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Warnings of an Under Resourced IMF Point to Imminent Economic Downturn

Warnings of an Under Resourced IMF Point to Imminent Economic Downturn

This week the International Monetary Fund host their annual Spring Meetings in Washington DC amidst rising uncertainty over the future relationship between Britain and the EU. Ahead of the gathering, general manager of the Bank for International Settlements, Agustin Carstens, has spoken of the IMF having ‘inadequate resources‘ to respond to a major new economic decline:

This leaves us with the problem of having to improvise in times of crisis. If the Fund cannot do it others will have to do it otherwise the economic costs will be huge.

Carstens was speaking in reference to the IMF’s quota subscriptions. As the institution explains on its website, quotas are the main source of funding for the IMF. Every member of the IMF (currently 189) is assigned a quota, with the largest economies contributing the most.

Up to 25% of a country’s subscription has to be paid in Special Drawing Rights or ‘foreign currencies acceptable to the IMF.’ SDR’s are the IMF’s unit of account, and are made up of the world’s five most prominent currencies – the dollar, the euro, the renminbi, the yen and the pound. The remaining 75% of a nation’s quota must be paid in their own currency.

With the United States being the largest member of the IMF, their quota is the most substantial. As of March 2017, their share was $118 billion. In SDR’s this equates to a value of 82.99 billion. The IMF values SDR’s in dollars – the latest reading shows that the U.S. dollar equivalent of $1 in SDR’s is 72 cents.

According to the IMF, in September 181 members had made all their quota payments, with total quotas standing at $675 billion (475 billion when measured in SDR’s).

 …click on the above link to read the rest of the article…

The Economic End Game Continues

The Economic End Game Continues

In November of 2014 I published an article titled ‘The Economic End Game Explained’. In it I outlined what I believed would be the process by which globalists would achieve what they call the “new world order” or what they sometimes call the “global economic reset.” As I have shown in great detail in the past, the globalist agenda includes a fiscal end game; a prize or trophy that they hope to obtain. This prize is a completely centralized global economic structure, rooted in a single central bank for the world, the removal of the U.S. dollar as world reserve currency, the institution of the SDR basket system which will act as a bridge for single a global currency supplanting all others and, ultimately, global governance of this system by a mere handful of “elites.”

The timeline for this process is unclear, but there is some indication of when the “beginning of the end” would commence. As noted in the globalist owned magazine The Economist, in an article titled “Get Ready For The Phoenix,” the year of 2018 seems to be the launching point for the great reset. This timeline is supported by the numerous measures already taken to undermine dollar dominance in international trade as well as elevate the International Monetary Fund’s SDR basket. It is clear that the globalists have deadlines they intend to meet.

That said, there have been some new developments since I wrote my initial analysis on the end-game strategy that I think merit serious attention. The end game continues, faster than ever before, and here are some of the indicators showing that the “predictions” of the globalists at The Economist in 1988 were more like self-fulfilling prophecies and 2018 remains a primary nexus point for a re-engineering of our economic environment.

…click on the above link to read the rest of the article…

The Real Dangers Behind The Syrian Crisis Are Economic

The Real Dangers Behind The Syrian Crisis Are Economic

Back in 2010/2011 when I was still writing under the pen-name Giordano Bruno, I warned extensively about the dangers of any destabilization in the nation of Syria, long before the real troubles began. In an article titled Migration Of The Black Swans, I pointed out that due to Syria’s unique set of alliances and economic relationships the country was a “keystone” for disruption in the Middle East and that a “revolution” (or civil war) was imminent. Syria, I warned, represented the first domino in a chain of dominoes that could lead to widespread regional warfare and draw in major powers like the U.S. and Russia.

That said, my position has always been that the next “world war” would not be a nuclear war, but primarily an economic war. Meaning, I believed and still believe it is far more useful for establishment elites to use the East as a foil to bring down certain parts of the West with economic weapons, such as the dumping of the U.S. dollar. The chaos this would cause in global markets and the panic that would ensue among the general public would provide perfect cover for the introduction of what the globalists call the “great financial reset.” The term “reset” is essentially code for the total centralization of all fiscal and monetary management of the world’s economies under one institution, most likely the IMF. This would culminate in the destruction of the dollar’s world reserve status, its replacement being the IMF’s Special Drawing Rights basket currency system.

Eventually, the SDR basket system would act as a stepping stone towards a single global currency system, and its final form and function would probably be entirely digital. This would give the globalists TOTAL push-button control over even the smallest aspects of normal trade. The amount of power they would gain from a single centralized digital currency system would be endless.

…click on the above link to read the rest of the article…

Lagarde – Wants to Raise Retirement Age & Taxes

Lagarde Christine imf

Christine Lagarde remained at the IMF and one of three Troika members because she is a Socialist and on board with both raising retirement ages to cheat people out of what they planned and to raise taxes while closing all borders to the movement of capital. She is also pushing behind the curtain for the SDR to replace the dollar and then the IMF becomes the power behind a one-world currency without ever having to stand for election anywhere.
Lagarde if pitching as a priority the lifting of retirement ages to match her excuse, the increase in longevity gains. People have been taxed their whole lives and governments have squandered that money while making lavish promises. Now Lagarde was retained at the IMF because she can push the Socialist agenda which is robbing the average person while blaming the rich. She does not have to worry about elections so she can do as she likes. Then pension systems around the world world are collapsing not just due to demographics, but the stupidity of government management. Lagarde is looking to use the demographics as the excuse because government have been robbing the people all along while blaming the rich. Lagarde is looking to alter the pension systems by extending the “productive life” expectancy of individuals. Extending the retirement age will allow them to tax you longer in life while shortening your benefit period of retirement. If government was managed properly and honestly, there would be not such crisis had money actually been saved instead of spent.
Largard has been running around the world threatening all tax heavens that they would be blocked from the Swift System if they did not turnover all accounts. She even threaten the Vatican.

…click on the above link to read the rest of the article…

IMF’s Lagarde Anoints Chinese Yuan. Will it Now Demolish the “Dollar Hegemony?”

IMF’s Lagarde Anoints Chinese Yuan. Will it Now Demolish the “Dollar Hegemony?”

IMF staff had determined that the yuan meets the requirements of being a “freely usable” currency, Lagarde said in a statement, so a currency that is “‘widely used’ for international transactions and ‘widely traded’ in the principal foreign exchange markets.”

China also overcame other hurdles the IMF had put before it, after numerous reforms to liberalize its currency and credit markets and offer more transparency. The IMF’s Executive Board has the final say, but Lagarde will chair the meeting. And the rubber stamps are lined up on the conference room table.

Some countries, including France and Britain, have already expressed support for the change. According to Reuters, a Treasury spokesperson said the US government has always backed the yuan’s inclusion if it met the IMF’s criteria, and would “review the IMF’s paper in that light.”

The yuan has arrived – at the elite club for the biggest currency warriors: the dollar, the yen, the euro, and the pound.

China has long sought to give its currency more global weight, both as payments currency and ultimately as reserve currency, given the enormous size of its economy. By being included in the SDR, the yuan moves a big step closer, becoming more palatable for central banks to add to their foreign exchange reserves.

Currency analysts peg central-bank demand for the yuan at over $500 billion, according to Reuters. But global foreign exchange reserves have been shrinking since last year, as this chart by NBF Economics and Strategy shows:

Global-foreign-exchange-holdings-q2-2015

…click on the above link to read the rest of the article…

China chooses her weapons

China chooses her weapons

China’s recent mini-devaluations had less to do with her mounting economic challenges, and more to do with a statement from the IMF on 4 August, that it was proposing to defer the decision to include the yuan in the SDR until next October.

The IMF’s excuse was to avoid changes at the calendar year-end and to allow users of the SDR time to “adjust to a potential changed basket composition”. It was a poor explanation that was hardly credible, given that SDR users have already had five years to prepare; but the decision confirming the delay was finally released by the IMF in a statement on Wednesday 19th.

One cannot blame China for taking the view that these are delaying tactics designed to keep the yuan out, and if so suspicion falls squarely on the US as instigators. America has most to lose, because if the yuan is accepted in the SDR the dollar’s future hegemony will be compromised, and everyone knows it. The final decision as to whether the yuan will be included is not due to be taken until later this year, so China still has time to persuade, by any means at her disposal, all the IMF members to agree to include the yuan in the SDR as originally proposed, even if its inclusion is temporarily deferred.

China was first rejected in this quest in 2010 and since then has worked hard to address the deficiencies raised at that time by the IMF’s executive board. That is the background to China’s new currency policy and what also looks like becoming frequent updates on her gold reserves. It bears repeating that these moves had little to do with her domestic economic conditions, for the following reasons:

…click on the above link to read the rest of the article…

 

China’s 1929 moment

China’s 1929 moment

Anyone with a nose for markets will tell you that the Chinese government’s attempt to rescue the country’s stock markets from collapse is far from succeeding.

Bubbles collapse, period; and government interventions don’t stop them. Furthermore, we are beginning to see a crack widen in the foundations of China’s capital markets that could end up undermining the whole economy.

Since the government owns the banking system, some of the knock-on effects will doubtless be concealed. A consequence for China is that domestic financial instability could threaten her current plans for the international development of her currency. Here the timing couldn’t be worse, because in a few months the IMF is due to announce its decision about the inclusion of the renminbi in the SDR*. The odds were in favour of China succeeding in this quest, on the basis that China was deemed to have fulfilled the necessary conditions, and the IMF itself has been supportive.

A 1929-style collapse in China’s stock markets would change this delicate balance. In mainstream macroeconomic theory, the only way China can resolve her excessive financial imbalances is to devalue the renminbi against other SDR currencies, hardly a good start for a new member. The IMF, probably egged on by the Americans, could be forced to defer its decision again, reviewing it in 2020.

This would be a bad outcome, given China has set her sights on joining the IMF’s top table. There can be little doubt that the recent announcement increasing her gold reserves by only 600 tonnes was made in the context of her desire for the currency to be included in the SDR. If she is rejected, China could swing the emphasis more firmly towards gold, which she owns and mines in abundance.

 

…click on the above link to read the rest of the article…

Greece Will Default On June 5 Without Deal, IMF Leaks

Greece Will Default On June 5 Without Deal, IMF Leaks

Another week came and went with no breakthrough in negotiations between Greece and its creditors. The IMF is now fed up and has reportedly refused to be a part of any new bailout program for Greece, after Athens drew down its SDR reserves to makes its latest payment to the Fund. That money will now need to be repaid and in a move that surely marks the new gold standard for absurd circular funding schemes, Greece will likely look to use the next tranche of IMF money to payback its IMF SDR reserve which it tapped to pay the IMF. The country’s public sector employees live in limbo, not knowing from one week to the next whether they will be paid and commuters are now subjected to a 50 second looped highlight reel of the Nazi occupation meant to rally the country behind the government’s quarter trillion euro war reparations claim (they might as well just ask for a ‘gagillion’) on Germany which has now become the symbol of tyranny and debt servitude for many Greek citizens.

Given the situation, one would be inclined to think that Alexis Tsipras would be falling all over himself to cut a deal with creditors because while giving up on campaign promises to voters isn’t ideal, it’s better than going down in history as the PM who sent the country careening into a drachma death spiral, and besides, giving up on campaign promises is something most politicians do all the time (it’s a job requirement for the US presidency). Alas we were back to the now ubiquitous ‘red line’ rhetoric on Friday as Tsipras continued to employ the “tell EU officials one thing behind close doors and tell the public the exact opposite a day later” negotiating technique. Here’s more from Bloomberg:

…click on the above link to read the rest of the article…

 

 

 

Europe Preparing Greek Bankruptcy Loan “In Event Of Grexit”

Europe Preparing Greek Bankruptcy Loan “In Event Of Grexit”

Earlier today, we learned that, contrary to what Greek government officials had been implying for the better part of a week, Athens did not have enough money to make a €750 million payment to the IMF on Tuesday. Instead, Greeceborrowed most of the money (€650 million according to unnamed officials) from its IMF SDR reserves. This money must be paid back within 30 days. This effectively means that the IMF paid itself and it sets up a hilariously absurd scenario wherein assuming Greece manages to convince creditors to disburse a €7.2 billion tranche of aid later this month, the IMF will send money to Greece, who will send it right back to the IMF to replenish an IMF fund, which was drawn down by the IMF to pay itself back for money it loaned to Greece a long time ago. Put simply: Greece has taken circular funding schemes to a whole new level.

Meanwhile, the IMF is understandably fed up and according to El Mundo, the Fund will not participate in a new program for the Greeks, something which German FinMin Wolfgang Schaeuble indicated may be a dealbreaker when it comes to structuring another bailout for Athens.

The takeaway: it’s likely over. Greece lacks the cash to keep up the facade and the IMF lacks the political will to perpetuate the farce any further. This suggests that both Greece and the creditors formerly known as the “Troika” will need to resort to Plan B. There’s a problem with that however — namely that EU officials have gone out of their way to make it clear that there is no Plan B, because to admit that such a plan existed would be to admit that the euro is in fact dissoluble after all, something which is taboo in polite discussions among European politicians. Here is but one example, via Reuters:

…click on the above link to read the rest of the article…

 

 

Greece Effectively Defaults To IMF Using SDR Reserves To “Repay” Fund; 1 Month Countdown Begins

Greece Effectively Defaults To IMF Using SDR Reserves To “Repay” Fund; 1 Month Countdown Begins

When Monday’s Eurogroup meeting concluded without an agreement between Greece and its creditors, it should have been game over for Athens. With pensioners at their breaking point and with local governments reluctant to comply with a decree mandating a sweep of excess cash reserves, the idea that Greece would somehow be able to scrape together €750 million euros to make a scheduled payment to the IMF today seemed far-fetched at best which is why we asked the following question Monday afternoon:

Where, if not from local governments who have been extremely reluctant to comply with Athens’ cash sweep decree, and if not from the IMF which will apparently not be paying itself tomorrow after all, is Greece going to get three quarters of a billion euros in the next 12 hours?

We now know the answer to that question. As Bloomberg reports, citing Kathimerini, Greece tapped IMF reserves to pay .. well, to pay the IMF:

 Greece used up ~EU650m reserves from its SDR IMF holdings account to meet loan payment of ~EU750m due to Fund today, Kathimerini newspaper reports, without citing anyone.

Reserves kept in IMF holdings account need to be replenished within one month

IMF agreed over weekend for their use, given Greece’s liquidity situation; without use of those reserves, payment due today wouldn’t be possible.

Reuters has a bit more color:

Greece tapped emergency reserves in its holding account at the International Monetary Fund to make a crucial 750 million euro (539 million pounds) debt payment to the Fund on Monday, two government officials said on Tuesday.

With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions later this month.

 

…click on the above link to read the rest of the article…

 

 

 

Gold, the SDR and BRICS

Gold, the SDR and BRICS

Last Monday there was a meeting in Washington hosted by the Official Monetary and Financial Institutions Forum (OMFIF) to discuss the future relationship, if any, of gold with the Special Drawing Rights1 (SDR).

Also on the agenda was the inclusion of the Chinese renminbi, which seems certain to be included in the SDR basket in this year’s revision, assuming that the United States doesn’t try to block it.

This is not the first time the subject has come up. OMFIF’s chairman, Lord Desai wrote a paper about it after the last Washington meeting on gold and the SDR exactly four years ago. The inclusion of the renminbi in the SDR was rejected in 2010 because of inadequate liquidity and is due to be reconsidered this year.

Desai pointed out in his paper that there are difficulties when it comes to including gold, because (and I think this is what he was trying to say) none of the SDR’s paper constituents are convertible into gold, but gold’s inclusion in the SDR would make them convertible through the back door. However, Desai seemed keen to re-examine the case for gold.

It should be pointed out that if gold is included in SDRs the arrangement cannot be long-lasting so long as the major central banks insist on printing money as an economic cure-all. However, China’s position with respect to gold and her own currency could be a different matter.

…click on the above link to read the rest of the article…

 

 

The Economic End Game Explained

The Economic End Game Explained.

Throughout history, in most cases of economic collapse the societies in question believed they were financially invincible just before their disastrous fall. Rarely does anyone see the edge of the cliff or even the bottom of the abyss before it has swallowed a nation whole. This lack of foresight, however, is not entirely the fault of the public. It is, rather, a consequence caused by the manipulation of the fundamental information available to the public by governments and social gatekeepers.

In the years leading up to the Great Depression, numerous mainstream “experts” and politicians were quick to discount the idea of economic collapse, and most people were more than ready to believe them. Equities markets were, of course, the primary tool used to falsely elicit popular optimism. When markets rose, even in spite of other very negative fiscal indicators, the masses were satisfied. In this way, stock markets have become a kind of dopamine switch financial elites can push at any given time to juice the citizenry and distract them from the greater perils of their economic future. During every upswing of stocks, the elites argued that the “corner had been turned,” when in reality the crisis had just begun. Nothing has changed since the crash of 1929. Just look at some of these quotes and decide if the rhetoric sounds familiar today:

John Maynard Keynes in 1927: “We will not have any more crashes in our time.”

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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