Showing posts with label Reserve Currency. Show all posts
Showing posts with label Reserve Currency. Show all posts

Tuesday, September 9, 2014

Obama's Former Chief Economist Calls For An End To US Dollar Reserve Status


http://www.zerohedge.com/news/2014-09-08/obamas-former-chief-economist-calls-end-us-dollar-reserve-status

Obama's Former Chief Economist Calls For An End To US Dollar Reserve Status

Submitted by Tyler Durden on 09/08/2014 16:51 -0400

Authored by Jared Bernstein, originally posted Op-Ed at The NY Times,

There are few truisms about the world economy, but for decades, one has been the role of the United States dollar as the world’s reserve currency. It’s a core principle of American economic policy. After all, who wouldn’t want their currency to be the one that foreign banks and governments want to hold in reserve?

But new research reveals that what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar’s reserve-currency status.

The reasons are best articulated by Kenneth Austin, a Treasury Department economist, in the latest issue of The Journal of Post Keynesian Economics (needless to say, it’s his opinion, not necessarily the department’s). On the assumption that you don’t have the journal on your coffee table, allow me to summarize.

It is widely recognized that various countries, including China, Singapore and South Korea, suppress the value of their currency relative to the dollar to boost their exports to the United States and reduce its exports to them. They buy lots of dollars, which increases the dollar’s value relative to their own currencies, thus making their exports to us cheaper and our exports to them more expensive.

In 2013, America’s trade deficit was about $475 billion. Its deficit with China alone was $318 billion.

Though Mr. Austin doesn’t say it explicitly, his work shows that, far from being a victim of managed trade, the United States is a willing participant through its efforts to keep the dollar as the world’s most prominent reserve currency.

When a country wants to boost its exports by making them cheaper using the aforementioned process, its central bank accumulates currency from countries that issue reserves. To support this process, these countries suppress their consumption and boost their national savings. Since global accounts must balance, when “currency accumulators” save more and consume less than they produce, other countries — “currency issuers,” like the United States — must save less and consume more than they produce (i.e., run trade deficits).

Tuesday, July 8, 2014

US Set To Alienate Angry Germany Next, As Crackdown Shifts From BNP To Commerzbank, Deutsche Bank



US Set To Alienate Angry Germany Next, As Crackdown Shifts From BNP To Commerzbank, Deutsche Bank

Submitted by Tyler Durden on 07/08/2014 08:04 -0400

http://www.zerohedge.com/news/2014-07-08/us-set-alienate-angry-germany-next-crackdown-shifts-bnp-commerzbank-deutsche-bank

As we reported over the weekend in "By "Punishing" France, The US Just Accelerated The Demise Of The Dollar", following the record $9 billion fine against French BNP, the outcry has been fast and furious, with virtually everyone in the local chain of command, from Total CEO to the head of the Bank of France (and ECB member) Christian Noyer, all saying that the US is now clearly abusing the reserve power of the dollar and it is time to move away from a dollar-based reserve currency (how that jives with concurrent French demands for a lower EUR is a different, incomprehensible matter entirely).

It appears that having pushed France forcefully into the Russia-China Eurasian, and anti-US camp, the US will now do the same with Germany. Because after infuriating the German population by first refusing to return their gold contained (the legend goes) at the New York Fed, and then with scandal after spying scandal, most recently involving the CIA directly soliciting a German double agent, now the time has come to "punish" Germany's largest banks for the same kind of money laundering that BNP was engaged in. As the NYT and Reuters report, the time has come to shift away from the BNP scandal and focus on what will soon be the Commerzbank and Deutsche Bank fallout.

Sunday, October 13, 2013

ZEROHEDGE: China's Official Press Agency
Calls For New Reserve Currency,
And New World Order



China's Official Press Agency Calls For New Reserve Currency, And New World Order

Tyler Durden's picture




We assume it is a coincidence that on the day in which we demonstrate China's relentless appetite for gold, driven by what we and many others believe is the country's desire to have a call option on a gold-backed reserve currency when the time comes, just posted in China's official press agency, Xinhua, is an op-ed by writer Liu Chang in which he decries the "US fiscal failure which warrants a de-Americanized world" and flatly states that the world should consider a new reserve currency "that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States."
Of course, if China were serious, and if the world were to voluntarily engage in such a (r)evolutionary reserve currency transition, then all Magic Money Tree theories that the only thing better than near infinite debt is beyond infinite debt, would promptly be relegated to the historic dust heap of idiotic theories where they belong.
Some of China's (which as a reminder is the single largest offshore holder of US Treasury paper, and the second largest of all only second naturally to the Federal Reserve whose $85 billion in monthly monetizing "flow" is what is keeping rates from exploding higher) thoughts as captured in the Xinhua Op-ed:
  • Reform of the world’s financial system should include the introduction of a new internatonal reserve currency to replace the U.S. dollar
  • The international community could thus permanently stay away from the spillover of intensifying domestic political turmoil in the U.S.
  • Fiscal impasse in the U.S. is a good time for “befuddled world” to start considering building a “de-Americanized world
  • Impasse has left many nations’ dollar assets in jeopardy and the international community agonized
  • Other cornerstones should be laid to underpin a de-Americanized world, including respect for sovereignty, recognizing authority of UN in handling global hotspot issues and giving developing and emerging market economies more say in major international financial institutions
  • Purpose of such changes is not to “completely toss the United States aside,” rather to encourage Washington to play a much more constructive role in addressing global affairs
Of course, if and when the day comes that the USD is no longer the reserve currency, kiss America's superpower, or any power, status, which is now based purely on the USD's reserve currency status, and the ability to fund half the US budget deficit with debt promptly monetized by the Fed, goodbye.
Finally, as a reminder...
From Xinhua:
U.S. fiscal failure warrants a de-Americanized world
As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.
Emerging from the bloodshed of the Second World War as the world's most powerful nation, the United States has since then been trying to build a global empire by imposing a postwar world order, fueling recovery in Europe, and encouraging regime-change in nations that it deems hardly Washington-friendly.
With its seemingly unrivaled economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been habituated to meddling in the business of other countries and regions far away from its shores.
Meanwhile, the U.S. government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.
Under what is known as the Pax-Americana, we fail to see a world where the United States is helping to defuse violence and conflicts, reduce poor and displaced population, and bring about real, lasting peace.
Moreover, instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.
As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites, while bombings and killings have become virtually daily routines in Iraq years after Washington claimed it has liberated its people from tyrannical rule.
Most recently, the cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonized.
Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.
To that end, several corner stones should be laid to underpin a de-Americanized world.
For starters, all nations need to hew to the basic principles of the international law, including respect for sovereignty, and keeping hands off domestic affairs of others.
Furthermore, the authority of the United Nations in handling global hotspot issues has to be recognized. That means no one has the right to wage any form of military action against others without a UN mandate.
Apart from that, the world's financial system also has to embrace some substantial reforms.
The developing and emerging market economies need to have more say in major international financial institutions including the World Bank and the International Monetary Fund, so that they could better reflect the transformations of the global economic and political landscape.
What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.
Of course, the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more constructive role in addressing global affairs.
And among all options, it is suggested that the beltway politicians first begin with ending the pernicious impasse.

Monday, October 8, 2012

CHINA AND RUSSIA LEAD MOVE AWAY FROM DOLLAR


Yevgeny Fyodorov

http://english.pravda.ru/russia/politics/21-09-2012/122236-russia_apec-0/
Russia to liberate the world from US occupation
21.09.2012


A State Duma deputy, the head of the Committee on Economic Policy and Entrepreneurship of the Russian State Duma, Yevgeny Fyodorov, told Pravda.Ru of his impressions from visiting the APEC summit in Vladivostok. According to him, the meeting showed that the U.S. gradually loses absolute power in the world economy and politics. The power and influence of other countries, such as Russia and China, grows against such a background.

State Duma deputy, the head of the Committee on Economic Policy and Entrepreneurship of the Russian State Duma Yevgeny Fyodorov:
"APEC is a very interesting and important event, although it seems to be an ordinary one. The leaders get together and discuss important issues, but in reality it is the key event in today's global scenario. With the onset of the global economic crisis,with political and economic turbulence, the APEC is a key event in terms of the demonstration of new vectors of unity of the international community outside the United States.

It is clear that it is not a split - everyone still plays by American rules, but the countries already demonstrate their independence in economic policy. I was there and saw how angry Mrs. Hillary Clinton was when she came from China, where several Chinese leaders - especially those who are to become top officials of China next year - did not even want to meet her. In China, Clinton was told no when she wanted to take on mediator's functions in resolving China's territorial disputes with Asian countries.

She also heard no in response to her requirement to set the yuan rate. It is an annual requirement of the United States to China to set the yuan rate for political reasons to pump resources and opportunities from China to the U.S. It is an additional form of tribute from China, which China had to deal with every year for political motives. Nowadays, the U.S. was refused. The world is changing."
Russian President Vladimir Putin clearly expressed his attitude to the dollar as the world reserve currency. In fact, he offered the countries of the world to start building a large number of regional currencies as an alternative to the reserve system of the dollar. This is a strong step and a strong move, including the initiative to switch to mutual payments. He also said that Russia and China had already switched to the system and he urged other countries to follow the example. This shows that the world begins to change fundamentally, and Russia's role at this point is to become the leader in changing the world. I would say that Putin as the leader of the national liberation movement in Russia, demonstrated himself at the event as a leader and provider of ideas for the world national liberation movement against the system of occupation, which was formed after 1991 not only about Russia but also China and many other countries.

From this point of view, it is the key and turning meeting of the leaders of world's largest economies, which creates conditions to reformat the entire economic system of the world - moving away from the U.S. Do not forget that the U.S. consumes a half the world's GDP, despite the fact that there is only 4.5 percent of the population living there. In other words, they eat ten times as much as compared to the citizens of all other countries. And they eat at the expense of China, Russia, India, Brazil - all other countries.

Today, the world begins to unite against the colonizer - USA. For the time being, it is a conceptual and preparatory process, but it takes place. In this regard, I would call the preliminary results of the meeting in the Far East the meeting of the future members of the world national liberation movement to free the world from the U.S. occupation.

Elizaveta Lavrentieva

Pravda.Ru

Saturday, July 21, 2012

Scandal At The IMF: Senior Economist Resigns, Says "Ashamed To Have Had Any Association With Fund At All"


http://www.zerohedge.com/news/scandal-imf-senior-economist-resigns-says-ashamed-have-had-any-association-fund-all

Scandal At The IMF: Senior Economist Resigns,
Says "Ashamed To Have Had Any Association With Fund At All"

Submitted by Tyler Durden on 07/20/2012 14:58 -0400

The rats everywhere are now jumping furiously off the titanic, but few had taken the time to write a letter explaining in detail just how cracked and broken the hull really was. This has now changed, with the departure of Peter Doyle, formerly a division chief in the IMF’s European Department responsible for non-crisis countries and currently an adviser to the Fund. Not content with quietly slinking off the scandal ridden organization which has become the butt of all jokes in the international community, where humor about Lagarde's Louis Vuitton panhandling bag is as pervasive as punchlines about just how incompetent the organization is at actually doing its duty, Doyle has penned the following scathing letter which tears down every myth about the IMF: from its impartiality, to the selection process of its head, to its effectiveness. The letter also contains the following gem: "After twenty years of service, I am ashamed to have had any association with the Fund at all." Pretty much says it all. This is a scandal in the making, and one which may shake to the core the credibility of the IMF in the context of international organization.



Full letter (pdf)

European Department
Washington DC
June 18, 2012


To Mr. Shaalan, Dean of the IMF Executive Board

Today, I addressed the Executive Board for the last time—because I am leaving the Fund.

Accordingly, I wanted first to formally express my deep appreciation to the Swedish, Israeli, and Danish authorities with whom I have worked recently, as well as all others with whom I have worked earlier, for their extraordinary generosity towards me personally.

But I also wanted to take this opportunity to explain my departure.

After twenty years of service, I am ashamed to have had any association with the Fund at all.

This is not solely because of the incompetence that was partly chronicled by the OIA report into the global crisis and the TSR report on surveillance ahead of the Euro Area crisis. Moreso, it is because the substantive difficulties in these crises, as with others, were identified well in advance but were suppressed here. Given long gestation periods and protracted international decision-making processes to head off both these global challenges, timely sustained warnings were of the essence. So the failure of the Fund to issue them is a failing of the first order, even if such warnings may not have been heeded. The consequences include suffering (and risk of worse to come) for many including Greece, that the second global reserve currency is on the brink, and that the Fund for the past two years has been playing catch-up and reactive roles in the last-ditch efforts to save it.

Further, the proximate factors which produced these failings of IMF surveillance—analytical risk aversion, bilateral priority, and European bias—are, if anything, becoming more deeply entrenched, notwithstanding initiatives which purport to address them. This fact is most clear in regard to appointments for Managing Director which, over the past decade, have all-too-evidently been disastrous. Even the current incumbent is tainted, as neither her gender, integrity, or √©lan can make up for the fundamental illegitimacy of the selection process. In a hierarchical place like this, the implications of those choices filter directly to others in senior management, and via the appointments, fixed term contracts, and succession planning of senior staff, they go on to infuse the organization as a whole, overwhelming everything else. A handicapped Fund, subject to those proximate roots of surveillance failure, is what the Executive Board prefers. Would that I had understood twenty years ago that this would be the choice.

There are good salty people here. But this one is moving on. You might want to take care not to lose the others.

cc. Ms. Nemat Shafik
Mr. Stanley Fischer
Mr. Stephan Ingves
Mr. Benny Andersen
Mr. Alex Gibbs
Mr. Eric Meyer
Mr. Amit Friedman
Mr. Martin Holmberg
Mr. Reza Moghadam
Mr. Mark Plant
Mr. Brad McDonald

Saturday, March 31, 2012

Status of Japan in Regards
 to New BRICS Financial System


Ben Fulford Blog Post

03/31/2012
RE: BRICS and the new financial system


Hi Ben,

Recently I saw a conference by Alfredo Jalife-Rahme (teacher of political and Social Science at the Universidad Nacional Autonoma de Mexico (UNAM)), where explains that BRICS are creating a new international Bank and a new financial system to fight against the power of FMI and the World Bank So my question is the following:? Is this the new financial system you have been talking about If the answer is yes, could you clarify which is the role that Japan is going to have in all this stuff and how BRICS will help to free humanity from the cabal?

Thanks in advance,

PS As I Know You Have a Good Spanish, I Add your Review for the conference link: http://www.youtube.com/watch?feature=player_embedded&v=IWF3IkyG2j4 


Hello, 

It is true the BRICS are working on a new financial system. There are 134 countries supporting this plan. Another group of 54 countries (the British Commonwealth) also has a plan that is in harmony with the 134 countries.

The obstacle is the governments of the United States, Germany, Japan, France and Italy and their remaining slave states.

Japan's government is on the verge of announcing its support of the new financial system. The Japanese government has already signaled in principle, its support for the creation of a new international economic planning agency based in Japan and with an initial budget of $ 10 trillion or possibly 1000 trillion yen. This organization would carry out large scale development plans like turning the deserts green and replenishing the oceans with fish. It would not, in any way, contradict or work against any plans of existing governments, corporations or development organizations. It would work in harmony with them.

The 5 nations that have controlled the previous financial system and the families that run those nations are negotiating a transition right now and hopefully some sort of mutually acceptable agreement will be reached soon.

Benjamin Fulford

Tuesday, March 20, 2012

The End of the Dollar Era

Issue N ° 63 is available!
Global systemic crisis - The five devastating storms in summer 2012
at the heart of the World Geopolitical swing

- Public announcement GEAB No. 63 (March 15, 2012) -

In its January 2012 issue, LEAP/E2020 signalled the current year as that of the world geopolitical swing. The first quarter 2012 has, to a large extent, started to establish that an era was in fact coming to an end with, in particular, the Russian and Chinese decisions:
to block any Western attempt at interference in Syria1their stated desire, associated with India especially, to ignore or circumvent the oil embargo fixed by the United States and the EU against Iran2the increasing tensions in relations between the United States and Israel3the acceleration of the policy of diversification out of the US Dollar led by China4 and the BRICS (but also by Japan and Euroland5 the premise of change in Euroland’s political strategy at the time of the French electoral campaign6 and the intensification of actions and statements fueling the rising strength of trans-bloc commercial wars7 In March 2012, we are far from March 2011 and the “hustling” of the UN by the USA/UK/France trio to attack Libya. 


March 2011 was still the unipolar world of after 1989. March 2012 is already the post-crisis multipolar world hesitating between confrontations and partnerships.


Thus, as anticipated by LEAP/E2020, the handling of the “Greek crisis”9 has quickly caused the disappearance of the so-called “Euro crisis” from the media headlines and market participants’ concerns. The mass hysteria maintained by the Anglo-Saxon media and the Eurosceptics during the second half of 2011 on this subject hasn’t lasted long: Euroland is increasingly asserting itself as a sustainable structure;10 once again the Euro is in vogue in the markets and for emerging countries’ central banks,11 the Eurogroup/ECB functioned effectively and private investors will have to accept a haircut of up to 70% on their Greek assets, thus confirming LEAP/E2020’s 2010 anticipation which then spoke of a 50% haircut when almost no-one imagined such a possibility without a “catastrophe” signalling the end of the Euro12. Ultimately, markets always yield to the law of the strongest… and the fear of losing more, whatever the students of ultra-liberalism may say. It’s a lesson which political leaders will jealously guard because there are other haircuts to come, in the United States, in Japan and in Europe. We will come back to this in this GEAB issue.


Central bank held sovereign debt (as a % of GDP) (2002-2012) - United States (in violet), United Kingdom (in grey), Euroland (in violet dots), Japan (in grey dots) - Sources: Datastream / central banks / Natixis, 02/2012 


Sunday, March 11, 2012

China to export yuan to BRICS

POSTED AT:




Go to main page Business China to export yuan to BRICS
China to export yuan to BRICS


Published: 8 March, 2012, 17:11


Edited: 8 March, 2012, 17:11

China is reportedly to begin extending loans in yuan to BRICS countries in another step towards internationalizing the national currency and diversifying from the US dollar.

The Chinese Development Bank wants to sign a memorandum of understanding with the country's partners from BRICS group of developing countries on increasing yuan-denominated loans, while partners increase loans in their national currencies, The Financial Times reports, citing people familiar with the talks.

The move aims to increase trade volumes between the five nations and diversify from using the US dollar.

Brazil and South Africa were quick to react to the proposal, saying they expect the lending pledge to be included into a master agreement to be signed in New Delhi on March 29.

“We will discuss the creation of structures and mechanisms for lending in local currencies in order to maximize economic and financial transactions between the countries that are members of the accord,” Brazil’s development bank BNDES said.

China, with 54 per cent of its foreign reserves in US dollars, has been trying to diversify from the currency it believes will weaken soon and for a protracted period.

China agreed to use national currencies with Russia, Belarus and Japan for bilateral trade. The country also decreased its foreign reserves in dollars recently in favor of the Australian and Canadian currencies.