Category Archives: Currencies

Central Bank Digital Currencies Would Bring Hyperinflation, by Daniel Lacalle

Posted on February 7, 2023 | 1 comment

It’s a lot easier to inflate or hyperinflate a currency when there are no competing currencies available. From Daniel Lacalle at dlacalle.com:

There are many excuses often used to explain inflation. However, the fact is that there is no such thing as “cost push inflation” or “commodity inflation.” Inflation is not an increase in prices, it is the destruction of the purchasing power of the currency.

Cost-push inflation is more units of currency going to relatively scarce real assets. The same can be said about all other, from commodities to demand and my favourite, “supply chain disruption”. More units of currency going to the same goods and services.

The monster inflation we have endured these years first arrived through asset inflation and then through consumer prices. Now, governments and statistical bodies are tweaking the calculation of CPI to disguise the loss of purchasing power of the currency and central banks had to hike rates after the disaster created in 2020, when the massive increase in money supply went to finance bloated government spending and created the mess we live today.

Central banks know that inflation is a monetary phenomenon and that is why they are hiking rates and tightening as fast as governments allow them. However, central banks have lost a significant amount of an already low credibility by first ignoring the inflation risk and later using the base effect and transitory excuse, only to react late and slowly.

This has happened in a world where the excess in money supply growth has a number of back-stops and limits that prevent a massive increase in consumer prices through the destruction of the artificially printed currency. With quantitative easing there are a number of limits that stop inflationary pressures: As the transmission mechanism of monetary policy is the banking channel, it is our demand for credit what puts a break on inflationary pressures.

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Charlie Munger: Exemplar of Cantillionaire Privilege, by Mark E. Jeftovic

Posted on February 5, 2023 | Leave a comment

Charlie Munger is Warren Buffet’s right hand man. The dynamic duo, sometimes portrayed as pure capitalists, have made a lot of money with investments that are anything but pure capitalism. From Mark E. Jeftovic at bombthrower.com:

Berkshire Hathaway was built atop a system that Bitcoin was created to destroy

The Oracle of Omaha’s second banana has pronounced judgement on crypto. It was even more unhinged than previous attacks (“rat poison”), as Munger applauded communist China’s technocratic dictatorship as a sensible ideal we should be following here in the West.

“the communist government of China recently banned cryptocurrencies because it wisely concluded that they would provide more harm than benefit…What should the U.S. do after a ban of cryptocurrencies is in place? Well, one more action might make sense: Thank the Chinese communist leader for his splendid example of uncommon sense.”

The fact that Munger is able to aggrandize a communist police state that maintains concentration camps, engages in organ harvesting and forced labour with impunity is a testament to his insular position (not to mention the lopsidedness of our political zeitgeist).

Munger is a Cantillionaire – after Richard Cantillion who wrote one of the first economic treatise in the eighteenth century describing how proximity to the monetary inputs of a society confer special advantages at the expense of wider populus.

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Warning Shot Fired! By James Rickard

Posted on February 4, 2023 | Leave a comment

The notion of freedom-destroying Central Bank Digital Currencies is making its insidious way from academic and think tank literature to the general populace. Implementation is next. From Jame Rickard at dailyreckoning.com:

Another warning shot across the bow just happened…

I warned my readers a few weeks ago about how the Federal Reserve, in cooperation with giant global banks, has launched a 12-week pilot project to test the message systems and payment processes on the new CBDC dollar.

A pilot project is not research and development. That’s already done. The pilot means that what I call “Biden Bucks” are here, and the backers just want to test the plumbing before they roll the system out on the entire population.

That project is due to be completed next month. In other words, Biden Bucks are getting closer to becoming a reality for us all. Now there is another big development to keep you up to speed…

This month, the Digital Dollar Project (DDP) released an updated version of its white paper called “Exploring a U.S. CBDC.”

The project expanded the paper in order to examine central bank digital currency projects internationally, though its focus is still on the United States. Since its original white paper release in 2020, CBDC projects worldwide have increased from 35 to 114.

Here is one statement in the updated paper:

It [is] imperative that the U.S. government consider ways to maintain the use of the dollar in digital global payment systems and develop a strategy related to the use of alternative payment systems.

Pigs in the Digital Slaughterhouse

“Alternative payment systems” is simply a technical term for Biden Bucks, which means replacing the cash (“fiat”) dollar we have now. What’s this mean for you?

Let’s first consider the kind of freedom that physical cash offers you. Above all, cash is untraceable and anonymous. When you buy something with cash, there’s no way to trace the purchase to you individually. In that sense, cash is like gold or silver. It doesn’t leave a digital fingerprint.

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A tale of two worlds, by Alasdair Macleod

Posted on February 3, 2023 | Leave a comment

One world is based on debt and fiat currencies, the other world is moving towards production and gold. Which shall prevail? From Alasdair Macleod at goldmoney.com:

In the war between the western alliance and the Asian axis, the media focus is on the Ukrainian battlefield. The real war is in currencies, with Russia capable of destroying the dollar.

So far, Putin’s actions have been relatively passive. But already, both Russia and China have accumulated enough gold to implement gold standards. It is now overwhelmingly in their interests to do so.

From Sergey Glazyev’s recent article in a Russian business newspaper, it is clear that settlement of trade balances between members, dialog partners, and associate members of the Shanghai Cooperation Organisation (SCO) optionally will be in gold. Furthermore, the Russian economy would benefit enormously from a decline in borrowing rates from current levels of over 13% to a level more consistent with sound money.

To understand the consequences, in this article the comparison is made between the western alliance’s fiat currency and deficit spending regime and the Russian-Chinese axis’s planned industrial revolution for some 3.8 billion people in the SCO family. China has a remarkable savings rate, which will underscore the investment capital for a rapid increase in Asian industrialisation, without inflationary consequences.

With a new round of military action in Ukraine shortly to kick off, it will be in Putin’s interest to move from passivity to financial aggression. It will not take much for him to undermine the entire western fiat currency system — a danger barely recognised by a gung-ho NATO military complex.

Introduction

In the geopolitical tussle between the old and new hegemons, we see the best of strategies and the worst of strategies, where belief is pitted against credulity. It is the season of light and the season of darkness, the spring of hope and the winter of despair…

Recalling some of Charles Dickens’ famous opening lines from his Tale of Two Cities to describe the current state of global politics sums up the potential of a new industrial revolution throughout Asia and much of the rest of the under-developed world (the best of times), compared with the western alliance abetted by its military arm, NATO, which is determined to suppress the plans for the new hegemons at its own peoples’ expense (the worst of times). Ironically, the nations which will benefit most from the western alliance’s proxy war are those which align themselves with its enemies. 

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Posted in Currencies, Debt, Economics, Economy, Energy, Eurasian Axis, Geopolitics, Governments, History

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Why the End of the Petrodollar Spells Trouble for the US Regime, by Ryan McMaken

Posted on February 2, 2023 | Leave a comment

Saudi Arabia’s move away from the petrodollar is yet another sign of the U.S. government’s diminishing influence and power. From Ryan McMaken at mises.org:

On January 17, the Saudi minister of finance, Mohammed Al-Jadaan, announced that the Saudi state is open to selling oil in currencies other than the dollar. “There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal,” Al-Jadaan told Bloomberg TV.

If the Saudi regime does indeed embrace substantial trade in currencies other than the dollar as part of its oil-export business, this would signal a shift away from the dollar as the dominant currency in global oil payments. Or measured another way, this would signal the end of the so-called petrodollar.

But how large of a shift is this? With the increasingly frequent Saudi comments about trading in nondollar currencies, we’ve also seen an increasing number of pundits announcing the “collapse” of the dollar or the imminent implosion of the dollar’s currently outsized global power.

Will a shift away from the dollar in the global oil trade really lead to a big relative decline in the dollar? Probably and eventually. But a number of other dominoes would need to fall first, most especially the domino we call “Eurodollars.”

On the other hand, it would be foolish to simply dismiss the potential end of the Saudi preference for the dollar with hand-waving. The end of the petrodollar would indeed weaken the dollar, even if this would not be a mortal blow in itself. Moreover, it is especially foolhardy to ignore the status of the petrodollar because that status also has geopolitical implications. Saudi comments on the dollar signal that the Saudis no longer consider its alliance with the United States to be as important as it has been since the 1970s. What’s not an immediate economic problem for the US regime or the dollar may nonetheless be an immediate geopolitical problem.

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How To Resist CBDCs—5 Ways You Can Opt Out of This Dystopian Future, by Nick Giambruno

Posted on January 31, 2023 | 1 comment

There are ways around central banks’ planned digital fiat currencies. From Nick Giambruno at internationalman.com

How To Resist CBDCs
 

There’s an excellent chance governments worldwide will soon force their citizens to use central bank digital currencies (CBDCs).

CBDCs enable all sorts of horrible, totalitarian things.

They allow governments to track and control every penny you earn, save, and spend. They are a powerful tool for politicians to confiscate and redistribute wealth as they see fit.

CBDCs will make it possible for central banks to impose deeply negative interest rates, which are really just a euphemism for a tax on saving money.

Governments could program CBDCs to have an expiration date—like some airline frequent flyer miles—forcing people to spend them, for example, before the end of the month when they’d become worthless.

CBDCs will enable devious social engineering by allowing governments to punish and reward people in ways they previously couldn’t.

Suppose governments impose lockdowns again for flu season, so-called “climate change,” or whatever pretext they find convenient. CBDCs could be programmed to only work in a geographic area. For example, your payments could be denied if you travel more than a mile from your home during a lockdown.

Suppose the people in charge want to encourage people to take a pharmaceutical product. With CBDCs, they could easily deposit money into the accounts of those who complied and deduct it from those who didn’t.

Undoubtedly, CBDCs will be paired with a sort of social credit system. Such a system is already in place in China today. In the West, it’s likely to come in a different flavor. Perhaps CBDCs will be paired with an ESG score.

Did you commit a thought crime on social media? Or perhaps you read too many politically incorrect articles online? Did you exceed your monthly meat consumption allowance? Then expect some financial punishment thanks to the CBDCs.

CBDCs are, without a doubt, an instrument of enslavement. They represent a quantum leap backward in human freedom.

Unfortunately, they’re coming soon.

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This Week’s FOMC: What Does Jay Powell Really Care About? by Tom Luongo

Posted on January 30, 2023 | Leave a comment

Is Jay Powell trying to stop the globalists? From Tom Luongo at tomluongo.me:

With the markets still firmly convinced the Federal Reserve will hike the Fed Funds Rate by just 25 basis points (0.25%) on Wednesday, I find it fascinating that no less a figure than Mohamed El-Erian, former head of PIMCO, argued for the Fed to stay the course and surprise markets with another 50 basis point move this week.

I agree with him. Completely.

I know you’re shocked.

This article came out on the same day as the latest US GDP figure (Q4 +2.6%), home sales (slowing but not terminal), inventories (down), and jobless claims (uninteresting).  It was followed up with week ending data about consumer spending and the Fed’s favorite inflation indicator, the PCE deflator, coming in cooling as expected, and now just barely below the FFR, 4.4% vs. 4.5%.

Oooh, positive real yield expectation of 0.1%. Quick, everyone the Fed made it safe to save in dollars again!

As the kids say on teh Twitterz, “SMFH.”

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As West, Debt, & Stocks Implode, East Gold & Oil Will Explode, by Egon Von Greyerz

Posted on January 29, 2023 | 1 comment

There is no way the world can escape a massive debt implosion. From Egon Von Greyerz at goldswitzerland.com:

“The risk of over-tightening by the European Central Bank is nothing less than catastrophic” says Prof Kenneth Rogoff .

At Davos he also said: “Italy is extremely vulnerable. But this could pop anywhere. Global debt has gone up massively since the pandemic: public debt, corporate debt, everything.”

Rogoff believes that it is a miracle that the world averted a financial crisis in 2022, but the odds of a major accident are shortening as the delayed effects of past tightening feed through.

As Rogoff said: “We were very fortunate that we didn’t have a global systemic event in 2022, and we can count our blessings for that, but rates are still going higher and the risk keeps rising.”

But lurking in the murkiness is also the global financial assets/liabilities which is almost $500 trillion including the shadow banking system at 46% of the total. The shadow banking sector includes  pension funds, hedge funds and other financial institutions which are largely unregulated.

oil

Shadow banking is not subject to the normal mark-to-market rules. Thus no one knows what the real position or losses are. This means that central banks are in the dark when it comes to evaluation of the real risks of the system.

Clearly, I am not the only one harping on about the catastrophic global debt/liability situation.

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The “Great Reset” and the Future of Money… Here’s What You Need To Know, by Nick Giambruno

Posted on January 28, 2023 | Leave a comment

The Great Reset wants a global currency that’s essentially a digital straight jacket for billions of people. From Nick Giambruno at internationalman.com:

The Great Reset

International Man: What is the idea behind the so-called “Great Reset?”

Nick Giambruno: We’ve seen countless examples of the self-identified elite in the West using that term.

But let me first ask, who put these people in charge? Who anointed them the leaders of the world?

They’re not only talking about resetting the financial system but dramatically changing the nature of life.

I think something sinister is going on, and they’re not even trying to hide it anymore. It’s all in the open now.

So, let me try to summarize something incredibly complex.

These people recognize the current international monetary system based on the US dollar is on its way out. Even Jerome Powell, the Chairman of the Federal Reserve, acknowledges that the US dollar’s supremacy is fading.

Although they would prefer to continue milking the current system, they realize it’s failing and the need to bridge the gap to a new system which they hope to control.

Nobody knows what the next international monetary system will look like—not even the elites. However, they know what they want it to look like.

They want a complete control grid with central bank digital currencies (CBDCs), movement licenses, mandatory medical procedures, and a social credit system, among other nasty things.

Simply put, the Great Reset agenda is a high-tech, totalitarian, global panopticon.

In short, they want total control over you in all domains—a new feudalism.

They’re emotionally manipulating people with fear and false narratives into accepting things they ordinarily wouldn’t—like their enslavement.

That’s what their Great Reset agenda is all about. It’s self-evidently anathema to personal freedom, human dignity, and self-determination.

Whether the self-proclaimed elites get all or some of those things is an open question.

The best scenario for mankind would be for most major governments to go bankrupt—which they are well on their way to—before they can implement the Great Reset agenda.

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Russia’s intentions are clarifying, by Alasdair Macleod

Posted on January 27, 2023 | 1 comment

The Russians have a not-so-secret weapon that would devastate the U.S.: back the ruble with gold. From Alasdair Macleod at goldmoney.com:

We have confirmation from the highest sources that Russia and the Shanghai Cooperation Organisation (SCO) are considering using gold for pan-Asian trade settlements, fully replacing dollars and euros.

In an article written for Vedomosti, a Moscow-based Russian newspaper published on 27 December, Sergey Glazyev, a prominent economic adviser to Vladimir Putin who is heading up the Eurasian Economic Union committee charged with devising a replacement for dollars in trade settlements sent a very clear signal to that effect. It appears he will drop earlier plans to design a new commodity-linked trade currency because it has been superseded.

Furthermore, increasing numbers of nations have joined or have applied to join the SCO as dialog members, including Saudi Arabia and other important Gulf Cooperation Organisation members. The economic benefits of discounted energy, China’s investment capital, and sound money are the ingredients for a new, Asia-wide industrial revolution, while the economies of the western alliance sink under rising prices, rising interest rates, collapsing financial markets, and collapsing currencies.

While it will mark the end of the road for the western alliance and its fiat currencies, Putin must be careful not to take the blame. Now that the alliance is racking up tanks and other equipment for the Ukrainians, they are actively promoting a new battle, with NATO getting almost directly involved. It is that action which will drive up commodity prices, undermine western financial markets, undermine government finances, and ultimately collapse their currencies. 

Putin is likely to use NATO’s impetuous action in defence of Ukraine as cover for securing Russia’s future as an Asian superstate, which will be the west’s undoing.

Introduction

We forget, perhaps, that from 1 March 1950 the Soviet rouble was on a gold standard at 4 roubles 45 kopecks for 1 gram of pure gold until 1961, when Khrushchev devalued it and refixed it to the dollar. Stalin had been a signatory to the Bretton Woods agreement but refused to join it and make the rouble subservient to the dollar as its intermediary for a gold standard.

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