Tim SDR Geithner versus FreeGold
Posted by Ivo Cerckel on March 27th, 2009
The dollar regime’s backing of Chinese proposals for the gradual development of a global reserve currency based on the IMF’s Special Drawing Rights has stunned global markets. (1)
The reason why the regime is backing the proposal is that the regime fears FreeGold as the universal standard of value.
Hence, the regime is amenable to accepting SDRs, the regime is amenable to accepting PaperGold.
In that way, the regime is hoping to prevent FreeGold from arising.
Hence, the British leg of the regime is now touring world so-called leaders to convince them to reject FreeGold at their London 2 April G20 Summit.
As this writer explained in his “FreeGold versus IMF”-paper which he submitted, but did not present, to the GCC Currency Forum 2008, held in Dubai on 15 June 2008 (2)
http://bphouse.com/honest_money/freegold-versus-imf/ :
SNIP
The goal of IMF was to supervise the Bretton Woods system which linked the US dollar to Gold and all other currencies to the said dollar.
The US dollar was linked to Gold.
The value of the US dollar could thus be derived from Gold.
The dollar was a Gold derivative.
The international supply of two key reserve assets — Gold and the US dollar — proved inadequate for supporting the expansion of world trade and financial development that was taking place. Therefore Special Drawing Rights (SDRs) were created in 1969, says the IMF. [3]
An SDR is a potential claim on the freely usable currencies of IMF members. It is neither a currency, nor a claim on the IMF. SDRs are defined in terms of a basket of major currencies used in international trade and finance. At present, the currencies in the basket are the euro, the pound sterling, the Japanese yen and the United States dollar.
SDRs are PAPER GOLD. They eliminate the logistical and security problems of shipping Gold back and forth across borders to settle national accounts.
A few countries peg their currencies against SDRs, [… but …], the euro is displacing the SDR as a basis to set values of various currencies, continues Wikipedia. [4]
On 15 August 1971, that is, two years only after the introduction of SDRs, US President Richard Nixon broke the Bretton Woods system. He closed the Gold window, making the dollar inconvertible to gold directly, except on the open market.
UNSNIP
Ivo Cerckel
ivocerckel@siquijor.ws
(1)
US backing for world currency stuns markets
US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is “quite open” to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.
By Ambrose Evans-Pritchard
Last Updated: 8:18AM GMT 26 Mar 2009
http://www.telegraph.co.uk/finance/economics/5050407/US-backing-for-world-currency-stuns-markets.html
(2)
GCC is the Gulf Co-operation Council.
Yes, IMF is the International Monetary Fund,
G20 the Group of 20 Leviathans
and Tim Geithner is the secretary of the US of A treasury.
[3]
A Factsheet – April 2008
Special Drawing Rights (SDRs)
http://www.imf.org/external/np/exr/facts/sdr.htm
[4]
Special Drawing Rights
From Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Special_Drawing_Rights
No related posts.
March 27th, 2009 at 23:40
China piles the pressure on the American greenback
Thanong Khanthong
The Nation (Thailand)
Publication Date: 27-03-2009
http://www.asianewsnet.net/news.php?id=4823&sec=2
SNIP
The IMF created the SDRs in 1969 to support the Bretton Woods exchange-rate system that collapsed in 1971. The SDRs now act as a unit of account, reflecting contributions from members, rather than a currency. The value of SDRs are based on a basket including the dollar, the euro, the Japanese yen and the British pound, shielding them from swings in a single currency. One special drawing right is valued at about US$1.50 (Bt53).
If the US caves in, China’s yuan will dominate the weighting in the basket of SDRs, rendering it de facto control over the new world reserve currency. China’s proposal comes amid the wobbling US dollar, which is lurching into a debt crisis.
CNBC: Doom For The Dollar
http://www.youtube.com/watch?v=9wjXUGRMth8
Russia adds to calls for currency reform
Peter Garnham and agencies
Published: March 26 2009 11:42 | Last updated: March 26 2009 13:24
http://www.ft.com/cms/s/0/884d12e8-19f9-11de-9f91-0000779fd2ac.html
SNIP
Russia wants to convene an international conference at government envoy level to discuss the creation of a new global currency, RIA news agency on Thursday quoted Andrei Denisov, first deputy foreign minister as saying.
”This proposal is aimed at a practical realisation of the idea about a new global accounting unit or a new global currency. It is a question which should be discussed to create a consensus,” said Mr Denisov, according to the RIA news agency
“The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run.”
— Zhou Xiaochuan, head of the People’s Bank of China
We are living not through a banking crisis, but through a crisis of the banking system.
We still don’t know “what” we don’t know about the banking system.
We still don’t know why banks no longer want to lend money, which they can create out of thin air, to each other. (As will appear later in this article, the creation of money out of thin air is indeed what fractional-reserve banking is about.)
This is fortunate because otherwise the present salami-crash in slices would immediately and abruptly come to a halt and become a real crash into the unknown.
http://bphouse.com/honest_money/2009/01/02/yuan-and-arab-economic-summit-kuwait-19-20-january-2009/
“We have to clean up the banking system,” the prime minister told financiers at the meeting hosted by the Wall Street Journal’s managing editor, Robert Thomson.
“We must give people confidence that the principles that guide their daily lives are those that also guide the markets. I know people are angry at what they see in banking bonuses remuneration.”
(We must clean up banking system, Gordon Brown tells US financiers
Nicholas Watt in New York
guardian.co.uk, Wednesday 25 March 2009 16.38 GMT
http://www.guardian.co.uk/money/2009/mar/25/gordon-brown-new-york-banks
On the second day of five-day tour ahead of G20 summit, prime minister denies lack of consensus over dealing with the global financial crisis)
Why does the Bank of England print money out of thin air?
Why does the said so-called Bank allow fractional-reserve banking by the banks which are thereby being forced to also create money out of thin air and lend it?
Credit crunch, said you?
The banks no longer want to go along.
Of course, the Bank of England is angry.
March 27th, 2009 at 23:59
COMPARE
WHAT I JUST QUOTED
If the US caves in, China’s yuan will dominate the weighting in the basket of SDRs, rendering it de facto control over the new world reserve currency. China’s proposal comes amid the wobbling US dollar, which is lurching into a debt crisis. (1)
TO
WHAT I WROTE EARLIER
We still don’t know “what” we don’t know about the banking system.
+
This is fortunate because otherwise the present salami-crash in slices would immediately and abruptly come to a halt and become a real crash into the unknown.
Maybe the yuan does not have the “what”, maybe the yuan does not have the bad characteristic we don’t know. (2)
Ivo
(1)
China piles the pressure on the American greenback
Thanong Khanthong
The Nation (Thailand)
Publication Date: 27-03-2009
http://www.asianewsnet.net/news.php?id=4823&sec=2
(2)
Yuan and Arab Economic Summit, Kuwait, 19-20 January 2009
Posted by Ivo Cerckel on January 2nd, 2009
http://bphouse.com/honest_money/2009/01/02/yuan-and-arab-economic-summit-kuwait-19-20-january-2009/
March 28th, 2009 at 00:14
New reserve currency idea needs work-German minister
Fri Mar 27, 2009 1:12pm EDT
By Louis Charbonneau
http://www.reuters.com/article/usDollarRpt/idUSN2754209520090327
SNIP
NEW YORK, March 27 (Reuters) – Proposals for creating a new global reserve currency to replace the U.S. dollar are gathering momentum but need further examination, Germany’s development minister said on Friday.
March 28th, 2009 at 00:29
China’s central bank proposes new reserve currency
http://www.chinaview.cn 2009-03-26 12:31:08
http://news.xinhuanet.com/english/2009-03/26/content_11076375.htm
SNIP
BEIJING, March 26 — Zhou Xiaochuan, the governor of China’s central bank, has proposed the creation of a new, super-sovereign reserve currency to help reform the global monetary system. Zhou said a desirable goal for the international monetary system was “an international reserve currency that is disconnected from individual nations, able to remain stable in the long run.” He said such a currency would “remove the inherent deficiencies caused by using credit-based national currencies.”Special drawing rights, or SDRs, issued by the International Monetary Fund could be such a currency, according to a signed article posted Monday on the website of the People’s Bank of China, the central bank.
Reform the International Monetary System
http://www.chinaview.cn 2009-03-26 08:51:16
By Zhou Xiaochuan
http://news.xinhuanet.com/english/2009-03/26/content_11074507.htm
SNIPS
BEIJING, March 26 — The outbreak of the current crisis and its spillover in the world have confronted us with a long-existing but still unanswered question,i.e., what kind of international reserve currency do we need to secure global financial stability and facilitate world economic growth, which was one of the purposes for establishing the IMF? There were various institutional arrangements in an attempt to find a solution, including
the Silver Standard,
the Gold Standard,
the Gold Exchange Standard
and
the Bretton Woods system.
The above question, however, as the ongoing financial crisis demonstrates, is far from being solved, and has become even more severe due to the inherent weaknesses of the current international monetary system.
+
I. The outbreak of the crisis and its spillover to the entire world reflect the inherent vulnerabilities and systemic risks in the existing international monetary system
+
II. The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.
+
III. The reform should be guided by a grand vision and begin with specific deliverables. It should be a gradual process that yields win-win results for all.
March 28th, 2009 at 00:40
New global currency unlikely to be G20 focus
Leaders likely to focus on reviving growth, reforming financial system
By Polya Lesova, MarketWatch
Last update: 4:06 p.m. EDT March 27, 2009
http://www.marketwatch.com/news/story/global-reserve-currency-debate-unlikely/story.aspx?guid={0E74D1C5-7E9F-4040-A5F3-57F48ACCC070}&dist=msr_1
SNIPS
NEW YORK (MarketWatch) — The main discussion topics at next week’s Group of 20 summit will likely be more significant to currency investors for what they do not include, rather than what they do, analysts say.
A new global reserve currency is unlikely to be among the main discussion topics at the Group of 20 summit next week, even as top Chinese officials and others have recently suggested that the U.S. dollar should be replaced as the world’s reserve currency.
+
Hans Redeker, global head of foreign exchange strategy at BNP Paribas, said that China is unlikely to bring up a discussion about the dollar at the G20 meeting, because they want to avoid a discussion about their own currency, the renminbi.
Ivo:
So we get FreeGold or what?
As I said above:
COMPARE
WHAT I QUOTED
If the US caves in, China’s yuan will dominate the weighting in the basket of SDRs, rendering it de facto control over the new world reserve currency. China’s proposal comes amid the wobbling US dollar, which is lurching into a debt crisis. (1)
TO WHAT I WROTE EARLIER
We still don’t know “what” we don’t know about the banking system.
+
This is fortunate because otherwise the present salami-crash in slices would immediately and abruptly come to a halt and become a real crash into the unknown.
Maybe the yuan does not have the “what”, maybe the yuan does not have the bad characteristic we don’t know. (2)
Ivo
(1)
China piles the pressure on the American greenback
Thanong Khanthong
The Nation (Thailand)
Publication Date: 27-03-2009
http://www.asianewsnet.net/news.php?id=4823&sec=2
SNIP
(2)
Yuan and Arab Economic Summit, Kuwait, 19-20 January 2009
Posted by Ivo Cerckel on January 2nd, 2009
http://bphouse.com/honest_money/2009/01/02/yuan-and-arab-economic-summit-kuwait-19-20-january-2009/
March 28th, 2009 at 00:50
FreeGold’s outlook looks better and better …
UPDATE 1-Russia c.bank: no early decisions on reserve currency
Fri Mar 27, 2009 5:52am EDT
(Adds Ulyukayev quotes, background)
http://www.reuters.com/article/marketsNews/idUSLR33924920090327
SNIP
MOSCOW, March 27 (Reuters) – The Russian central bank does not expect any decisions on a new global currency any time soon with the dollar remaining the main reserve unit, First Deputy Chairman of the central bank Alexei Ulyukayev said on Friday.
March 28th, 2009 at 02:35
Merkel seems to be listening to Cerckel
“This crisis did not come about because we issued too little money but because we created economic growth with too much money, and it was not sustainable growth,” said Ms Merkel. “If we want to learn from that, the answer is not to repeat the mistakes of the past.”
Merkel warns on further stimulus
By Bertrand Benoit, Quentin Peel and Chris Bryant in Berlin
Published: March 27 2009 23:30 | Last updated: March 27 2009 23:30
http://www.ft.com/cms/s/0/eda17b82-1b09-11de-8aa3-0000779fd2ac.html
March 28th, 2009 at 02:42
Oops,
Angela Merkel is the chancellor of the federal republic of Germany.
March 28th, 2009 at 12:10
Call for global currency wins int’l backing
By Wang Xu (China Daily)
Updated: 2009-03-28 08:21
http://www.chinadaily.com.cn/china/2009-03/28/content_7625684.htm
SNIP
China’s central bank governor said in an article earlier this week that it was necessary to create a “super-sovereign reserve currency” to overhaul the existing international monetary system. He also said the IMF’s SDR could become the new global reserve currency.
Russia earlier this month proposed creating a new reserve currency to be issued by international financial institutions. It is expected to raise the suggestion at the G20 summit to open in London on April 2.
Brazilian President Luiz Inacio Lula da Silva said on Thursday that it was important to discuss the Russian proposal at the G20 summit.
March 28th, 2009 at 12:18
As this writer wrote in September 2003:
In Russia, the Middle East and India, there is an increasing aversion against the dollar and is a search for a replacement under way. The present gold fever in China where individuals are since early 2003 again allowed to possess gold implies that in order to be an economic world power by 2012, China could well accede to this world standard, FreeGold. At that moment only physical gold will be traded as the natural vehicle to incorporate one’s wealth, the value of paper gold [contracts embodying wagers concerning the future gold price] will be reduced to nothing, and the value of the euro will increase quarterly upon the marking to market of its gold reserves.
The [European Central Bank] ECB will not define the euro like the old gold standard as a certain quantity of gold, but will use it as a free-trading financial reserve so that each increase in the price of gold will bring about an increase in the value of the euro’s reserves and thus an increase in the value of the euro itself.
http://bphouse.com/honest_money/arab-economic-summit-kuwait-19-20-january-2009
With Chinese Freegold from a reserve currency to a world standard
Tuesday, 2 September 2003
http://www.free-europe.org/english/2003/09/with-chinese-freegold-from-a-reserve-currency-to-a-world-standard/
March 28th, 2009 at 23:20
Russia wants rouble, yuan, gold in SDR basket
http://asia.news.yahoo.com/090328/3/3yb5s.html
\MOSCOW, March 28 (Reuters) – Russia supports expanding the IMF’s Special Drawing Rights (SDR) to include the rouble, the yuan and gold, but sees no chance of the G20 Summit accepting a new reserve currency, a Kremlin aide said on Saturday, agencies reported. “It would be logical for the set of currencies (that make up the SDR) to be expanded, and it could include other currencies, including the rouble, the yuan and perhaps others,” state RIA news agency reported the Kremlin’s senior economic aide Arkady Dvorkovich as saying. China this week caused a stir ahead of the April 2 Group of 20 meeting of rich and emerging economies when it suggested the world move towards greater use of the International Monetary Fund’s Special Drawing Rights, created by the IMF in 1969 as an international reserve asset. G20 leaders have made clear that for now the dollar’s status as the dominant reserve unit remains, but the idea of creating a new reserve currency system
based on SDRs has not entirely been knocked down. Dvorkovich said he sees no chance of the G20 accepting a new reserve currency next month, but his comments suggest the issue will be in the spotlight at the meeting, where world leaders will discuss ways to combat the global economic crisis. “We could also think about more effective use of gold and gold and forex reserves in this system,” Dvorkovich said, RIA reported. For its part, he added, Russia would support the broad use of the rouble and the yuan as reserve currencies, Itar-Tass reported. (Reporting by Simon Shuster; editing by Sue Thomas)
March 28th, 2009 at 23:43
The force of the FreeGold argument
FORCING their way on to the agenda [of the G20 summit] late in the day are calls from China and Russia to see a new super-sovereign international reserve currency, disconnected from the interests of one nation, to replace the dollar. China has become increasingly worried that its $1trn of dollar assets are vulnerable to excessive US borrowing.
(G20: Can we really expect a global new deal authored by Gordon Brown?
The summit marks an extraordinary moment – and a severe test – for the prime minister
Patrick Wintour and Nicholas Watt in Santiago
The Guardian, Saturday 28 March 200
http://www.guardian.co.uk/politics/2009/mar/28/gordon-brown-g20-summit
March 29th, 2009 at 00:28
Regulation is the problem, (and therefore) not the solution.
Financial Regulatory Proposals – Bloomberg Video
http://www.youtube.com/watch?v=b7ltzQOx_jw
Nobody knows the future.
March 29th, 2009 at 03:36
Speaking at an Inter-American Development Bank meeting in the northwestern Colombian city of Medellin, [Chinese Central Bank Governor] Zhou [Xiaochuan] said that current fiscal and monetary measures were useless if the international financial system is not overhauled.
(China insists on financial system overhaul
2 hours ago
http://www.google.com/hostednews/afp/article/ALeqM5jdMBsLng0dClAEJRCyDcT0TwAt5w
Ivo:
Still,
Zhou believes that SDRs mean an overhaul.
No,
SDRs symbolise the present system,
with its overhaul on 15 August 1971
by US of A president Richard Nixon
of the last remnants of Honest Money.
Indeed,
SDRs were introduced in 1969
to achieve this overhaul in 1971.
March 29th, 2009 at 06:29
Since 15 August 1971,
when US of A president Richard Nixon broke the Bretton Woods agreement,
which linked the US of A dollar at fixed parity to gold
and all other currencies to the said dollar,
the IMF has no more reason to exist.
Now, Dominique Strauss-Kahn, bureaucrat-in-chief at the IMF, wants to revive the IMF.
Shouldn’t the IMF (and its SDRs) be repealed first?
And then, we can start …
Ivo Cerckel
ivocerckel@siquijor.ws
As the world’s reserve currency, U.S. Dollars must be held by central banks around the world in order for foreign governments to pay international debts and purchase important commodities like Oil. (1)
Eager to offset the effects of the global financial crisis on their economy, Russians are seriously deliberating the creation of an alternative reserve currency to the US Dollar. Recent proposals by Russians to establish such currency did not receive much attention until last week, when China put its support behind this idea. At one point the idea was also picked up by the most distinguished global economists. The world is now seriously talking about the possibility of the emergence of supranational Reserve unit, based on Special Drawing Rights – quasi-currency of the International Monetary Fund.
The dollar recently suffered another blow, inflicted by Dominique Strauss-Kahn, Head of the IMF, who said that discussions about new global reserve currency are legitimate and could be held in in the coming months. According to Russians, Strauss-Kahn’s haste is obvious – if a new reserve currency emerges that is based on the SDR, then the International Monetary Fund will be the most powerful entity on Earth – the issuer of the world’s money. This attitude suits Russia just fine – now, the prospect of creating a new, non-dollar currency becomes short-term, rather than a long-term project.
Russia responded immediately to such developments – on Thursday, March 26, First Deputy Foreign Minister Andrey Denisov suggested convening an international conference with the authorized representatives of governments and financial experts to discuss the creation of a single global currency. According to the diplomat, such conference should be the next step after the upcoming G-20 London Summit and after June conference at United Nations. However, the discussions, even at the highest levels, are not enough – there should be policy decisions agreed upon by all countries. “This is an issue that must be discussed in order to develop a consensus, its not enough to solve this by a simple majority. It must be agreed by virtually all participants of the international economic and financial exchange. Only then can this idea be realized,” admitted Denisov. (2)
Ivo Cerckel
(1)
Thursday, March 26, 2009
NIA Warns Don’t Be Last Person Out of the Dollar
http://www.foxbusiness.com/story/nia-warns-dont-person-dollar/
(2)
March 29, 2009
Russia: Visa-Free Trips to America?
http://www.realclearworld.com/blog/2009/03/russia_visafree_to_america_or.html
March 29th, 2009 at 10:13
Is it the market or the G20 clique which decides?
The idea of a new reserve currency system based on the IMF special drawing rights has not been entirely knocked down, but many G20 leaders have made clear that for now the U.S. dollar’s status as the dominant reserve unit remains.
(EU says G20 not to focus on China financial calls
Reuters – 1 hour 10 minutes ago
http://ph.news.yahoo.com/rtrs/20090329/tbs-china-eu-21231dd.html
March 29th, 2009 at 11:05
The Market will provide us with FreeGold
G20 “Grand Bargain” looks distant prospect
Fri Mar 27, 2009 3:19pm EDT
http://www.reuters.com/article/topNews/idUSTRE52Q3WB20090327
SNIP
British Prime Minister Gordon Brown’s hopes of an overarching deal to pull the world out of recession looks doomed
April 7th, 2009 at 00:12
Haha ^^ nice, is there a section to follow the RSS feed
April 7th, 2009 at 08:24
I’m no computer freak.
I don’t clearly understand what is a RSS feed.
In the old days, it was possible to be notified by creating a Google News Alert on “ivo cerckel”.
But Google now boycotts this blog.
Yahoo! does not boycott the blog but a Yahoo! News Alert on “ivo cerckel” won’t help you.
Maybe, I should create a mailing list.
Next problem: how to hide the recipients in Yahoo! Mail.
Any help welcome.
Ivo
philmigrator@yahoo.com
April 10th, 2009 at 16:44
im wanting to see more content from ppl in this niche. come check out my blog and give me your inputs.
April 10th, 2009 at 17:13
From your blog:
The Basics of Mutual Funds
Sunday, November 26, 2006
http://jdinvest.blogspot.com/2006/11/basics-of-mutual-funds.html
SNIP
If you are not looking to get into the stock market by managing your own portfolio, then I suggest you look into mutual funds. Here are the basics: UNSNIP
Ivo:
Sorry, this Honest Money blog does not promote stocks or mutual funds of “gold” corporations.
The blog tries to convince individuals and corporations (and central banks as long as they are not outlawed) to have the yellow metal in physical possession.
I am unable to provide any input for individuals wanting to entrust their money to the stock market.
April 11th, 2009 at 10:04
What? Me worry about being boycotted by Google?
Microsoft, Yahoo talking on search deal: report
Fri Apr 10, 2009 1:18pm EDT
http://www.reuters.com/article/newsOne/idUSTRE53921U20090410
SNIP
SEATTLE (Reuters) – The chief executives of Microsoft Corp and Yahoo Inc met last week to discuss potential partnerships between the companies’ Internet search and advertising operations, the technology blog All Things Digital reported on Friday.
April 12th, 2009 at 15:30
Keep up with Honest Money on the Web
Yahoo! Feed / Blog Alert
added in both the left-hand and the right-column on the blog.