And the joke continues …

Whereas the Gulf Co-operation Council wants a strong and high value single currency,
the Group of Seven industrialised guv’mints wants China to continue to be committed to move to a more flexible exchange rate

GCC nations to hold poll for naming new currency
October 04, 2009
http://www.business24-7.ae/Articles/2009/10/Pages/03102009/10042009_1aea296348564336bda538cae2180ec4.aspx
SNIP
“As a result, there is a general tendency now to name the currency either dinar or riyal, which are two common names of currency in the region… but according to observers, the dinar is a stronger candidate because the founders want a name of a currency which is psychologically associated with the minds of the citizens as a strong and high value currency,” a Saudi Arabian newspaper reported yesterday.

G7 welcomes China’s backing for a flexible currency
By Krishna Guha in Istanbul
Published: October 3 2009 18:15 | Last updated: October 3 2009 18:15
http://www.ft.com/cms/s/0/82dcb54c-b031-11de-b78c-00144feabdc0.html
 
G7 warns of excess volatility on currency markets
Arab News newspaper, Sunday 4 October 2009 (15 Shawwal 1430) 
Agencies
http://www.arabnews.com/?page=6§ion=0&article=127042&d=4&m=10&y=2009 
SNIPS
ISTANBUL: G7 finance chiefs on Saturday warned “excess volatility” on currency markets was hurting economic stability and said a more flexible exchange rate in China would promote world economic growth.
+
European finance ministers put pressure on the United States this week ahead of the talks to defend the dollar, which has weakened considerably as a tentative global economic recovery has taken shape. The G7 finance chiefs also stressed the importance of China’s policy.
“We welcome China’s continued commitment to move to a more flexible exchange rate, which should lead to continued appreciation of the renminbi in effective terms and help promote more balanced growth in China and in the world economy.”
UNSNIP

In his latest move, Dominique Strauss-Kahn, the head of the International Monetary Fund, on Friday in Istanbul, at  the annual meetings of the IMF and the World Bank, reiterated his criticism of China’s “undervalued” currency and he wanted currencies to “rebalance”
(IMF chief renews call for currency reform
By Chris Giles and Krishna Guha in Istanbul
Published: October 2 2009 13:21 | Last updated: October 2 2009 13:21
http://www.ft.com/cms/s/0/ae08da42-af47-11de-ba1c-00144feabdc0.html

Now on Saturday.
G7 finance chiefs warned “EXCESS VOLATILITY” on currency markets was hurting economic stability and said a MORE FLEXIBLE exchange rate in China would promote world economic growth,
says the Arab News newspaper article I quoted above  this Sunday morning

Does enhanced flexibility not lead to more volatility?

What is the point I am missing?

There is no point?

The issuer of a currency needs reserves in order to determine the value of that currency. A distinction should be made between the gold (hiding in oil – since oil is the only commodity that is large enough for gold to hide in, gold is hiding in there) reserves and the forex (foreign exchange) reserves of the issuer of the currency. Forex reserves consisting of worthless paper money can only possibly be used for intervention on forex markets. Such reserves are worthless, no, useless, to determine the value of a currency. Only gold (hiding in oil) reserves can determine the value of a currency.

A Lex-column “The myth of rebalancing” in this week-end’s Financial Times
http://www.ft.com/cms/s/3/8fbb4db4-af2d-11de-ba1c-00144feabdc0.html
says however that we have only free-floating currencies and manipulated currencies.
In either case, the reserves of the central bank are irrelevant to determine the value of the currency.

Against what should the currencies rebalance?

Against each other?

None of the banks on this planet matches maturities, none applies the lesson its managers should have been taught in college finance classes, the lesson of matching one year loans to one year deposits and so on.

All banks on this planet are thus illiquid banks and they should be liquidated because they are fraudulent.

And the joke continues …

Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/