Each country could use taxes and public spending to offset temporary falls in demand, but it would have to borrow rather than print money to finance its budget deficit.  With no recourse to the inflation tax, governments and their creditors would be forced to judge their borrowing and lending plans more carefully than they do today.  This means a big loss of economic sovereignty, but the trends that make the phoenix so appealing are taking that sovereignty away in any case.  Even in a world of more-or-less floating exchange rates, individual governments have seen their policy independence checked by an unfriendly outside world.

. . .

As the next century approaches, the natural forces that are pushing the world towards economic integration will offer governments a broad choice.  They can go with the flow, or they can build barricades.  Preparing the way for the phoenix will mean fewer pretended agreements on policy and more real ones.  It will mean allowing and then actively promoting the private-sector use of an international money alongside existing national monies.  That would let people vote with their wallets for the eventual move to full currency union.  The phoenix would probably start as a cocktail of national currencies, just as the Special Drawing Right is today.  In time, though, its value against national currencies would cease to matter, because people would choose it for its convenience and the stability of its purchasing power.

. . .

The alternative – to preserve policymaking autonomy – would involve a new proliferation of truly draconian controls on trade and capital flows.  This course offers governments a splendid time.  They could manage exchange-rate movements, deploy monetary and fiscal policy without inhibition, and tackle the resulting bursts of inflation with prices and incomes polices.  It is a growth-crippling prospect.  Pencil in the phoenix for around 2018, and welcome it when it comes.

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USA + FRN/PD – – > IMF + SDR – – > NDB + UMU? The “Universal Monetary Unit” . . . Coming To a Planet Near You (January 2, 2017)

Posted in AIIB, Banks and Banking System, Book Reference, BRICS, CFETS, CIPS, Dollar - World's Reserve Currency, Gold, Gold Standard, Hyperdive Economic Collapse, International Finance, International Monetary Fund, Money, Petrodollar, SDR - Special Drawing Rights, Special Drawing Rights (SDR), Trade, Universal Monetary Unit, World's Reserve Currency on January 2, 2017 by e-commentary.org

. . .

K          “Remember way back on October 1 when the International Monetary Fund (IMF) implemented the modified composition of the Special Drawing Rights (SDR) that includes for the first time the Chinese Renminbi (RMB) along with the United States Dollar (FRN/PD), the Euro (€), the British Pound Sterling (£) and the Japanese Yen (¥) in the Great Valuation Basket?”

J          “Couldn’t forget.  To celebrate the transition, we got the entire day off.”

K          “The Federal Reserve Note/PetroDollar maintained its percentage share of the portfolio with the Euro, Pound and Yen yielding room for the new kid on the block.  The way I see it, the evolution of the SDR may be too slow for Brazil, Russia, India, China and South Africa (the BRICS countries) and other countries (the BRICS+ countries) and still leaves the FRN/PD as the world’s reserve currency.”

J          “They say more countries are getting cranky that the FRN/PD remains the mandatory currency peg for trade on the global market.  Last Thursday, the China Foreign Exchange Trade System (CFETS), the foreign exchange trading platform operator, announced that it is adjusting the way it calculates the CFETS Yuan Index which is a critical measure of the Yuan against a basket of currencies, starting yesterday.”

K          “And you got the entire day off.” 

J          “And today, for good measure.  They say that the USA will not allow the IMF to revisit the composition of the SDRs again for years.  The problem for the BRICS+ countries is that the United States has veto power over the composition of the SDR and will block any attempt to accelerate the transition to incorporate other currencies.”

K          “Think about this possible scenario.  The BRICS+ countries may make an end run and expand the mandate and activities of what is now known as the New Development Bank (NDB) and create a Universal Monetary Unit (UMU) constituted of the Chinese RMB, Russian Ruble, Indian Rupee, South African Rand, Brazilian Real, good old gold (Alpha uniform) and a smorgasbord of other currencies.”     

J          “While they are at it, the South African Kruggerand could supplant the Rand and serve as the gold component or part of the gold component.”

K          “Who knows, when they do that, you may get the week off of work.”

J          “Count me in and count me off.  And to provide for a smoother transition, include in the new generation UMU the current currencies in the SDR in diluted amounts.  A measured and gradual approach is prudent.  Interdependent economies and unintended consequences, you know.”

K          “While they are at it, they could go full in.  The Cross-Border Inter-Bank Payment System sometimes known as the China Interbank Payment System (CIPS) could develop into a comparable transnational multilateral payment system as a complement to and to compete with the Society for Worldwide Interbank Financial Telecommunication (SWIFT).”

J          “That’s exactly what I was going to suggest.  An economy needs a ‘thing’ to serve as money/currency/chits/script/wampum and a means to reconcile payments.  The BRICS+ countries have no reason to wait another half decade when they can do it themselves.”

. . .

J          “Or the BRICS+ countries may force the issue at the IMF meeting in Rome, District of Columbia on April 21 – 23.”

K          “And you will get at least two days off of work.”

J          “Can’t forget.  Stay tuned.”

. . .

K          “Someone surely has thought and wondered about these possible developments.”

J          “You think?  I wonder if anyone cares.  What’s on tv?”

. . .

[See the e-commentary at “The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016)” and “Dollar – World’s Reserve Currency”.]

Bumper stickers of the week:

The “Universal Monetary Unit” . . . Coming To a Planet Near You

Paper [Money] Is Patriotic

Fight the War on Cash

 

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The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016)

Posted in Book Reference, Collapse, Courts, Debt/Deficits, Dollar - World's Reserve Currency, Federal Reserve, Gold, Gold Standard, Guns, INFORM Act, International Finance, International Monetary Fund, Journalism, Money, Newspapers, Petrodollar, Press/Media, SDR - Special Drawing Rights, Silver, Silver Standard, Special Drawing Rights (SDR), World's Reserve Currency on September 5, 2016 by e-commentary.org

. . .

X          “Some of the folks at the G20 Summit may kick around the future composition of the ‘Special Drawing Rights’ that is emerging as the new world’s reserve currency.  The International Monetary Fund formally sets the composition of the SDRs, yet the major players gathered in China yesterday to discuss such matters.  A thing is now being described as a right.”

Z          “Sounds like they are creating a right to reach first for your gun.”

X          “Or they are sketching a new picture of the economic future based on rights rather than on power and circumstance.”

Z          “Or someone special who has been allowed to have the only gun in the great currency gunfight now must play well with others who are suitably armed.”

X          “Or the one with the big gun is now being disarmed.”

. . .

X          “Felicitous publication really.”

Z          “Timely, even.  The times they are changin’ the way we will make change in the near future.”

X          “In The Mandibles, Lionel Shriver adopts Keynes’ term ‘Bancor’ rather than the new age term ‘SDR’ to describe supplementary foreign exchange reserve assets.  As the U.S. Petrodollar slips as the world’s reserve currency and then as the dominant component of the SDR/Bancor, the United States people will slip to second-world status in the world.”

Z          “The way I describe it, when the Petrodollar is no longer the big dog, the United States is no longer the leader of the pack.”

X          “Prices will increase and perhaps double in short order before more structural disorder devolves.  Our McMansions still will sport baroque brushed nickel bathroom fixtures in the multiple bathrooms, yet in due course the water coursing through the corroding pipes will be increasingly intermittent and decreasingly safe.”

Z          “Many of us have those problems now while everything appears to be dory hunky.”

. . .

X          “Her description of the human consequences is very plausible, yet her explanation for the underlying causes is only partially complete.  Contemporary economic doctrine is exposed as voodoo and a specious secular religion that rationalizes those in power acquiring and retaining wealth.  The entitlement Ponzi scheme receives appropriate blame.  The pernicious involvement of the Federal Reserve is alluded to obliquely, yet the entrenched corruption and incompetence in every quarter are not addressed.”

Z          “She does not describe the institutions that are failing systematically and simultaneously.  Congress, courts, executives and executive agencies, bureaucrats, universities, news outlets, parents, preachers, prophets, you name it.  At some time, a fragile, fractured, fissured and fundamentally weak system of manipulation and intervention will fail with consequence.”

X          “She does observe that the traditional news fashioners are defunct.”

. . .

X          “‘The Chip’ is first described in an e-commentary titled ‘Monitoring The Masses:  The Card And The Chip’ published on January 12, 2015.  She further develops the human impact of implanting ‘The Chip’ to control and corral the masses.  ‘The Chip’ is so much more efficient and effective than the corn chip and football at sating the populace.”

Z          “‘The Chip’ is an electronic lobotomy that is more powerful, pervasive and perverse than fear or drugs.  Technology saves us.  I think that is what one would conclude.  Surely.”

. . .

X          “An empire cannot continue to mimeograph a fiat currency and force it on the rest of the world at great cost and consequence to the rest of the world without the rest of the world demurring at some point.”

Z          “And the rest of the world is becoming restive.”

X          “They are issuing SDR-denominated bonds.”

Z          “And they are selling oil without even acknowledging the Petrodollar.”

. . .

X          “In her novel, the U.S. government confiscates gold and disregards even basic civil liberties while confiscating the yellow stuff.”

Z          “Survey the universe of commentary on the subject and you discover that no one has ever even questioned that the government will confiscate gold when the stuff competes with the fake stuff.”

X          “The people of the United State of Nevada who seceded from the dysfunctional disunion agree that it is ‘dumb’ and ‘arbitrary,’ but they base their currency the ‘Continental’ on the gold standard.”

Z          “She does not see that the government would have eliminated cash of any kind years or decades earlier.”

X          “That is one of the harbingers of great danger.  When the government outlaws or confiscates Au, Ag, Fe, Pb, or even worthless fiat cash, the end of civil rights and civil liberties is near.”

Z          “Or here.”

 . .

[See the e-commentary at “Monitoring The Masses:  The Card And The Chip (January 12, 2015)”, “Brave 1984 Farm:  The Best Of All Possible Worlds (March 19, 2012)” and the e-commentary on the institutional distractions in our society at “Foot Longs and Football (September 2, 2013).”]

Bumper stickers of the week:

G20 > G7; SDR > FRN; World > USA   

In the intermediate run, a Kleptocracy is unsustainable.

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The Gold Standard Revisited  (August 15, 2016)

Posted in Book Reference, Dollar - World's Reserve Currency, Gold, Gold Standard, Money, Nobel Prize, Noble Prize, Petrodollar, SDR - Special Drawing Rights, Silver, Silver Standard on August 15, 2016 by e-commentary.org

. . .

M          “You may be right.”

G          “I don’t want to be right.  But you just cannot trust the government.”

M          “It will never seem reasonable, but it is rational.  We must do something to restrain human nature and government excess.”

. . .

G          “Gold is an element.  Gold is a commodity.  Gold is a currency if folks act as if it is a currency.  Gold is what you make it.  The vote is coming in.  The Swiss not so much but who knows what to make about the election.  Those who vote in favor of the dollar or the pound and against gold as a currency may soon be . . . pounding sand.”

. . .

G          “As I recall, Keynes proclaimed that the gold standard, not gold per se, is a ‘barbarous relic.’  ‘Barbarian’ means ‘foreign.’  For example, ‘Barbara’ is a ‘foreign woman.’  So that might suggest that the gold standard, or at least gold, is popular in foreign countries.  And it is.  One point four billion Chinese and one point three billion Indians relish the element.  The Russians embrace it with both paws.”

M          “Seems that Au is A1 in the world today.”

. . .

M          “Tying human activity to an element such as Au seems so . . . confining.  And elemental.  Yet without something tethering human greed, ‘printing money’ is a temptation too great.  If he had known about it, Bill Shakespeare would have written about it.”

G          “You cannot trust the government.  And yet the great irony is that the government is not printing money.  The government has ceded power to the Federal Reserve which sounds like the government and yet is a private business that owes its allegiance to the banks and advances the welfare of the those in the stock market racket.” 

. . . 

M          “Keynes criticized the gold standard because it was a direct threat to his ego and his identity and his desire to make unbridled decisions.  That is the hallmark of what passed for the elite.”

G          “No one in power wants to be restrained by a standard.  Some standard is better than no standard.”

. . .

G          “The rule of law is a civilizing relic yet not one in currency today.  Even with more rules and laws on the books than ever in the history of humankind, the rule of law simply does not apply to those in power.  The law is no restraint.”

. . .

G          “The Nobel gang rewards those who shill for the fiat system and the central banks.  If the Nobel gang gave awards for those who ask probing questions about the viability and consequences of fiat currency and unrestrained debt, there would be more folks asking probing questions about the viability and consequences of fiat currency and unrestrained debt.”

M          “Perhaps the new Noble Prize in Eco-nomics can be awarded to those few individuals who ask probing questions and provide trenchant answers.”

. . .

[See the previous great gold standard debate in the e-commentary at “Is The Gold Standard Really The Gold Standard? (January 18, 2010)”, a discussion of the silver standard at “The Silver Standard:  The Value Of (Sort Of) Real Money (July 15, 2013)” and the observation in “The U.S. And Saudi Arabia:  Not Playing Well With Others (Each Other) (July 11, 2016)” that President Nixon decided unilaterally to cancel the direct international convertibility of the United States dollar to gold today.]

Bumper stickers of the week:

“In truth, the gold standard is already a barbarous relic.”  John M. Keynes, A Tract on Monetary Reform (1924).

“Real gold is not afraid of the fire of a red furnace.”  Chinese proverb

“There are three hundred economists in the world who are against gold, and they think that gold is a barbarous relic – and they might be right.  Unfortunately, there are three billion inhabitants of the world who believe in gold.”  Attributed to János Fekete

In every country, culture and civilization through space and across time, gold is the one thing and the only thing that has been cherished by everyone everywhere at all times.

Eco-nomic SAT Question:  Which statement does not fit:  1) resources are finite, 2) water is finite, 3) gold is finite or 4) money printing is infinite?

The Gold Standard may just be the Gold Standard or at least a standard.

The G20 Leaders Summit is in Hangzhou, China this September 4 and 5.

Convention between the United States and Great Britain (for Canada) for the Protection of Migratory Birds, also called the Migratory Bird Treaty, was signed on August 16, 1916.

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The U.S. And Saudi Arabia:  Not Playing Well With Others (Each Other) (July 11, 2016)

Posted in Gold, Gold Standard, Middle East, Petrodollar, Special Drawing Rights (SDR) on July 11, 2016 by e-commentary.org

. . .

K          “On August 15, 1971, President Nixon unilaterally cancelled the direct international convertibility of the United States dollar to gold.  The U.S. abandoned the ‘gold standard’ and embraced the ‘oil standard.’  As part of the grand deal, the Saudi Arabians agreed to price oil in dollars and thereby created a new and extremely valuable thing dubbed the ‘Petrodollar.’”

J          “I note to others that the Petrodollar is right up there with the steam engine and the Internet as the driver of innovation and progress in the United States.”

K          “The Petrodollar is an almost cost-free export that has undergirded American expansion and power for the last almost 45 years.  Now the two countries are in a spat that is not likely to turn out well for the U.S.”

J          “I noticed.  Life is like high school writ large.  The Saudis did not receive O’Bama when he visited Saudi Arabia; O’Bama did not receive Saudi officials when they visited Washington.  They do not play well with others.  Or with themselves.”

K          “Sounds more like elementary school antics writ small.  Sales here and sales there of oil around the world today are being denominated in something other than the Petrodollar.  If the use of the Petrodollar declines, the U.S. declines with it.”

J          “The Petrodollar’s status as the world’s reserve currency may not be able to sustain it.”

K          “The Petrodollar’s status as the world’s reserve currency is also being challenged and undermined by other countries advancing the creation of Special Drawing Rights (SDR).”

. . .

[See the e-commentary at “The Percolating Middle East (February 22, 2016)” and “Venturing A Few Unfounded And Unwarranted Predictions (July 13, 2015).”] 

Bumper stickers of the week:

The Petrodollar fuels the American economy: no Petrodollar, no economy.

Dallas

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