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The world faces challenges and uncertainty these days
like perhaps never before in modern history. Broken insolvent banking systems
match the insolvent homeowners living in despair but with newfound hope from
simply not paying home mortgages in large numbers. Henry David Thoreau could
actually run for the US Senate, as his platform of civil disobedience is more
widely embraced with each passing month. Over a quarter million Bank of
America home mortgage holders have not made a loan payment in a year, yet
still occupy rent-free dwellings. The European sovereign debt has shaken the
entire government financial structures, offering a preview of what comes to
the sacrosanct Untied States
and Untied Kingdom.
In its wake, a fire is lit under gold as a recognized safe haven asset that
has no debt attachment or counter-party risk. Government budgets read like
Banana Republics throughout the Western world. The norm has become crime
syndicates to control most Western Govts,
matching the trend for local warlord criminal groups to control most Third
World Govts. Mexico
is now a failed state. Think evolution in reverse. Indeed, crisis has become the new norm. Indeed, stimulus and
extreme liquidity buttresses have become the new norm. Indeed, sugar high on
perceptions after stimulus has become the new norm. Indeed, war has become
the new norm to define peace. Indeed, pursuit of truth has become the new
norm to define terrorism. It makes
sense that restructure of the global monetary system would evoke a powerful
response by the Anglo bankster power merchants. Their response so far has
been desperate attempts to preserve the system, combined with feeble gestures
on actual innovative concepts. Take for instance, the Straw Man built of
the Intl Monetary Fund and its primary vehicle, the Special Drawing Rights,
the equivalent of a rusty corrosive chopshop car whose engine is still seized
up, runs at extreme inefficiency like 1.5 gallons per mile, but sports a
spiffy new paint job.
Against this backdrop, the global monetary system is
clearly broken, and increasingly recognized as broken. Political and banking
leaders have been working on solutions. In
Europe they have been focusing on extreme solutions, but in the United
States they have been focusingon more
extreme measures to preserve the current system. The one main principle
to recall about bubbles and Ponzis is that an accelerated supply of money is
required to maintain even a constant size of the destructive condition. My
firm point has been for two years that the first nations to abandon the USDollar
as the foundation for their monetary, banking, financial, and economic
systems will emerge as leaders in the next global chapter. The jump
transition is extraordinarily difficult. The
entire world, evidence seen in the G-20 Meetings, is actively pursing an
alternative to the US$
as the global reserve currency. While they diddle and dither, gold has
taken up the slack within the vast void from inaction. Gold demand is on an
accelerated rise for physical investment. Coin and bar shortages are almost everywhere,
and gold mine output is on a worsening decline. Awareness has grown robustly
about the incredible duplicity of fraud laced in many Exchange Traded Funds
for gold & silver investment. Europe
without question must first find a solution, and much progress has come. The quest for a monetary structural
solution can be best seen in viewing the pathetic IMF SDR concept for its
lack of solution, versus the innovative aggressive plan of the New Euro
currency. The patchwork SDR vehicle means continuation of a broken
system, with the power baton held by multiple hands, but all the newly
indebted broken kings. The New Euro vehicle will involve a grand streamlined
platform, better described as a Dollar Killer. It will remove dependence upon
faith, that same faith deeply betrayed, and thus remove the potential of
syndicate control, fraud license, and counterfeit potential.
THE S.D.R. STRAWMAN NON-SOLUTION
As preface, consider the best parts of the patchwork
SDR vehicle, and what benefits it offers. The Special Drawing Rights, denominated in US dollars, has their
nominal value derived from a basket of currencies, tied to fixed amounts of
Japanese Yen, USDollars, British Pounds, and Euros. The proportion each
of these four currencies contributes to the nominal value of a SDR, reset
every five years. A greater role for the SDR either to store foreign acquired
reserves or to conduct transaction settlement does offer greater stability.
It does so by essentially fixing the currency exchange rates within the
participating group of currencies. While ignoring the reality of changing
environment, it enforces stability from instilled constancy. Maybe the SDR
could reset the component percentages every six or twelve months, instead of
five years. The world is changing fast. The other benefit would be the
greater confidence that comes when foreign reserves can be placed in a stable
warehouse shed, even if the place is rotten, has rancid acid spread about,
and smells horrid.
The SDR concept reveals desperation
among the Western bankers, led by the Anglos. Their idea of switching (hardly reverting) to the
SDR reveals desperation to retain continuity within a broken system. We see Europe
struggling to maintain the unified Euro currency, bailing out banks for badly
impaired sovereign debt, with the cost being to the entire European
continent. By holding together, they sink together from a broken system.
Leaders rarely choose to look at why it is broken, preferring to put a
typical bandaid or tourniquet on the gaping wounds. Instead of the patient
walking, he stumbles quickly when on foot, only to reveal a new gaping wound.
The patient needs to be shown the morgue, and its clan to claim its wretched
toxic inheritance from the corrupted strongbox brought forward.
The Special Drawing Rights is a life extension
concept without solution, a reprieve without consequence. It represents tying
a noose around the four major world currencies, so that they most assuredly
sink together, hardly a raft, more like shackles. However, in the eyes of the
Anglos, those Wall Street and London
craftsmen of toxic bonds, and of clever insurance contracts against their own
clients death (conflict of interest),
the SDR is a poor attempt to divert attention away from viable constructive
solutions. For two years, the Jackass has mentioned a Grand Paradigm
Shift underway from the USDollar in both banking and commerce. The IMF SDR is an attempt to detour the
G-20 nations from seeking a better vehicle that actually operates
efficiently without toxic fumes of ruined debt and seized engines of
insolvent banks. The mere fact that the G-8 Meeting has been eclipsed and
supplanted by the G-20 Meeting carries great meaning. The Western dominated smaller G-8 is being recognized as an assembly
of failures, not only champions of failed fiat currency and failed
central bank franchises and insolvent banking systems and broken economies,
but the responsible parties for export of toxic bonds that pollute most
emerging economies. The mere
thought floated of new SDR bonds or new FX contracts to link with the SDR
cause nausea, since they come with no credibility. Expect zero progress on
these mechanics.
The Anglo leaders of the G-8 Wolfpack wish to subvert
the larger group of nations and their broad initiative to seek a workable sweeping
solution, since it would surely not center on the USDollar. The G-20 nations
clearly perceive the USDollar as exhausted, lacking viability, and the source
of much of their own internal instability. The Anglo-led Fiat
Monetary Brigade must pre-empt a Paradigm Shift away from worthless currency
backed by nothing, the fiat system, centered upon the USDollar. The
Anglo Bankers appear to pursue another vehicle for principal usage, one still
under the control of the developed world. Translation: by Anglo Bankers. It
is merely a group of integrally connected similarly damaged vehicles. The Intl Monetary Fund currency, the
Special Drawing Rights is the perverted goal for broader global usage as
replacement to the USDollar, in a stay of execution, a delayed trip to the
cemetery. My view is that the G-20 has no interest whatsoever in any
broader SDR usage, which they see as the same toxic bundled fiat papyrus that
cannot float well in the oceans, showing different ink on its flag. The paper
currencies are doomed to die together, alone or in a bundle. They are all
denominated debt masquerading as money. The foundation for any SDR vehicle
would be just as damaged from a balance sheet perspective, maybe worse. The
IMF is merely a commisioner office for the broken fiat team members, complete
with rotating chairs. Furthermore, admission of its own insolvency has come
forth. The head of the IMF policy
steering committee, Youssef Boutros-Ghali announced the fund requires $320
billion in order to be properly resourced, in his words. So they are broke
too! The jig is up in full view. Boutros-Ghali admitted that the IMF is
essentially insolvent in its current form.
Fortunately, the broader group of organized nations
is wise to the failure of the current system. They increasingly defy the
smaller group of formerly powerful industrial nations. They hold outsized
reserves in toxic bubble bonds, no longer of the mortgage variety, but
instead the sovereign variety. Emerging
nations are worried sick that years of labor and export surpluses have been
directed, under US-UK guidance, into tainted US$-based bonds and Euro-based
bonds. The damage suffered from the EuroBond holdings has them scared
witless of a larger series of losses from the bubblicious USTreasury Bonds,
kept inflated by monetization with increasingly awareness and publicity. They
see their FOREX reserves supported by a Printing Pre$$, which they readily
recognize as a Banana Republic hallmark. The news of a ruined Gulf of Mexico
ecosystem and shoreline adds to the tragic Third World image for the United
States.
The entire movement of the IMF SDR to serve as next
global currency smacks of putting a new paint job on a rusty clunker car,
essentially a bait & switch but in package form. The SDR is a Strawman of
no substance whatsoever. This man cannot walk, cannot bear weight, and cannot
withstand storms. The SDR concept is designed to scare away the legitimate
architects of a valid solution. What is lacking in the intellectual
discussion among architects on the broken side of the table is an absolute truth, the Sound
Money Axiom.
THE SOUND MONEY AXIOM: PAPER
CURRENCY CAN NEVER REPLACE PAPER CURRENCY AS THE GLOBAL RESERVE, SINCE ONLY
METAL CURRENCY HAS THAT CAPABILITY.
So the cobbled weak solution behind the IMF Special
Drawing Rights initiative serves several purposes, designed to accomplish the
following:
- continue to perpetuate the
same broken fiat currency system
- continue to enable banker
power to be wielded by the Anglos
- transfer the Keynesian Fiat
prime pump to a still controlled location
- drag down the group of
currencies together, with illusion of stability
- spread evenly detrimental
effects of massive deficits into global inflation
- create a new monolith of
corrupt power in the IMF, whose track record is horrendous
- work toward the creation of
new worthless sovereign basket bonds
- divert attention away from
actual effective lasting pagan solutions.
NEW EURO PATHWAY
The two new Euro initiatives serve as systemic
threats, delivered from outside the power center, as attacks to the crippled
fiat flanks. The mere split of the Euro into two tiers, a seemingly sensible
maneuver, avoids difficult decisions like bank-held bond writedowns, bank
shutdowns, the whiplash effect of a fast rising new currency, and much more.
Germany and France are examining a Two-Tier Euro currency structure. The
intermediate stage of the new Northern Euro currency is in progress. The
motive is to create a firewall of protection from the Southern imploding PIGS
nations. German and French finance
ministers are attempting to design a Two-Tier Euro currency system to
separate stronger Northern European countries, protecting them from being dragged
down by the weaker insolvent Southern states. A collectivist Southern
solution protects banks exposed to sovereign debt, rather than a single
nation being expelled. However, they will tend to sink together rather than
alone. The UK Daily Telegraph is the intrepid source for the dramatic option.
See the article (CLICK HERE).
Senior European politicians do not believe they can
withstand another crisis, but they must prepare for Spain and Italy next,
with assured bigger shocks. The
creation of a Super-Euro zone would initially include Germany, France, the
Netherlands, Austria, Denmark, and Finland. The broken parts in Portugal,
Italy, Greece, and Spain, even Ireland, would be relegated to the
Mediterranean under-class. The Spanish banking implosion scares the central
banks witless, and it should. Spain has a distinction of denying its bank
corrosion reality. They have not written down much of any bank credit assets
in two years, and have not reduced prices of properties in any sensible
constructive fashion. They therefore have left themselves exposed to gigantic
airpockets, where entire scaffolds will collapse.
The Two-Tiered Euro currency system is intended to
cut out and remove the damaged insolvent nations they can no longer afford to
bail out. Regard the half-baked eleventh hour concoction as lacking substance
and planning, replete with desperation. The PIGS sovereign debt is dragging
down all of Central Europe. The pursuit of solutions is motivated by staring
into the abyss, threatened by contagion of insolvency and default. France has
lent $750 billion and Germany $500 billion to Spain respectively. And Italian
Govt debt to be refinanced before the end of 2011 is 10 times that of Greece.
Lead nations are frustrated by being
attached by a ball & chain to the wrecked PIGS nations. Politicians
have suffered lost support in elections, are deeply concerned about lost
power, and seek alternative solutions of radical type, since their finances
are being ruined slowly. This Two-Tiered initiative is NOT a solution, but
rather a step away from centralization that will not avert the tumble step
toward sovereign debt default. The Two-Tiered approach serves mainly to
develop the psychology, in my view, to condition the mindset for reform with
substance, to embark on a new path with some hint of innovation, and to light
a fire under the process. It urges a solution out of the box.
PRECURSOR TO NEW NORDIC EURO
Witness the precursor to the New
Nordic Euro.
This is the much more realistic lasting solution, with systems being put in
place, with important contracts being signed for installation of support systems.
The wealthier Northern European nations seek to protect themselves, while
simultaneously setting up the necessary structure that would enable reform
and restructure to the indebted Southern Europeans. Take the concept of a
forked split, but put different meat on the bones. Germany would lead a group of countries out of the existing Euro into
a new single currency. The old Euro would become the Latin Euro or Southern
Euro, whatever name suits them. The Latin Euro currency after the split
would decline sharply against the newly hatched German-centric Euro. The
devaluation would render great economic stimulus to the Southern nations.
Important difficult decisions would have to be made regarding debt
writedowns, forgiveness, and restructure. A perceived driving motive in the
plan is to provide Southern nations some security from remaining within a
group, so individual distressed nations like Spain or Italy would be spared
the stress of being forced to contend with their situations alone. The bunker
mentality will not spare them of continued deep distress. The consequences
for any expelled nation would be catastrophic to bankers holding any
sovereign PIGS debt, a problem not mitigated by any bicameral plan. The only
assurance in this chaotic crisis is change coming to the EuroZone, radical
change. In time, my full expectation is for each Southern Europe nation to
opt to go it alone, to revert to the old native currency, to devalue it more,
and inflate with abandon with spectacular deficits incurred, incite some
nationalism, wave flags, and slide badly from prosperity into poverty.
When practicality and feasibility dictate very
difficult decisions to be made, with actual full implementation made final, a
simple split of the current Euro will not be possible. It sounds good, and
has value primarily in altering the psychology toward even more aggressive
reform. Finally, the design of the New Nordic Euro will be on the table, with
its radical but extremely necessary and obligatory requirements. A simple
Euro currency split cannot work, since it does not solve the shared debt
problem. A new currency must have a rock solid foundation built of hard
assets, not a floating raft of papyrus built of fiat value, false promises,
phony confidence, and a twine made from debt.
For those who believe the New Euro is a crock,
consider this. A Hat Trick Letter subscriber in Copenhagen Denmark offered a
note with meat, for which the Jackass is grateful. He confirms the New Nordic
Euro is coming into reality, as a result of conversation with his banker. By
email, the man sent the message, "It
is amazing to see how things play out like a script! I recently talked to the
German chief economist of Barclays Thorsten Polleit. When confronted with the Nordic Euro currency idea, he nodded silently,
with a strange look of having a secret cover blown away. He did not
comment on it even though we were having a quite informal talk. The warmest
of greetings from the heart of Copenhagen." Word is spreading,
impossible to contain, since too important.
So the European innovations on currency reform and
redesign have some formidable challenges. The simple Two-Tier Euro split has
many obstacles to overcome:
- restructure sovereign PIGS
debt and East European debt
- protect from unstable shifts
between standing currencies
- protect from unstable shifts
in price of major assets like crude oil and copper
- detach from new debt driven by
fresh government deficits
- permit more autonomy to
central banks from individual nations
- restore confidence in
currency itself
- install payment systems for
international commerce, starting with OPEC crude oil
- integrate with European trade
partners (e.g. Russia, Scandinavia, Asia, Arab world)
Gold satisfies the above criteria when
attached formally to a monetary currency vehicle the strength, durability,
credibility, and freedom from debt. Germany plays a role filled with
intrigue. They cooperate with the Wall Street and London bankers, whose
prestige has vanished from the $trillion mortgage bond fraud, aggravated by
their nasty attacks against sovereign bonds. German consultants advised Swiss
and Dubai to remove gold bullion from custodial accounts at the New York Fed.
Now German parties are the primary proponents, designers, architects, and
engineers to a new revolutionary currency. After installation, the New Nordic Euro will serve as a Dollar
Killer in my view. Americans are blind to the upcoming broadside
assault, arrogant to the end that the King Dollar will live forever,
oblivious to the Paradigm Shift in progress.
As the United States is knocked further off its
prestigious perch, great wealth will evaporate from the significant movement
away from the USDollar as global reserve currency. Its value must eventually
be determined by the free market, and that value will come at a shocking low
level. My belief is that any new widely used gold-backed (or hard asset)
currency embraced by the major nations of the world will act as a Dollar
Killer, and usher the United States into the Third World. The linchpin is usage of the New Nordic
Euro for crude oil sales, a requirement as part of an alliance with OPEC.
It is scheduled for later. Imagine the USEconomy fretfully buying New Nordic
Euros so it can fetch crude oil, foreign cars, or nifty home electronics. The
USDollar would descend each and every month in value. Eventually the United
States would adopt the Nordic Euro, but only after tremendous damage, huge
asset losses, and much more lost power & prestige.
FRENCH PASTRY & RUSSIAN OIL
Tremendous posturing and preparation are underway
behind the curtains, out of view. France wishes to be included in the New
Nordic Euro, due mainly to image and prestige. It lacks sufficient export
surplus and national wealth to be an equal partner. In fact, France is more like
the PIGS nations than like Germany, without a doubt, as per annual debt and
cumulative debt. Leaders in France had better be cautious of what they wish
for. An equal partner among Northern European nations is unlikely. They might
have to settle serving as German squires, carrying luggage and delivering
messages. Posing as a strong nation under any new currency regime, even if
temporary, will deliver quick shocks to Paris, where arrogance runs high,
solvency runs low, and wealth is non-existent.
Russia on the other hand is making preparations to
establish Moscow as an important financial center. The Kremlin strives to
elevate the Russian Ruble to a reserve currency. They want an end to USDollar
domination. A complex strong financial center in Moscow requires many
challenges to be met, and diverse financial assets to be freely traded, with
open borders. Moscow is working toward a role within the New Nordic Euro
framework, toward guarantee of commodity supply. The challenge to establish
an international financial hub is great. A reserve currency requires the
openness to trade it on the FOREX, and strong capital markets for currency,
bonds, and stocks, along with investment banking and respect for contract
law. These are the challenges. My
sources tell of Russia working closely with the designers toward the
foundation of the New Nordic Euro, in commodity supply guarantees. Rumors
are swirling that the new hard asset currency might have not only a gold
component, but a crude oil component as well, maybe even an industrial metal
component.
After such profound bond fraud in New York and
London, the door is open in foreign lands. At a St Petersburg Intl Economic
Forum, Russian President Dmitry Medvedev publicly stated his multi-faceted
goal: to make the Ruble one of several world reserve currencies, and to
establish Moscow as a global financial hub. The vast nation under nine
timezones is in possession of natural resources to support a global currency.
The world might require up to six
reserve currencies, Medvedev believes, without any direct mention by him of
either participation with the New Nordic Euro or a gold-backed Russian Ruble
currency. The Kremlin wishes to reduce the USDollar dominance, and US
financial domination in general. Russia sold USTreasurys for a fifth
consecutive month in April. In fact, all BRIC nations (Brazil, Russia, India,
China) were net sellers of US$-based assets in April. Central bank Chairman
Alexei Ulyukayev announced in a June 16th interview more diversification
plans for its reserves. A tidbit, as Medvedev this week visited Apple
Computer and Cisco systems in the United States. Look for a possible role for
Cisco in the financial hub and Apple products on retail shelves.
GOLD OUTPERFORMS U.S. STOCKS
Some extremely important developments have occurred
in the gold market. The most
significant and earth changing has been the recognition of Gold as a reserve
asset alternative, not for commerce, but for foreign reserves asset
management. Wealth is scrambling to find security, under siege. As the
USDollar and Euro currency have undergone extreme shocks and have withstood
the aftermath of stimulus, rescue, and nationalization, with all the
attendant shame, Gold has emerged as
nobody's counter-party risk, an asset free from debt. The gold rise
continues to be resisted by illicit (if not illegal) methods, with naked
shorting by the Big Four Banks. Consider the June Gold Call Options as they
came due to expire three weeks ago. In predictable but corruptible fashion,
vast naked short sales arrived just in time to ruin the value of call options
whose predominant strike price was $1200 per oz. The CFTC and its commission
Gary Gensler, true to form and loyal to the syndicate they serve, remained
asleep at the wheel despite feisty independent cat calls out the window.
Ditto for the Silver Call Options due to expire this week, as the silver
price has suddenly fallen by $1.00/oz in three days, just enough to ruin more
call options held by the idealists among us.
My firm belief is that
every magnificent government or central bank Quantitative Ease program, or
big bank rescue, or ongoing nationalized sewer payment, the potential price
for gold rises $1000/oz and for silver rises $30/oz. The key is nothing is
being fixed, no reforms put in place, no bank liquidations of substance
occur, just more wasteful monetary creation to serve the syndicate. The cabal
is vast, and covers far more than banks.
Individual investors should regard the stock market
behavior as evidence of wreckage steeped with great deception. No nominal
gains have been registered in ten years, which means a loss in purchase power
is compounded at 5% to 7% per year. Almost no real gains have been registered
in 40 years. Since 2001, gold has more than quadrupled in price, almost
quintupled, while shills and sheisters ply their trade on Wall Street to
denigrate it. The propaganda is unending by Wall Street and the USGovt about
the nettlesome nature of gold. It pays no yield? Of course it does. Ask
Warren Buffet, who earned gains from writing options on silver until he
misjudged the rise, was called away, and lied to shareholders about selling
too early. Some total knuckleheads
actually claim that gold has not kept pace against inflation. They must
not comprehend its 400+% gains in the last decade. Wake up, Karl!! In fact,
they must be certified morons or genuine paid shills. Gold will continue to
outperform all assets, since their trading activity is too deeply intertwined
with the currencies and their national debts.
Jim Willie CB
Home : Golden Jackass website
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