The conversation of “Global reserve currency” is a tough one, same as all this talk about recessions, no one likes this, no one likes to think about losing, or fearing for the future and even though most already do that anyways, when its big and blown up in your face seems worse, I think most would agree.
Well right now, there is some serious pieces being moved on the board, we can all feel that something big is coming with the monetary system and now I am quite confident that the USD will lose its reserve status in the next 2 yrs or less and there will be a division between the FED and the US. Now I am still unsure if its Trump and team against these elites and old power structures or if he is the guy they sent in to play this pretend game, they all on the same side and the end-goal is the same they always wanted they just brought in this false profit in order to facilitate it. Time will tell on that one, lets look at some interesting data here and words that have been said along with some developments to see if we can’t put together a story line here.
Now I want to be clear before we start that for years and years before Youtube, people talked about this “conspiracy theory” that the elite were gonna try to create a New World Order (NWO) and part of that was gonna be a one-world currency that everyone would use, in fact there is connection to the famous 1988 Economist cover of the Phoenix coin which many think predicted either Bitcoin or Ripple. Furthermore we had elites like George Soros who quite openly talked about the need for a New World Order, the IMF made the SDR currency basket back in 1969 so one could say this plan was in play for a long time. The growth of the internet has just made connecting these dots much easier now.
I guess now all of us whole believed that was coming can say “I told you so”..? Lets cover the 3 indicators that I feel point to the USD losing its Global Reserve Currency status.
Federal Reserve Mandate
Most people aren’t aware that the Federal Reserve (FED) was an idea that hatched into reality back in 1913 on Jekyll Island (off coast of Georgia- the state not country) by some of the most powerful men/families of the time and created as a way to ensure they would be the sole option for the US government to use for fiat and financing. They also have a mandate which was passed in 1977 called the Federal Reserve Act which is the following two mandates…
1. Maximum employment, which means all Americans that want to work are gainfully employed
2. Stable prices for the goods and services we all purchase
Now since then a lot has changed and in fact in 2012 we heard the FOMC (Federal Open Market Committee) state that they felt an inflation rate of 2% is most consistent over the longer run with the Federal Reserve’s statutory mandate.
Indicator #1 Bankers Feel USD Is Too Strong
The now infamous Jackson Hole Central Bankers Summit will now go down in history as a major pivotal point of change that we can look back on later to track down just when the bankers really started to move away from the USD as the global reserve currency.
The main speech by Jerome Powell was uneventful, it was the talk with (Bank of England Governor) Mark Carney that got everyone talking, where he made mention that interest rates were too low and inflation too low over the last 10 years and that a digital currency should take over as the reserve currency, making mention of Libra (Facebooks cryptocurrency project), the SDR (IMF currency) and even the RMB.
Countries could triple the resources of the IMF to $3 trillion as a better alternative to countries protecting themselves by racking up enormous piles of dollar-denominated debt.Mark Carney
“While such concerted efforts can improve the functioning of the current system, ultimately a multi-polar global economy requires a new IMFS (international monetary and financial system) to realize its full potential,”
Carney is clearly stating the need for a “New financial system” to realize this potential greater reality we could be living in.
Mark Carney isn’t the only banker to be talking like this, in fact the IMF and BIS have been publishing papers on this same topic for years, and the most recent spin they are using as the trigger or reasoning is the negative interest rate idea, the IMF ran several papers and blog posts talking about the need for going below 0, we have covered this extensively in the daily emails over the last few weeks.
Christine Lagarde is a strong proponent of a dual-currency that would allow most countries to go deeper and deeper below zero interest rates. I talked about the bad track record of negative interest rates in Japan here and the disaster in the Eurozone here, we also have Mark Carney stating that negative interest rates usually lead to war.
Now to be clear I do agree with some of the line of thinking we have here with this, the USD is strong and economy is strong due in part to the fact that so much of the world operates off the USD, this is true yes and actually this would’ve been a way bigger deal 10 years ago before crypto’s and the other options we all now have to transact with.
My guess here is a version of digital currency that they use in conjunction with fiat (for now) then phase out cash as we get more into space. The PBOC has already been testing out their new bank backed cryptocurrency and the BIS said a few months back it would fully support central banks that wanted to create their own backed crypto.
Indicator #2: BRICS Was Created To Destroy The USD
After more than 500 days in jail former Brazilian president Luis Inacio Lula da Silva re-emerged for a very telling interview where he states that BRICS (Brazil, Russia, India, China grouping of emerging markets) was created to dethrone the USD and give emerging countries a chance to create a new system that didn’t rely on the USD as much.
“BRICS was not created to be an instrument of defense, but to be an instrument of attack. So we could create our own currency to become independent from the US dollar in our trade relations; to create a development bank, which we did – but it is still too timid – to create something strong capable of helping the development of the poorest parts of the world.”
“This was the logic behind BRICS, to do something different and not copy anybody. The US was very much afraid when I discussed a new currency and Obama called me, telling me, ‘Are you trying to create a new currency, a new euro?’ I said, ‘No, I’m just trying to get rid of the US dollar. I’m just trying not to be dependent.’”
Lula defined his top priorities as he supported the creation of BRICS was economic autonomy, and uniting a group of nations capable of helping least developed countries. Again no one can blame other countries for doing this, they need to insult themselves to global economic conditions to a degree to ensure longevity of their people. Apparently alot of interesting things went down at the December 2009 COP15 UN Climate Change Conference where both Hilary Clinton and Obama were rejected admittance into a private meeting with BRICS.
This BRICS group reminds me of the One belt, One road initiative that China has pledged $900 Billion towards and working closely with Russia on.
Indicator #3: Trump & FED Public Relationship
The third and final indication that we will see a change here in the USD reserve status is part hunch and part public relationship between President Trump and not just Jerome Powell but the whole FED. They don’t seem to get along very well in public, tirades of tweets flow from Trumps twitter on a regular basis about his disappointment in Powell’s job. Not only that but Trump and Larry Kudlow have both been very public about their desire for the FED to cut rates again to attempt to fix the rate hike they did last December. Trump in by far his most dramatic tweet literally called the FED our enemy.
In response to this more recent criticism Jerome Powell has ordered all FED chairs to cancel public appearances, meetings, talks etc until further notice which to my knowledge has never happened.
Further more we had central Banker Bill Dudley write an opinion piece a few weeks ago for Bloomberg where he essentially lobbies the FED to take political sides and either purposefully make the economy worse or attempt to force Trump out of office which if you notice didn’t get ANY media coverage, glad to see that Trumps usage of a Sharpie marker on storm projections for Dorian got all the attention instead of a treasonous call for civil war between the bankers and the White House.
Here is what Dudley said…
“The trade war with China keeps undermining the confidence of businesses and consumers, worsening the economic outlook. This manufactured disaster-in-the-making presents the Federal Reserve with a dilemma: Should it mitigate the damage by providing offsetting stimulus, or refuse to play along? If the ultimate goal is a healthy economy, the Fed should seriously consider the latter approach.Bill Dudley
Such a harder line could benefit the Fed and the economy in three ways. First, it would discourage further escalation of the trade war, by increasing the costs to the Trump administration. Second, it would reassert the Fed’s independence by distancing it from the administration’s policies. Third, it would conserve much-needed ammunition, allowing the Fed to avoid further interest-rate cuts at a time when rates are already very low by historical standards…
I understand and support Fed officials’ desire to remain apolitical. But Trump’s ongoing attacks on Powell and on the institution have made that untenable. Central bank officials face a choice: enable the Trump administration to continue down a disastrous path of trade war escalation, or send a clear signal that if the administration does so, the president, not the Fed, will bear the risks — including the risk of losing the next election.”
That is a crazy statement to make isn’t it! The implications on this are staggering and should be still talked about now weeks later yet crickets. Why didn’t Trump say anything about this? After this happened Senator Thom Tillis called for the Senate Banking Committee to probe the FEDS independence. Things could get a whole lot more interesting here very soon.
World Reserve Currency FAQ
What is World Reserve Currency?
The US dollar is currently the worlds reserve currency as a result of the Bretton Woods Agreement that was signed in 1944, backed by the worlds largest gold reserves. Instead of gold reserves, other countries accumulate USDs.
When did US dollar become reserve currency
As a result of the Bretton Woods Agreement signed by allied nations in 1944, after WWII ended, this was the start of the World Bank and the International Monetary Fund (IMF)
Will the dollar be replaced as the worlds reserve currency?
Back in 2009, both China and Russia called for a new global reserve currency that was not pegged to any nation and could sit on its own. China wants the yuan to replace the USD as the world reserve currency.
Will the US dollar collapse?
The collapse of the US dollar remains unlikely outside of a black swan event at this point, inflation, negative interest rates and a rising digital currency are all variables to watch.