Friday, April 19, 2019

The Petro-Yuan Bombshell and Its Relation to the New US Security Doctrine

by Pepe Escobar, Russia Insider:

“Russia and China … have concluded that pumping the US military budget by buying US bonds … is an unsustainable proposition …”

The new 55-page “America First” National Security Strategy (NSS), drafted over the course of 2017, defines Russia and China as “revisionist” powers, “rivals,” and for all practical purposes strategic competitors of the United States.

The NSS stops short of defining Russia and China as enemies, allowing for an “attempt to build a great partnership with those and other countries.” Still, Beijing qualified it as “reckless” and “irrational.” The Kremlin noted its “imperialist character” and “disregard for a multipolar world.” Iran, predictably, is described by the NSS as “the world’s most significant state sponsor of terrorism.” 

Russia, China and Iran happen to be the three key movers and shakers in the ongoing geopolitical and geo-economic process of Eurasia integration.

The NSS can certainly be regarded as a response to what happened at the BRICS summit in Xiamen last September. Then, Russian President Vladimir Putin insisted on “the BRIC countries’ concerns over the unfairness of the global financial and economic architecture which does not give due regard to the growing weight of the emerging economies,” and stressed the need to “overcome the excessive domination of a limited number of reserve currencies.”

 Yes, this is photoshopped, but still very apt - the whole world is wondering what his next move will be .
Yes, this is photoshopped, but still very apt – the whole world is wondering what his next move will be .

That was a clear reference to the US dollar, which accounts for nearly two-thirds of total reserve currency around the world and remains the benchmark determining the price of energy and strategic raw materials.

And that brings us to the unnamed secret at the heart of the NSS; the Russia-China “threat” to the US dollar.   

The CIPS/SWIFT face-off

The website of the China Foreign Exchange Trade System (CFETS) recently announcedthe establishment of a yuan-ruble payment system, hinting that similar systems regarding other currencies participating in the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) will also be in place in the near future.    

Crucially, this is not about reducing currency risk; after all Russia and China have increasingly traded bilaterally in their own currencies since the 2014 US-imposed sanctions on Russia. This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar.   

The decision follows the establishment by Beijing, in October 2015, of the China International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank clearing system, through which virtually every global transaction must transit.  

What matters, in this case, is that Beijing – as well as Moscow – clearly read the writing on the wall when, in 2012, Washington applied pressure on SWIFT; blocked international clearing for every Iranian bank; and froze $100 billion in Iranian assets overseas as well as Tehran’s potential to export oil. In the event that Washington might decide to slap sanctions on China, bank clearing though CIPS works as a de facto sanctions-evading mechanism.

Last March, Russia’s central bank opened its first office in Beijing. Moscow is launching its first $1 billion yuan-denominated government bond sale. Moscow has made it very clear it is committed to a long-term strategy to stop using the US dollar as their primary currency in global trade, moving alongside Beijing towards what could be dubbed a post-Bretton Woods exchange system.

Gold is essential in this strategy. Russia, China, India, Brazil & South Africa are all either large producers or consumers of gold – or both. Following what has been extensively discussed in their summits since the early 2010s, the BRICS countries are bound to focus on trading physical gold.

Markets such as COMEX actually trade derivatives on gold, and are backed by an insignificant amount of physical gold. Major BRICS gold producers – especially the Russia-China partnership – plan to be able to exercise extra influence in setting up global gold prices.

The ultimate politically charged dossier

Intractable questions referring to the US dollar as the top reserve currency have been discussed at the highest levels of JP Morgan for at least five years now. There cannot be a more politically charged dossier. The NSS duly sidestepped it.

The current state of play is still all about the petrodollar system; since last year, what used to be a key, “secret” informal deal between the US and the House of Saud, is firmly in the public domain.

Even warriors in the Hindu Kush may now be aware of how oil and virtually all commodities must be traded in US dollars, and how these petrodollars are recycled into US Treasuries. Through this mechanism, Washington has accumulated an astonishing $20 trillion in debt – and counting.

Read More @ Russia-Insider.com

Facebook blocks pages with TENS OF MILLIONS of views after CNN reports their ties to RT

from RT:

Facebook has suspended several accounts operated by Maffick Media without prior warning, right after CNN ran a report about the company’s perceived ties to the Kremlin.

In what seems to be a new step in the social media giant’s fight against perceived ‘Russian propaganda’, Facebook took down, without prior notice, several pages offering video content. The social media network said it would ask the administrators of SoapboxBack Then and Waste-Ed to disclose their “Russian affiliations.”

California Burns: Apocalyptic ‘Extreme Fire’ Future Arrives

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by Mac Slavo, SHTF Plan:

As California burns, experts say these extreme fires are no longer rare, but the new normal. The town of Redding is being threatened by the fast-growing Carr fire outside of the town and the fire itself is so hot it has begun creating its own weather.

Recent California wildfires have been notable for their ferocity. At least six people have died, including two firefighters, in the past month in fires that continue to burn hot.  Last year, 44 died as a result of the wine country fires that caused epic destruction. The conflagrations have also spawned bizarre pyrotechnics, from firenados to towering pyrocumulus clouds that evoke a nuclear detonation. These events are not aberrations either, say the experts. They are California’s future and the new normal for the entire state.

How Did JPMorgan Reverse an Arrest Warrant for its Mexico Bank Chief?

by Pam Martens and Russ Martens, Wall St On Parade:

On Monday Reuters reported that “a judge in Mexico has issued an arrest warrant for the country head of U.S. investment bank JPMorgan for alleged fraud….” Details about the arrest warrant were provided the same day in a lawsuit filed in the Federal District Court for the Southern District of New York. The lawsuit explained that “…a prosecutor has conducted a criminal investigation into fraud by J.P. Morgan. Based on the preliminary evidence collected, the prosecutor recently (in June 2018) requested that a judge detain Eduardo Cepeda, the chairman of the board and chief executive officer of Defendant’s Mexican unit, and former J.P. Morgan managing director Miguel Barbosa. Upon review of the evidence presented by the prosecutor, a criminal court judge has found the elements of felony fraud in the amount of $100 million, and issued a detention order for Eduardo Cepeda and Miguel Barbosa.”

Gold, The Economy, Cryptocurrencies And Irrational Exuberance

by Dave Kranzler, Investment Research Dynamics:

The current tax legislation isn’t some thoughtful reform to benefit Americans. It’s a quickly planned looting through a broken window in our nation’s character. – John Hussman

John Hussman wrote a must-read essay titled:  “Three Delusions:  Paper Wealth, A Booming Economy and Bitcoin (link).”   The crypto/blockchain delusion has exceeded the absurdity of the dot.com and housing bubble eras.   I was shorting fraud stocks happily in both eras.  I’m short a company  now called Riot Blockchain.  If you look at its description in Yahoo Finance, it bills itself as a developer of technologies applied to animal (“non-human”) medicine.  It recently changed its name to Riot Blockchain from Bioptix Inc.  Prior to calling itself Bioptic Inc, it called itself Venaxis.  Just the name change to Riot “Blockchain” moved the stock from $4 to $40…insanity.

The Company changed its name in early October to Riot Blockchain.  Based on this, Canaccord was more than happy to fleece investors by raising $37 million for Riot in a private placement.  But that’s okay I guess because one has to be a “sophisticated” investor with the financial qualifications to have your money taken from you by Wall Street and Bay Street in order to invest in private placements.

Fundamentally this system is dissolving. The Government economic data, like GDP, CPI and employment  is worthless. The numbers produced by the Government are rigged to support political propaganda about the economy and the financial system. Economic reports released by the private sector generally contradict the Government’s reports.

Silver Doctors invited me to participate in their weekly Metals & Markets podcast. We chatted about gold, cryptocurrencies and the economy. Gold is currently the only asset that has not participated in this “Irrational Exuberance 2.0.” Of course, gold ran from $250 to $1900 from 2001 to 2011. We discuss why now is time to move investment funds back into gold for its next cyclical bull move in the context of a much bigger secular bull market in real money:

Read More @ InvestmentResearchDynamics.com

Massive $30 Billion Outflow Streak in U.S. Stocks Raises Red Flag

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from Birch Gold Group:

Investors are pulling money out of the U.S. market at an alarming rate, resulting in the longest and most aggressive outflow streak since 2004. Meanwhile, stocks are middling. Does this wave of selling mean stock prices have finally reached their peak?

Here’s how the trend could impact markets moving forward, and how you could possibly use it to your advantage…

Longest Outflow Streak in 13 Years

U.S. stock funds were sapped by $30 billion over the past 10 weeks. Investors are abandoning U.S. markets and reinvesting their funds elsewhere — primarily in emerging markets and European or Japanese stocks (which received a combined $36 billion in inflows over the same 10-week period).

Investors are fleeing the U.S. for multiple reasons…

First of all, political instability is growing stronger by the day. The Trump administration continues to involve itself in fresh scandals, while struggling to rid itself of old ones. And the dizzying spin of the administration’s revolving door of officials only makes things worse.

Plus, Washington gridlock and the administration’s inability to so far make good on its pro-growth policy promises is giving investors another reason to lose faith in U.S. markets.

We haven’t witnessed an outflow in U.S. stocks this significant since 2004 . And if it continues, it could end up being the biggest in history.

Can Markets Weather This Storm?

With billions being pulled out of the U.S. market, average savers are becoming more concerned about how they could be affected. And rightly so…

There’s no question that U.S. markets will take a hit from this selling activity. The real question is just how big that hit will be.

Although stocks made modest gains over the 10 weeks spanning the outflow, they’re now starting to fall off. This could very well be the catalyst that triggers the end of our current bull market — which, by the way, represents the third longest period of economic expansion in U.S. history.

Markets are cyclical, and we’re long overdue for a correction. That said, if this is the beginning of our next correction, what should average savers do before the situation gets worse?

Well, there are a few things they should know…

Bullish Bets & More Good News On Gold

As the outlook for U.S. stocks grows bleaker, there’s one asset that’s already thriving in response: physical precious metals, especially gold. And the tremendous outflow in U.S. markets is just one of the reasons why gold is shining brighter and brighter.

Nuclear tensions with North Korea… concern that Congress will fail to authorize new spending and raise the debt limit… threat of government shutdown… a falling dollar (which makes gold more attractive to foreign buyers)… and a whole host of other positive price drivers are boosting gold right now.

Read More @ BirchGoldGroup.com