GEITHNER TALK ABOUT CHINA GOLD PROPOSAL ROILS FX MARKETS

The US is still trying to finagle some sort of system which is as close to the preset floating fiat fake currency regime we enjoy these days, alas.  Europe and Japan desperately want a return to the halcyon days of yore.  But other countries are getting pretty tired of the present system.  Geithner nearly collapsed the value of the dollar today, reacting to the Chinese New World Order based on GOLD proposal.   The Chinese are moving forwards their final plans which originally should have come into being in about 2020, not 2010.

Geithner Remarks on IMF Roil Foreign-Exchange Market (Update2) – Bloomberg.com

 

Treasury SecretaryTimothy Geithner sent the dollar tumbling with comments about China’s ideas for overhauling the global monetary system, only to drive it back up by affirming that it should remain the world’s reserve currency.

Like Xerxes ordering the seas to go back as the tide rolls in!  Of course, the US wants to have sole control of our currency!  This way, our rulers can create inflation to their dark little stony heart’s content.  But Geithner’s bluster is just so much hot air.

Geithner was asked at a Council on Foreign Relations event in New York about People’s Bank of China Governor Zhou Xiaochuan’s call for a new international reserve currency. He said while he had not read Zhou’s proposal, he understood it as a plan “designed to increase the use of the IMF’s special drawing rights. And we’re actually quite open to that.”

 

HAHAHA.  Actually, the long-range plans is for some entity to force the US to cut social services.  The deal would be, Europe and Japan would get access and control of our entire military-industrial complex and in return, we get to die in wars for these guys while they get to make money at our expense.  This is a wonderful dream.  But won’t come true if China controls the IMF.

The dollar slid as much as 1.3 percent against the euro within 10 minutes of news accounts of Geithner’s remarks. It recouped much of the loss about 15 minutes later, when Geithner then predicted no change in the U.S. currency’s role. The dollar was down 0.9 percent at $1.3591 per euro as of 3:39 p.m. in New York.

 

Paper gold: nice idea, shame about the politics – Telegraph

Having a central currency – let’s call it the Zhou-Triffin Doubloon (ZTD) – managed by a supra-national organisation would make it more difficult for any one country to get into too much debt to another. If the supply of ZTD in issue were controlled properly – say by expanding it in line with global GDP – it would serve as a steady store of value, with little risk of devaluation.

Ah, gold is Libra. Sitting in front of the Portals to the Cave of Wealth and Death, She holds a sword in one hand and scales in the other. We can’t enter the Cave and run off with the Goddess of Inflation. Instead, we have to balance the books and behave.

Moreover, a credible ZTD would have many of the advantages of the now-defunct gold standard. It would be strictly limited in supply and ready acceptability everywhere. Indeed, it would be even better than the yellow metal, which is after all too cumbersome for a modern economy and too scarce to serve as a measure for international trade.

Paper gold has the same hazards as paper money: everyone swears, they will not run into the Cave of Wealth and Death and jump into the arms of the Goddess of Inflation…but it is so easy! So, even if humans swear, they won’t do this, the gnomes will do this because their sexual lust is much stronger than any mere promises.

In sum, the ZTD would add much needed ballast to international finance. And China would not be alone in promoting this single currency. Russian authorities have been thinking along similar lines…

Why? Because both are MAJOR GOLD PRODUCERS!

Indeed, China probably has other things in mind than financial stability, such as augmenting its global financial sway. Right now, the Middle Kingdom has only a 3pc vote in the IMF, no more than Belgium, because votes are linked to each country’s contribution to the fund. Were China able to claim credit for its prodigious foreign reserves, it could replace the US at the top of the table.

At best, China’s proposal is self-serving. At worst, it could be merely another manifestation of growing hostility towards the US – to be filed alongside recent protectionism, naval skirmishes and Chinese criticism of US spending habits. That political undercurrent is a shame. Paper gold looks like one of the best ideas to come out of the financial crisis.

How childish is this?  Of course, the Chinese are ‘self-serving’.  This is the essence of capitalism!  The Adam Smith blind hand of the markets!  Everyone is ‘self-serving’.  What we CHOOSE to serve ourselves, is another matter entirely.  The US had all the advantages of being the fiat currency. We use this to merrily overspend.  We want to do this, we are tempted to do this and we do this!  If we can, we will!  And Libra will make us pay, too. She is relentless.  No matter how much we want to cheat, She will force us to pay, in full, with interest.

 

Geneva Bankers Have a Word for Brown’s Tax Attacks: Hypocrisy – Bloomberg.com

In yet another sign that financial centers are losing each other’s confidence, Geneva bankers are insisting that Gordon Brown, the champion of deregulated markets in London and the British Isles, favors tax cheats at least as much as he says they do.

Earlier today, we had to talk about Senator Dodd and how his pirate Hausfrau and himself were tempted by the more piratical of the gnomes to work with them, offshore, in a tax cheat country, to get richer. And in turn, Dodd protected these pirates.  And insured they could loot our nation and the world.  Time to shut this down, eh?  This is why I keep calling for our expensive and useless navy to stop snooping around Chinese islands and go off and raid the many Queen Elizabethan pirate islands.  Supposedly, this bitch is an ally of ours!  Some ally!

 

Euro Currency of Choice as Fed Easing Devalues Dollar (Update2) – Bloomberg.com

 

– Less than a month after lambasting European Central Bank President Jean-Claude Trichet for failing to keep up with Ben S. Bernanke’s efforts to stem the recession, foreign-exchange traders are glad he’s behind the curve.

The 16-nation currency strengthened 7.7 percent versus the dollar since February, after tumbling 9.3 percent in the first two months of the year. JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. are advising investors to buy euros.

Traders are looking past forecasts from Germany’s Kiel- based IfW institute for the European Union economy to shrink 3.3 percent this year, and snapping up currencies where central bankers are resisting calls to purchase debt securities as a way of lowering interest rates and pump cash into their financial systems. Those options are becoming scarce after Federal Reserve Chairman Bernanke joined the Bank of England, Bank of Japan and Swiss National Bank in so-called quantitative easing.

 

There is overall turmoil in currency markets due to everyone rushing into the same deep, dark black hole Japan is in.  So everyone is going ZIRP.  This is like ordering the tide to go out when it is rushing in.  Maybe I should call this ‘XERXES ZIRPZES’.  Heh.  Try writing that several times.  Makes me dizzy.  Xerxes Zirpzes.  Yipes!

 

Market Skeptics: *****Fed Planning 15-Fold Increase In US Monetary Base*****

The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad.

At least 70 percent of all US currency is held outside the country, and this means the US monetary base is considerably smaller than the fed’s overall balance sheet. Take, for example, the true US domestic money supply at the beginning of September 2008, before the fed started its quantitative easing. From the Federal Reserve’s website, we know that currency in circulation was 833 Billion. This translates as 583 Billion dollars circulating abroad (70 percent), and 250 Billion dollars circulating domestically (30 percent). Since the bank reserve balances held with Federal Reserve Banks were 12 billion, that gives us a 262 Billion domestic monetary base as of September 2008. Now compare that to the projected US domestic monetary base for September 2009 which is 3,818 billion (4,500 billion – 583 billion (dollars circulating abroad) – 99 billion (other fed liabilities not part of the money supply)). The fed’s planned balance sheet expansion results in a 15-fold increase in the base money supply.

Well, the Bank of Japan was issuing more dollars than the US.  We lost control of our faux fiat funny money long ago.  And liked this.  Money magically appeared in every nook and cranny.  This allowed us to make an infinite number of loans and deals.  Now, we can’t pay the principal.  Nor the interest, unless it is a Xerxian Zirpian system of 0% for all eternity.

 

Of course, this is IMPOSSIBLE.  The Goddess of Inflation is very much sitting nearby, flexing her massive wings, ready to take off.  We saw this the other day: the US stock market shot up by 500 points in hours on the hopes Geithner will capitalize all the faux capitalist gnomes with infinite fiat funny money!  Whoopee.  But then, today, they panicked.  What if there are STRINGS attached?  Oh no!  So there is glum and sadness. They don’t want this money if they can’t grab the vast majority of the profits, for themselves.  

 

US Mint Suspends Production of More Gold and Silver Coins | Gold and Silver Blog

The following message was posted on the US Mint’s website in the space where the collectible Gold Eagle coins typically appear. The proof coins has been offered uninterrupted since 1986. The uncirculated version has been offered since 2006.

Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. Currently, all available 22-karat gold blanks are being allocated to the American Eagle Gold Bullion Coin Program, as the United States Mint is required by Public Law 99-185 to produce these coins “in quantities sufficient to meet public demand . . . .”

The United States Mint will resume the American Eagle Gold Proof and Uncirculated Coin Programs once sufficient inventories of gold bullion blanks can be acquired to meet market demand for all three American Eagle Gold Coin products. Additionally, as a result of the recent numismatic product portfolio analysis, fractional sizes of American Eagle Gold Uncirculated Coins will no longer be produced.

A similar message is posted in the section where collectible American Silver Eagle coins would typically appear. The proof coins have also been offered uninterrupted since 1986 and the uncirculated coins since 2006.

 

Sane people are scared and with good reason.  They are running to gold and even silver.  And despite pretending gold and silver are worthless, the market for both is tightening up, unbelievably.  I was at the mall yesterday.  There is this gold outfit there that buys gold.  I saw NO ONE in the store, selling to the gold merchants who looked quite glum.

 

Japan Exports Drop Record 49% as Global Slump Deepens (Update3) – Bloomberg.com

Shipments to the U.S., the country’s biggest market, tumbled an unprecedented 58.4 percent from a year earlier, theFinance Ministry said today in Tokyo. Automobile exports tumbled 70.9 percent.

The collapse signals gross domestic product may shrink this quarter at a similar pace to the annualized 12.1 percent contraction posted in the previous three months, the sharpest since 1974. Prime Minister Taro Aso is compiling his third stimulus package as companies from Toyota Motor Corp. to Panasonic Corp. fire thousands of workers.

 

 

Speaking of glum, the export-only manufacturing world colossus, Japan, is falling off a US cliff.  The LDP doesn’t want Japan to be stimulated.  He wants the US to be stimulated. He will use electrodes attached to our foreheads to do this, if he could.  He wants more dollars to flow via Japan lending to us so we can buy Japanese manufactured goods and ask no questions.

 

John Maynard Keynes’ golden rule breached by Winston Churchill | Business | The Guardian

 

 

Keynes was yet to achieve the fame that came to him in the 1930s and had a rather more conventional view of what should be done. He favoured a return to the gold standard, abandoned during the economic chaos caused by the first world war, as a means of stabilising exchange rates and preventing policy makers from playing fast and loose with the public finances.

Stabilisation would lead not just to the revival of trade and production but also of international credit and the movement of capital. “One of the most vital parts of pre-war organisation would be restored. And one of the most subtle temptations to improvident national finance would be removed; for if a national currency had once been stabilised on a gold basis, it would be far harder (because so much more openly disgraceful) for a finance minister so to act as to destroy this gold basis.”

Yet Keynes was strongly opposed to the idea that governments should raise their exchange rates to their old gold standard parities – a policy that he warned would only deepen the slump and lead to deflation. Three years later this was precisely the policy introduced – in the teeth of opposition from Keynes – by Winston Churchill.

In a later pamphlet, Keynes underlined the problems facing economists. Even if they had a secret remedy, they had to persuade the politicians. And “the politicians, who have ears but no eyes, will not attend to the persuasion until it reverberates back to them as an echo from the great public”.

 

 

Keynes was a wizard.  I am going to do a story about wizards because they are the worst of the creatures in my little fabulous universe, the Cave of Wealth and Death.  They imagine, they can control all the dark, deep forces within this dangerous place, entirely via magic spells which are mathematical formulas, graphs, charts and of course, chanting various words such as ‘free trade’.  They are ultimately, the authors of this hideous mess.  

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

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3 responses to “GEITHNER TALK ABOUT CHINA GOLD PROPOSAL ROILS FX MARKETS

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