Consequences of US Dollar Lost Global Reserve Status
Currencies / US Dollar Mar 12, 2019 - 02:01 PM GMTBy: Jim_Willie_CB
The Gold suppression game appears finally to be coming to an end. A Perfect Storm is hitting the Gold market, with an internal factor (QE), an external factor (SGE), and a systemic factor (Basel). All three forces are positive in releasing Gold from the corrupt clutches of the Anglo-American banker organization. They have been willing to destroy the global financial structure and many national economies, in order not just to maintain the political power, but also to continue the privilege of granting themselves $trillion free loans. In the last ten years since the Lehman Brothers failure, all systems have undergone the same reckless treatment that the mortgage bonds endured. They saw corrupted underwriting, corrupted title database, rigged market pricing, and corrupted demand functions. Slowly the realization is coming to the fore, stated by a few astute analysts. In the last decade, the US-UK banksters have created the USTreasury bond as the global subprime bond. This is the result of astounding persistent magnificent QE abuse and hidden corruption. The so-called financial stimulus is actually hyper monetary inflation, which has destroyed the bond market.
PERFECT FINANCIAL STORM
The perfect financial storm will be three to five times worse than the 2008 financial crisis that engulfed the subprime bond market. The corporate bond market is turning gradually into a $trillion BBB junk bond field and broken bone yard, after years of abused bond issuance devoted to share buybacks and executive options. The malinvestment and self-dealing has been atrocious, with a business impact. It can be stated with accuracy that the entire global bond market is subprime, led by the USTBonds. In the last ten years, absolutely nothing has been fixed, no remedy even attempted, while all the errors, crimes, and reckless monetary policy that created the Lehman fiasco with the Global Financial Crisis, have been repeated on a global scale. The great unfolding crisis will engulf sovereign bonds, national banking systems, and major corporations. For the last ten years, the USD-based money supply has almost tripled. The process created a coiled spring. The Gold price is due to triple in compensation. Much lost time will be made up for. It just needs some internal, external, and systemic pushes. The Gold market will never let a crisis go to waste. Financial analyst Rob Kirby has recently identified the great gold supply shortage, and described what comes as a Roman Candle with the Gold price shooting up an order of magnitude.
The unfolding global crisis will expose the USTreasury Bond as toxic, the new subprime bond. It will struggle to maintain the safe haven status, but lose the battle. Gold will assume the safe haven status, along with other undetermined hard assets. Attempts by the Basel bunch of uber-bankers, who have no official authority over the Western central banks, will change the course of banking history. That Gold is made a risk-free Tier-1 asset will put forth a direct challenge to the USTBond in banking reserves. The Basel or IMF attempt to make a new gold-backed SDR bond will fall on deaf ears and doubtful eyes. In effect, Basel will become pitted directly against the Wall Street bankers, as great adversaries during the Global RESET. Let us lay out the sequence of powerful factors which come in the lost global currency reserve for the USDollar. It is certain bring about the following powerful events and effects:
- to remake the global financial system with greater non-USD platform volume
- to cause major shock waves in financial markets (stocks, bond, currency, LIBOR)
- to pressure the London LBMA gold market toward default
- to introduce the Gold Trade Note, used as crude oil payment initially
- to affirm the regional financial systems within the Dual Universe
- to lead to accelerated dumping of USTBonds held in reserve
- to kill off certain insolvent big Western banks
- to amplify central bank monetization of sovereign bonds (i.e. USTBond, EuroBond)
- to initiate new programs to monetize assets such as SIFI big banks
- to destroy the Wall Street financial derivatives once and for all
- to begin the long process of USGovt debt default (i.e. debt restructure)
- to initiate grand battles to capture regional resources (Africa, South America)
- to trigger terrorist events from Langley spooks toward non-compliant allies
TRADE EFFECT
Two important effects are soon to hit in force. The oil trade will continue to see much greater volume of payments outside the USDollar. So far those such nations have been considered terrorist nations beyond the King Dollar Court. But now Germany seeks to buy energy products from Iran using the new SPV called Instex. Furthermore, member nations in the European Union seek to make energy payments in Euro currency terms. More will follow. Bear in mind that the German defiance includes France and England, all of whom are US allies. The Russian sanctions and threatened retaliatory action against German firms participating in Nord Stream-2 are backfiring in a big way. Following the oil trade outside the USD will be agricultural trade and commodity trade, like grains, beans, cement, lumber. Following these will be vehicle shipments and container vessel trade, like with boxes of home electronics. These will increasingly be done outside the USD in final payment. Lastly, the international consulting trade will be completed outside the USD. Think in terms of say, Indian InfoTech work done in Saudi Arabia, a favorite Jackass example. Contracts soon will no longer be written in USD terms for settlement.
The big enchilada is the Gold Trade Note. If the USDollar is not used in trade payment any longer on a universal basis, then something must take its place. It will be the Chinese RMB currency on a caretaker basis, in the Jackass opinion. Then soon afterwards will come the Gold Trade Note. It is rumored already to be in usage, but in secrecy. It would involve a gold equity like with 5% placed, made final by a gold transfer upon satisfaction of the contract delivery. Of course, bilateral accounts could be settled on a quarterly basis. By that is meant that for instance, Qatar and Germany could settle on a net basis every three months with gold bullion transfers, after accounting for German equipment exports and Qatari energy exports over the time period. The Gold Trade Note would become the first Gold instrument to challenge the USTreasury Bill for its 45-year supremacy in trade payment. Recall first in crude oil, then in grains & commodities, finally in bulk shipments (vehicles, containers) and later in consulting work.
BANKING EFFECT
With less USD usage in trade payment, less requirement will be felt for holding USTreasurys in the many national banking systems. This is precisely where the USD will be discharged by central banks, in favor of acquired Gold bullion. The RESET will have Gold used within the banking systems. The Basel Rules change to make Gold a Tier-1 asset assures the transition. Nations will not need large tracts of USTBills held in their banks as reserves, in order to guarantee payment for oil, grains, containers, and contract work. The great jettison of USTreasurys will begin, with Gold demand increasing by a big order of magnitude. With trade payment and bank reserves management changes, the Gold Standard will finally have a solid foothold. The catalyst for making the banking system transformation will be the urgent need to render the franchise central banking system solvent again. They are all zombie entities now. As present, the group of majors is badly insolvent after years of serving as buyers of toxic sovereign and mortgage bonds as last resort. The central banks will deploy the Basel long-term revitalization plan put forth by former Chairman Jelle Zijlstra and chief economist William White. To restore solvency, the central banks must discharge sovereign bonds and buy Gold bullion in great volume. Their demand will become more publicly known, adding to the demand and rising price effect. Then they will permit the Gold price to rise five to ten times. Poof! Restored bank solvency!
DUAL UNIVERSE
The next stage for global finance will incorporate regional structures and platforms. The entire community of nations is making major adjustments as preliminary preparation to the Global RESET, in order to minimize the shock, disruption, and potential chaos. Expect regional themes to dominate, as the Dual Universe comes into form. The East will prefer to trade in Chinese RMB terms, and often in Euro terms. The West will prefer to conduct trade in USD terms, but also British Pounds in trace amounts within the old colonies. A dichotomy has formed with great geopolitical division amidst hostility and trade friction. The entire USFed QE initiative, coupled with unbridled $trillion USGovt debts, has fostered a rebellion. The rest of the globe sees how the USGovt uses the USMilitary as a predatory device, funded by free money secured at the King Dollar trough. The disdain for the King Dollar is not just in Asia, but also in the Middle East, in Europe, and even in Africa. The transition period will involve the two dominant currencies at work: the USD and RMB. The USDollar will not go away quickly or easily. It is well rooted in trade payments systems, in credit systems, in banking systems, and more. The entire Langley seven silos of corrupt illegal enterprises (narcotics, weapons, human trafficking, human organs) are based in the USDollar, with gargantuan savings accounts and business investments. They will not go away anytime soon, which dictates an interim period. The Dual Universe has been born, without much fanfare. The Chinese RMB is to be the designated caretaker, used for ushering in the Gold Standard.
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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com
Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com, which includes a Squirrel Mail public email facility.
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