Wednesday, July 28, 2021

In Unprecedented, Shocking Proposal, BOE’s Mark Carney Urges Replacing Dollar With Libra-Like Reserve Currency

from ZeroHedge:

After Jerome Powell’s neutral-to-slightly-dovish-but-mostly-boring speech on Friday morning, investors could be forgiven for suspecting that this year’s Fed-sponsored gathering in Jackson Hole might be disappointingly dull (especially with all that’s going on in Trump’s twitter feed, the escalating trade war and escalating geopolitical unrest).

Then along came former Goldman banker and current (outgoing) BOE governor, Mark Carney, who in his lunchtime address laid out a shocking, radical proposal – perhaps the most stunning thing to ever be unveiled at Jackson Hole – urging to replace the US Dollar with a “Libra-like” reserve currency in a dramatic revamp of the global monetary, financial and economic order.

John Rubino – No Relief for Developing Country Currencies

by Kerry Lutz, Financial Survival Network:

John Rubino is back for another Monday… It’s always good to be the king, as a wise philosopher one stated. And being the king of currencies is no exception. The US Dollar is rolling along and crushing every currency in its path. But how long can it go on? Looks like there’s really life in the mining space once again, with Barrick’s acquisition of Randgold.reserve currency!

Click HERE to Listen

Hotel California and the Federal Reserve

by Gary Christenson, Deviant Investor:

In 1977 the Eagles spoke to us about “Hotel California.” Lyrics are here.

A few lines from the song …

“On a dark desert highway, cool wind in my hair…

Up ahead in the distance I saw a shimmering light…

Then I was thinking to myself this could be Heaven or this could be Hell

Welcome to the Hotel California

Some dance to remember, some dance to forget

They’re living it up at the Hotel California

We are all just prisoners here of our own device

Relax, said the night man, We are programmed to receive,

You can check out any time you like but you can never leave.”

The lines have been rewritten to fit the Federal Reserve – the hypothetical “Hotel Marriner Eccles:”


“On a dark digital highway, QE rewarding my pals

Up ahead in the distance I saw a burning pyre of debt

I was thinking to myself this should be Heaven but it’s Hell

Welcome to the Hotel Marriner Eccles

Some pontificate to remember, some lie to forget

They’re living it up at the Hotel Marriner Eccles

We are all just prisoners here of our own device

Relax, said the chairman. We are programmed to deceive

You can check out any time you like but you can never leave”


Thanks to the efforts of the Federal Reserve:


  • US national debt in 1913 was $3 billion. Today it exceeds $20,000 billion. There is no plan to reduce or eliminate debt.
  • Money supply has grown similarly. Debt has grown far more rapidly than the economy which must support the debt. This model is not viable in the long-term.
  • The debt will never be paid in today’s dollars, and debt cannot increase forever.
  • Hence the debt will default via outright repudiation or default via inflation. Both will be painful.
  • Who in their right mind believes that an economy can solve an excess debt problem with more debt? The “powers-that-be” don’t want the excess debt problem solved – THEY WANT MORE DEBT!

Like the Hotel California, the debt based currency system lives on, and we can never (without a traumatic reset) leave it.

Dishonest money created by politicians and bankers is profitable for the financial elite. It may look like heaven but it is HELL for the poor and middle class. The elite want the economic skim to continue. The rest of us must protect ourselves. Gold and silver come to mind.

The econometric models that supposedly guide the Fed are reminiscent of that edited line: “Relax, said the chairman. We are programmed to deceive. You can check out any time you like but you can never leave.”

In the financial world, where actions eventually have consequences, debt is growing explosively, fiat currencies are continually devalued and currencies are issued by insolvent central banks and insolvent governments.

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Why Are We So Stupid When It Comes To Gold?

from Silver Doctors:

It seems that every single analyst that you read regarding the gold market parrots the exact same thesis…

By Avi Gilburt via Gold Seek

In 3rd grade, my teacher had a sign up at the front of the class which read:  PUT BRAIN IN GEAR BEFORE ENGAGING MOUTH

This made an impression upon me as a 3rd grader. Yet, many adults have yet to learn this lesson.

Gold & the USD Reign Supreme in Venezuela as it Descends Toward Collapse – Nathan McDonald (15/03/2019)

by Nathan McDonald, Sprott Money:

If you don’t hold it, you don’t own it.

I have stated this time and again, and the reason why it bears repeating is once more unfolding in front of our very eyes.

The people of Venezuela continue to suffer under a historic blackout that has destroyed what little control the government still had over its people.

This comes at a crucial time for the country, as President Nicolas Maduro was already finding himself on shaky ground both within Venezuela and on the international stage, with the United States government leading the charge against him.

How Politicians Are Creating the Worst Economic Crash in History

by Martin Armstrong, Armstrong Economics:

Politicians have totally and completely misunderstood the trends within the global economy and as a result, they are actually creating one of the worst economic debacles in history. I have explained several times that the bulk of investment capital is tied up in two primary sectors – (1) government bonds and (2) real estate. Because of income taxes, real estate has offered a way to make money in capital gains without having to pay income taxes.

Doug Casey on What Will Trigger Bitcoin’s Collapse


by Doug Casey, Casey Research:

Justin’s note: Central bankers are losing sleep over bitcoin.

And they should be. It’s a direct threat to their monopoly on money.

Because of this, they’re trying everything they can to crush bitcoin.

They’re urging people not to buy it. They’re calling it a bubble. They’re even talking about launching their own rival digital currencies.

Regular readers know that I think these efforts will fail. But I couldn’t help but wonder what Doug Casey thinks of this. So, I called him up a few days ago to get his take…

Justin: Doug, governments around the world seem to be waging a war on bitcoin.

Do you see expect to see more of this in the years ahead?

Doug: Absolutely. You can plan your life around governments doing everything they can to discourage not only bitcoin, but all the other private cryptocurrencies as well.

It will be for pretty much the same reasons they hate gold, and other hard moneys. The State believes the issuance of currency is one of its major prerogatives, like making war and levying taxes. It’s critical to them not to have alternatives, competition, when it comes to money.

For one thing, almost every government in the world is running deficits—gigantic deficits in many cases. They’re financing those deficits by printing money. It’s national policy everywhere because they believe deficits “stimulate” the economy as a bonus.

Most of that newly created money is flowing into the stock, bond markets, and real estate markets. It’s making everybody feel much wealthier. Except for the bottom 50%—they’re getting poorer.

Government and central banks don’t want to give up that monopoly on money. Least of all the US, since our major export isn’t wheat or airplanes—it’s dollars. So, they’re going to do what they can to quash bitcoin and the others. For a myriad of reasons.

Justin: But will they succeed?

Doug: Well, they could certainly illegalize it. But would that eliminate it? About as well as their laws eliminated drugs or prostitution today. Or alcohol during the ‘20s. Fat chance. Although illegalization would certainly make cryptos inconvenient and risky.

But could they destroy cryptos? Who knows what kind of computing power the National Security Agency (NSA) has. They might be able to destroy any computer network or digital product at this point.

This is a huge argument against any kind of purely electronic currency—anything can happen in the ether.

Bitcoin is evidence of a worldwide distrust in government fiat currencies, though. And they’re right to be distrustful; I don’t doubt that we’ll experience monetary chaos in the future.

At some point, they’ll try to ban bitcoin, though. They’ll tell people it’s the law that they have to use the national e-currency. Plus they’ll use moral suasion and propaganda. You know the drill. They’ll say if you use bitcoin you’re a money launderer, a drug dealer, a terrorist, a tax evader, and/or a child pornographer. Actually, the morality involved in all those activities is worth a separate discussion… it’s perverse they’re always classed together.

But this is what we can look forward to.

Now, that doesn’t mean that bitcoin won’t still be valuable. That’s because, as I’ve said before, three-quarters of the people on earth live in the Third World. These people use currencies that are worth little within their own countries. Outside of their country, they’re worth nothing. They’re “blocked” currencies. So, these people will continue to use bitcoin, or other cryptos, to a growing degree. There’s trouble brewing.

And let me add something else. I’ve said for some time that bitcoin is a wonderful thing. But what happens when somebody develops bitcoin 2.0? I’m talking about a digital currency that uses a considerably better or different technology. What happens then to the value of bitcoin? It will likely collapse.

But these aren’t even the main reasons to be concerned about bitcoin.

Justin: So, what would be?

Doug: The development of quantum computing power poses a huge threat to bitcoin.

The little computers that are making bitcoin today will be obviated.

Now, I don’t know when quantum computing will be become commercial or practical—although it seems quite soon. But when it does, no code will be uncrackable. So any alteration of blockchain may be possible. Who knows? It’s been said that any sufficiently advanced technology is indistinguishable from magic.

But, entirely apart from that, the owners of quantum devices will be able to create bitcoin or its look-alikes in gigantic quantities almost instantly. Of course, at that point we’re living in the world of the Singularity—and the price of bitcoin will be the least of our worries. Or opportunities.

There are all kinds of X-factors that most people haven’t considered.

But there’s the biggest one. Cryptos have gone hyperbolic. At $18,000 a Bitcoin, I no longer have the nerve to play the game. After all, it’s gone up about 18,000% this year. I’m happy to leave something on the table for the next guy.

Justin: What about governments that are trying to launch their own digital currencies?

Doug: A certainty. And it’s happening as we speak. We’re living in the digital age. Everybody has a smartphone today. And governments are developing their own digital currencies to take advantage of that fact…

In the U.S., they’ll call it FedCoin. In Japan, it will be called JCoin or something. The Russians will come up with their own digital currency too.

Even the Venezuelans are trying to go digital with Petrocoin. Of course, they’ll fail miserably. That’s because digital currencies only work if there’s an element of trust. And there’s zero trust with them. But there should be zero trust with any government.

Still, governments around the world will try this because they want to eliminate paper currency completely.

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This is how China moves the world to a gold standard! – Bill Holter

by Bill Holter, Miles Franklin:

We have watched for years as China grew in strength economically, financially and militarily. They have pre positioned themselves by making trade deals, setting up credit facilities and even an alternative clearing system to the West’s “SWIFT”. We also know China has been gobbling up global mine supply of gold for going on 10 years now. As I’ve written in the past, just using the back of a napkin, it can be surmised they now have hoarded 20,000 tons or more compared to the “supposed” 8,133 tons held by the U.S..

It is clear China has meticulously readied themselves to take the role of world leadership from the U.S. but do they really want the responsibility AND burden of issuing the reserve currency? This has always been the question and the answer from logical thinkers is “no”. No, because we (and of course China) have seen the result of the “burdens” that comes along with the privilege of issuing the reserve currency. I must confess, I too did not believe China would desire or even accept the responsibility of reserve currency status. I now believe this thought is mistaken! I will explain shortly.

The announcement of “yuan for oil, convertible into gold” is a game changer . China imports about 8 million barrels of oil per day, this works out to 3 billion barrels per year. At $50 per barrel, the oil trade by China is about $150 billion per year. If we compare that to total global production of gold, we find the 80 million ounces produced and priced at $1,300 currently amounts to just over $100 billion. In other words, China consumes more oil (in dollar terms) than ALL the gold produced in the world. Think about this for a moment, at current pricing, just one country uses more oil than the entire world produces money? Does the word “reset” at all come to mind?

Taking just one step back, China has over the last few years imported roughly 2,000 tons of gold per year. If we add India’s imports of roughly 1,000 tons per year, we see combined they are importing more than the 2,500 that are produced. These numbers by themselves illustrate that the gold supply had to come from somewhere …and that “somewhere” can only be from Western vaults. In order to extend and pretend their financial systems and currencies were sound, the West (led by the U.S.) has been bleeding their gold reserves.

Now, getting back to China, here is why I believe they are leading the world BACK to a gold standard! If China imports oil and pays with yuan and offers their yuan “convertible” into gold, how many oil producers will take them up on the conversion? Certainly not 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} and maybe not 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. Maybe the number is only 25{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} or even less but that’s not important as “time” will take over. You must ask yourself, how long can China and India import 3,000 tons while the world only produces 2,500 tons? Where will another 1,000 tons (or maybe much more?) of demand be satisfied if oil producer’s newly acquired yuan are converted to gold? The easy answer is “they cannot” …AT CURRENT PRICES!

Here is the interesting part and where I believe I was mistaken in previous thought. China watched as the U.S. was bled of gold leading up to 1971. They also know we have been bleeding gold ever since as a way to camouflage the credit bubble and gross over issuance of dollars. They understand the game and do not want to be placed in the same quandary if the yuan becomes the reserve currency. Instead, I believe China is leading the world toward a de facto gold standard by diverting what was previously “oil for dollars” into “oil for gold”. I believed China might mark gold higher by making a bid and ask price at much higher numbers, instead, facilitating and using natural demand makes so much more sense.

By making yuan convertible into gold, China in essences is creating a demand they know cannot be met by supply … (again) AT CURRENT PRICES! Why would they do this? It is actually so simple I feel dumb for not seeing this previously. China actually kills an entire flock of birds at one time!

First, they are THE largest owner of gold on the planet so they are in fact marking the value of their treasury up by multiples. The higher future price of gold will also make it very difficult if not impossible for other nations to catch up in gold accumulation. By freeing the gold price, China is assuring their place as a world financial leader for many years if not many centuries as that is their mindset. They know quite well, gold is lasting wealth and also the phrase “he who has the gold makes the rules”!

Second, they will in essence be devaluing the yuan versus gold. This will have many benefits and too broad of a subject to breach here but think back to 1934 when the U.S. devalued the dollar versus gold, it creates “inflation” and makes debt easier to pay and service as well as giving a bump to the real economy.

Next and of great importance, moving the world “naturally” to a gold standard means moving away from the dollar standard and all the unfairness that goes with it. A world moving toward gold (China) is a world moving away from the dollar. Surely the dollar will devalue versus the yuan via lower demand from the oil trade and also the lessening of “power” afforded as issuer of the reserve currency. The U.S has enforced the dollar standard by military use for years. Is this action by China “neutral” enough and free market enough to avoid military conflict? We can only hope and pray the U.S. does not kick the table over in reaction.

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Federal Debt: A Cancer on Economic Growth


by Peter Schiff, SchiffGold:

The mainstream investment world is starting to worry about the federal debt.

CNBC put it this way:

Goldman Sachs sees a tidal wave of red ink — and it may drag the US economy into its undertow.”

Goldman recently released a note to clients saying virtually the same thing Peter Schiff has been saying for months. The US economy won’t likely get the promised economic growth out of GOP tax cuts – at least not over the long-haul.

Goldman estimated that the federal deficit would reach 5.2% of US growth by 2019 and would “continue climbing gradually from there.”

Again from CNBC:

‘The fiscal expansion should boost growth by around 0.7pp in 2018 and 0.6pp in 2019, but will likely come to an end after that’—listing a litany of reasons why spending and debt would conspire to undermine the world’s largest economy. While tax cuts are partly responsible, Goldman stated that ‘projected increases in mandatory spending—this includes Social Security, Medicare, Medicaid, and income support programs—are primarily responsible’ for an unsustainable surge in spending.”

The CBO conservatively estimates the debt-to-GDP ratio currently stands at 77%. But this is likely understated and leaves out a number of factors. Trading Economics calculated the 2017 debt-to-GDP ratio at 105.4%. A high debt-to-GDP ratio stymies economic growth. Even using the more conservative CBO number flashes giant warning signs. Last year, the CBO issued a dire forecast, saying the number could skyrocket to 150% by 2047 if the trend remains unchecked.

And Congress has shown no inclination to check the trend.

The budget plan passed last month added another $300 billion in spending over the next two years and raised the mythical debt ceiling.

Lance Roberts at broke down the long-term impact of the budget deal. The continuing resolution added an 8% spending increase to the previous baseline. That means the higher level of spending now becomes the new baseline.

This means over the next decade, the C.R. will add $2 trillion in spending to the federal budget. Then add to that any other spending approved such as the proposed $200 billion for an infrastructure spending bill, money for DACA/immigration reform, or a whole host of other social welfare programs that will require additional funding. But that is only half the problem. The recent passage of tax reform will trim roughly $2 trillion from revenues over the next decade as well.”

Roberts’ conclusion? “There will be no economic boom.”

Deficits, and deficit spending, are highly destructive to economic growth as it directly impacts gross receipts and saved capital equally. Like cancer – running deficits, along with continued deficit spending, continues to destroy saved capital and damages capital formation. Debt is, by its very nature, a cancer on economic growth. As debt levels rise it consumes more capital by diverting it from productive investments into debt service. As debt levels spread through the system it consumes greater amounts of capital until it eventually kills the host. The chart below shows the rise of federal debt and its impact on economic growth.”

Goldman also hit another theme we’ve been harping on – the impact of rising interest rates on the debt.

We expect rising interest rates and a rising debt level to lead to a meaningful increase in interest expense. On our current projections, federal interest expense will rise to 2.3 percent of GDP by 2021,” and could hit 3.5 percent by 2027.”

In other words, it will cost the US government even more money just to make its annual interest payments on the debt. That means Washington will have to borrow even more money, creating a vicious cycle of skyrocketing debt and borrowing. This doesn’t even take the bigger question into consideration: Who is going to buy all of this debt?

Simon Black  at Sovereign Man recently penned an interesting note on this:

Less than two weeks ago, the United States Department of Treasury very quietly released its own internal projections for the federal government’s budget deficits over the next several years. And the numbers are pretty gruesome. In order to plug the gaps from its soaring deficits, the Treasury Department expects to borrow nearly $1 trillion this fiscal year. Then nearly $1.1 trillion next fiscal year. And up to $1.3 trillion the year after that. This means that the national debt will exceed $25 trillion by September 30, 2020.”

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A Trip Trough Time to Jekyll Island

from Miles Franklin:

Creation of the Federal Reserve

The Year is 1910; America had gone through three Central Banks. The bankers are tired of picking up the losses and at the same time the people are calling for breaking the power grip of the Banking Trust.

The bankers (J.P. Morgan, Rockefellers, Warburg’s of Germany & the Rothschild’s of Europe) , who are competitors , put their differences aside and decided to have the meeting.

A little Trivia:  The little man on the Monopoly Board is J. P. Morgan.   Also, in the story Little Orphan Annie:  Daddy Warbucks is a portrayal of Paul Warburg.

On an evening in November, representatives of the bankers secretly arrived at the Hoboken, New Jersey Train Station to board the private train car of Sen. Nelson Aldrich (father- in- law of John D. Rockefeller, Jr).  They were bound for a two day trip to the coast of Georgia.

They were instructed to speak to each other using first name only.  Even two used the names: Wilber and Orville …taken from the Wright brothers.

When reaching the coast, the men traveled by ferry to a private Island: Jekyll Island. This is where the super wealthy had summer cottages.  (More like million dollar homes.)  On the Island is the Jekyll Island Club House.  The secret meeting was in the club house and, to make sure no one was suspicious, they gave the normal staff the week off .

The men representing the bankers (including Asst. Sec. of Treasury A. Piatt Andrew) met there for 10 days to hammer out and write what would later be the Federal Reserve Act!

Isn’t it ironic: The banking trust wrote the bill that befits them!

This secret meeting on Jekyll Island was creating a banking cartel (no different than a banana cartel where profits benefit the cartel members).  The losses would be passed on to the taxpayer through inflation or bailout by the taxpayer.

When they all got back to New York and Washington., D.C., the next step was to make what the bankers wrote go into law.  The biggest reason, as in many cartels, is a need for government as partner and enforce the cartel agreement.

Sen. Nelson Aldrich was so excited about this creation; that he wanted put his name on the bill.  The bankers warned him it is going to fail because of his relations to the Rockefellers.   They were right; the bill did fail!

So they waited a few years to give it another try.  This time they gave the bill a better name:  Federal Reserve Act, to give the impression it is a federal agency (which it is not) and it has reserves (It has none).

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Fed Loses Control of its Benchmark Interest: Repo Rates through the Roof!

by David Haggith, The Great Recession Blog:

Well, that didn’t take long! Four days ago, I stated the following in an article titled “Why are Bonds Going for Broke?“:

Central banks are losing control, and are admitting they don’t even understand what is happening.

I quoted St. Louis Reserve Bank president, James Bullard, who commented

Something is going on, and that’s causing I think a total rethink of central banking and all our cherished notions about what we think we’re doing…. We just have to stop thinking that next year things are going to be normal.”