Slowly but surely, the central bankers and their cronies and minions are edging towards a digital global currency. From Steven Guinness at stevenguinness2.wordpress.com:
Amidst the annual spectacle of the World Economic Forum in Davos, the Bank for International Settlements this week announced that multiple central banks have created a group that will ‘assess potential cases for central bank digital currencies‘.
Here is the press release from the BIS in full:
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements (BIS), have created a group to share experiences as they assess the potential cases for central bank digital currency (CBDC) in their home jurisdictions.
The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums – in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI).
The group will be co-chaired by Benoît Cœuré, Head of the BIS Innovation Hub, and Jon Cunliffe, Deputy Governor of the Bank of England and Chair of the CPMI. It will include senior representatives of the participating institutions.
Having the world’s reserve currency means you can create all sorts of mischief and never say you’re sorry. From Jim Rickards at dailyreckoning.com:
I’ve been documenting financial warfare in my articles for years, but it still doesn’t get the mainstream attention it deserves.
Because as you’ll see below, it can directly impact your wealth.
Financial warfare tools include account seizures and freezes, expulsion from global payment systems, secondary fines and penalties on banks that do business with targeted entities, embargoes, tariffs and many other impositions.
These tools are amplified by the unique role of the U.S. dollar, which is the currency behind 60% of global reserves, 80% of global payments and almost 100% of transactions in oil.
The U.S. controls the banks and payments systems that process dollar transactions. This leaves the U.S. well positioned to impose dollar-related sanctions.
Much has been made of the recent killing of Iranian terrorist mastermind Qasem Soleimani. Many say it was an act of war. But guess what, folks?
We’ve been in a full-scale war with Iran for two years now. It’s just that most people don’t realize it.
According to Iraq’s acting Prime Minister, Adel Abdul-Mahdi, Trump is trying to muscle Iraq into abandoning a lucrative oil deal with China. From Whitney Webb at mintpressnews.com:
The U.S. is adamant that its assassination of Qassem Soleimani and refusal to leave Iraq is about protecting Americans, but a little known Iraqi parliamentary session reveals how China increasingly strong ties to Baghdad may be shaping America’s new Mideast strategy.
Since the U.S. killed Iranian General Qassem Soleimani and Iraqi militia leader Abu Mahdi al-Muhandis earlier this month, the official narrative has held that their deaths were necessary to prevent a vague, yet allegedly imminent, threat of violence towards Americans, though President Trump has since claimed whether or not Soleimani or his Iraqi allies posed an imminent threat “doesn’t really matter.”
While the situation between Iran, Iraq and the U.S. appears to have de-escalated substantially, at least for now, it is worth revisiting the lead-up to the recent U.S.-Iraq/Iran tensions up to the Trump-mandated killing of Soleimani and Abu Mahdi al-Muhandis in order to understand one of the most overlooked yet relevant drivers behind Trump’s current policy with respect to Iraq: preventing China from expanding its foothold in the Middle East. Indeed, it has been alleged that even the timing of Soleimani’s assassination was directly related to his diplomatic role in Iraq and his push to help Iraq secure its oil independence, beginning with the implementation of a new massive oil deal with China.
Alasdair Macleod outlines how the US could return to gold-backed money. From Macleod at goldmoney.com:
Given the current fiat money system is on a path towards its own destruction it is not surprising that there has been increasing talk of a monetary reset. Without a completely different approach and by retaining the same institutions and macroeconomic concepts, any such reset is bound to fail.
This article provides a template for an enduring sound money solution that will deliver economic progress while eliminating destructive credit cycles. It posits that a properly constructed gold and gold substitute monetary system, which also includes the removal of bank credit inflation as a means of providing investment capital, is the only way that lasting stability and prosperity can be achieved. As well as the establishment of an incorruptible monetary system, the state’s role in the economy must be curtailed, budgets always balanced, banking reformed, and the private sector allowed to accumulate the wealth necessary to provide the investment for producers to produce.
Monetary reform involves a clear understanding of why free markets succeed and why socialism, together with neo-Keynesian macroeconomics, are responsible for the impending monetary and economic collapse. It will require a complete change of socio-political and economic cultures, but properly approached it can be done.
There has been very little commentary in recent years about the benefits of sound money, being limited almost entirely to followers of the Austrian school of economics. Even less has been written about how to back out of inflationism, end unsound money and return to a monetary arrangement which cannot be corrupted by governments and the banking system.
The most notable attempt was by Ludwig von Mises who appended a chapter on the subject in his updated 1952 version of The Theory of Money and Credit[i] The circumstances were very different from that of today. At that time, the US had corrupted its gold exchange standard to progressively exclude the ability of individuals to demand gold for paper dollars. And both Keynesianism and socialism, in the West at least, were in their earlier days. Today, we face more of an end game where considerable damage has been done since to the status of circulating money, and we face the prospect not of reform but of a collapse of the entire fiat money system.
Posted in banking, Business, Capitalism, Collapse, Currencies, Debt, Economics, Economy, Governments, Money
Tagged Bank Deposits, Central banks, Federal Reserve, Gold Standard, government bonds
The next financial collapse will owe it all to debt and central banks. From David Stockman at internationalman.com:
International Man: You have sounded the alarm on a coming financial crisis of historic proportions. How do Trump’s trade policies figure into your view that a crisis is coming?
David Stockman: Trump’s trade policies only create more risk and rot down below.
They’re just kicking the can down the road. With this latest move by the Fed, they have cut the interest rates three times and short-term rates are back at 1.55%. They’re pumping their balance sheet back up—it’s up $300 billion just since September.
The Fed has reverted to all of the things that have created the underlying rot—and that means when finally things break loose, it’s going to be far worse than it would have otherwise been.
Given that they’re kicking the can down the road, they’re building the pressure in the system to really explosive levels.
The trade chaos that Trump’s creating is probably the catalyst that will bring down the whole house of cards.
At end of the day, it’s about the Red Ponzi. The world economy would be not nearly as good as it looks had the Chinese not been borrowing like there’s no tomorrow and building regardless of whether its efficient or profitable.
Posted in banking, Business, Collapse, Currencies, Debt, Economy, Financial markets, Governments, History
Tagged central bank policies, China, Federal Reserve
To borrow from Orwell: there are some ideas that are so stupid on central bankers can believe them. From Daniel Lacalle at mises.org:
Negative rates are the destruction of money, an economic aberration based on the mistakes of many central banks and some of their economists, who start with a wrong diagnosis: the idea that economic agents do not take more credit or invest more because they choose to save too much and that therefore saving must be penalized to stimulate the economy. Excuse the bluntness, but it is a ludicrous idea.
Inflation and growth are not low due to excess savings, but because of excess debt, perpetuating overcapacity with low rates and high liquidity, and zombifying the economy by subsidizing the low-productivity and highly indebted sectors and penalizing high productivity with rising and confiscatory taxation.
Historical evidence of negative rates shows that they do not help reduce debt, they incentivize it. They do not strengthen the credit capacity of families, because the prices of nonreplicable assets (real estate, etc.) skyrockets because of monetary excess, and the lower cost of debt does not compensate for the greater risk.