The billboard promoting a “New World Currency” is near an International Airport in Asia. Most people have no idea what this billboard really means and won’t know until October or November of this year.
Don’t expect Scott Pelley, Anderson Cooper, Brian Williams, Dian Sawyer, Ann Curry, Bill O’Reilly, Piers Morgan, Shepard Smith, Andrea Mitchell or Chris Wallace to tell you what it means. That’s why you pay me the big bucks. Despite the fact that the Currency Markets receive almost no attention from the mainstream press, developments in the currency markets will definitely affect you, your money, and your retirement. The Currency Market is 200 times the size of the Stock Market.
The IMF meets every five years. The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The IMF will probably announce the results of this year’s meeting during the October-November time frame.
The following excerpt was published on the IMF Website just over a year ago under the headline: “The Dollar Reigns Supreme, by Default”
“The dollar has been the preeminent global reserve currency for most of the past century. Its status as the dominant world currency was cemented by the perception of international investors, including foreign central banks, that U.S. financial markets are a safe haven. That perception has ostensibly driven a significant portion of U.S. capital inflows, which have surged in the past two decades. Many believe that this dollar dominance has allowed the United States to live beyond its means, running sizable current account deficits financed by borrowing from the rest of the world at cheap interest rates. Some other countries have chafed at this “exorbitant privilege” enjoyed by the United States.
Moreover, the fact that a rich country like the United States has been a net importer of capital from middle-income countries like China has come to be seen as a prime example of global current account imbalances. Such uphill flows of capital—contrary to the prediction of standard economic models that capital should flow from richer to poorer countries—have led to calls for a restructuring of global finance and a reconsideration of the roles and relative importance of various reserve currencies.
The 2008–09 global financial crisis, whose aftershocks continue to reverberate through the world economy, led to heightened speculation about the dollar’s looming, if not imminent, displacement as the world’s leading currency.
Indeed there are indications that the dollar’s status should be in peril. The United States is beset by a high and rising level of public debt. Gross public (federal government) debt has risen to $16.8 trillion, roughly equal to the nation’s annual output of goods and services. The aggressive use of unconventional monetary policies by the Federal Reserve, the U.S. central bank, has increased the supply of dollars and created risks in the financial system. Moreover, political gridlock has made U.S. policymaking ineffectual and, in some cases, counterproductive in driving the economic recovery. There are also serious concerns that recent fiscal tightening has constrained the government’s ability to undertake expenditures on items such as education and infrastructure that matter for long-term productivity growth.”
I believe the currency story behind the billboard will be one of the defining events of American History and trigger one of the most profound transfers of wealth in my lifetime.
The US dollar is not the only Reserve Currency but right now it dominates all other currencies. All other countries must convert their currency into dollars to pay for imports. What an advantage for the US! While the US is probably not involved in the trade, the dollar is. Can you imagine that many countries like China, India and Russia are getting a little sick of this dollar dominance?
The IMF considered adding Chinese currency as a Reserve Currency five years ago and decided not to add it. Things have changed as the US borrows billions a day from China and owes China 1.3 trillion dollars. Two years ago, in 2013, China became the largest exporter in the world. Today, 10,000 financial institutions deal in the Chinese Yuan including 40 central banks.
The signs I see tell me the US Dollar is on the way out even if the IMF does not make the Yuan a Reserve Currency. Google “AIIB” and “BRICS” to see the direction the rest of the world is headed including our closest allies. China has been busy taking advantage of our blunders such as giving away the Panama Canal. China took over the canal and is now working on two other passages between the Atlantic and Pacific including one rail and another larger canal. If you travel around the world you will see Chinese influences everywhere and you will also be shocked that NOBODY wants to accept your US dollars.
The United States cannot simply keep printing tons of Dollars to prop up the Stock Market and the US economy while selling gold and silver derivatives. The fourth major printing spree could happen again this year with QE4. The brilliant news media called the Reagan economy, “Trickle-down Economics” and “Voodoo” economics. The current policy of Trickle-up Economics seems to have run its course. The use of taxpayer funds to bailout big banks, auto companies and hedge funds didn’t seem to work. Even with the Union setting on the General Motors Board of Directors, 70% of the GM cars sold in America are manufactured overseas.
If the Yuan becomes a Reserve Currency it will likely quickly become the dominant Reserve Currency and the Dollar will come home to roost. Most countries HATE the United States and would gladly ship our Dollars back and start using the Yuan.
Maybe you should listen to the talking heads stirring you up about the Confederate States of America Flag or Donald Trump calling a “spade” a “spade” or global warming or what should happen to Brian Williams. On the other hand, maybe you should pay a little attention to what your smiley faced politicians and the Supreme Court have in mind for your future? Perhaps you should look at the worst case scenario and start making preparations? If you think riots were bad over police killing one man, what would riots look like if grocery store shelves were empty or if a thousand dollars worth of food stamps wouldn’t buy a carton of cigarettes? What if the dollar was devalued by 30% or 70%? What if ISIS and Global Warming both attacked the US simultaneously along with Iran, Russia and China? I can’t advise you, I’m just an old retired fighter pilot. Maybe it’s time to do your own research and be prepared?
Tags: Anderson Cooper, Andrea Mitchell, Ann Curry, Bill O'Reilly, Brian Williams, Chris Wallace, CSA, Dian Sawyer, Donald Trump, Euro, George Osborne, Greece, IMF, Piers Morgan, reserve currency, Scott Pelley, Shepard Smith, UK, world currency, Yuan