Saturday, August 19, 2017

Currency Cloud; Doubling-Down on a Fractured Inflationary Policy

Do you really hold title on property that's stored on the cloud? I don't know about you, but I don't trust the cloud. There is something that makes me think twice about the idea of owning something that I can't store myself. Yes, I know that cloud purveyors of goods promise that we really 'do' own whatever it is that they're selling us. Yet, whether I buy music or software, I want to hold it in my possession; even at the risk of making a mistake and losing it due to a hard disk crash or something else.
Since humans begun to trade, holding title over property was essential, no matter how informal that title was. This is why, the medieval system was destined to fail. Only kings could own productive property such as land and other important resources. Let's also remember that in the communist system the concept of property title over any productive asset is eliminated. We all know where all communist systems went.
So what would you say if I told you that we are now briskly moving towards a cloud-based monetary system. The International Monetary Fund, the only central bank type in the world with a clean balance sheet, created the SDR's as a direct replacement for all world currencies; especially the dollar. An SDR is a Special Drawing Right, a debt instrument no different than the US dollar, issued by the International Monetary Fund.
Central banks around the world understood in 2008 that our present inflation-based monetary system based on the dollar as an exchange currency died the moment that real estate problems in the US affected the whole world. The patient almost died. As a result, all sorts of untested monetary drugs were created. These drugs were given to the patient in overdose fashion. Every major central bank around the world loaded its balance sheet with anything they could: government bonds, real estate, corporate debt and stock. But to understand why, we have to look back.
At the end of the 1990s, the main financial institutions in the world got together to rescue Long Term Capital Management, one of their own. This hedge fund managed by Nobel laureates faced collapse and damage to the financial system as their mathematical models drove them to overinvest in a defaulting Russia. This was a case where banks bailed banks out.
But in 2008, it was these banks that needed a bigger balance sheet to rescue them. This is where central banks entered the picture.
So what now that all the central banks around the world have destroyed their balance sheets? What will happen in the next recession? Who's going to rescue the central banks? The only institution with a clean balance sheet left his International Monetary Fund. To understand inflationary monetary fund one must understand Ponzi schemes. Both require larger players to enter the game. Yet, both will fail eventually. The catastrophic outcome increases in size as the Ponzi scheme gets bigger.
However, changing the monetary system is more than just changing one paper money for another. In the past, we went from gold or silver to paper, for example. This time, central bankers want to change the way property title works when dealing with money. They want to eliminate the cash-based society altogether.
At first sight, one could think that because of our extensive use of credit cards, we already have a cashless system. But this is not what central bankers think about when looking at cash.
Recently, interest rates when negative in several European countries. In essence, the lender pays the borrower a premium in exchange for the borrower placing the lender's money at risk of loss. Throughout history, if the borrower put the lenders money at risk, it is the borrower who had to pay the premium.
If assets like money or labor are free, how many should you get? All that you can, of course. So if money or labor pay you for taking advantage of them, how many should you get? I guess the only answer is: infinite. This is the absurd result from letting academics control our lives. To them, it's just a simple mathematical formula.
So how did citizens respond to negative interest rates punishing their savings? Instead of infinite spending or infinite lending they took the money out of the banks and held it in cash. This is because no matter where interest rates are, positive or negative, cash is a zero interest debt instrument. Consequently, central bankers went crazy. Their beautiful formulas didn't work. So what to do next? Perhaps rethink the formulas? No! Let's eliminate the stinky cash. Let's make all money virtual. In that way, no one can take money out of their interest rates system. Let's say that again. In a cashless society, there is no place to hide from central bankers.
Stock and commodities traders everywhere know that, when markets are extremely volatile, staying in cash is a very viable riskless alternative. Well, so much for that. No one will ever be able to do that again; or at least until we realize central bankers are not looking after our best interest.
But like everything else, a cashless society will also place every citizen within closer reach of government and those who influence it most. A real scary thought.
The IMF made China responsible for the launch of the SDR. In August of 2016 China issued the first debt instruments within the SDR system. Visit for more information about their progress. Their immediate goal is to securitize assets with these SDR's. Think about it. Securitizing US real estate during the early 2000s wasn't enough for bankers around the world. By the time those so-called assets were passed through the derivatives machine, bankers were really happy. Yet, everyone lost all sense of where real value lied. When the real estate bubble blew up, many were unsure of who owned the asset in the end. Many foreclosed properties stayed in limbo as it wasn't clear who in a series of titleholders was the final owner of the debt. It was akin to a musical chairs game where multiple people ended over a single chair.
The first SDR's in China where backed by tea leafs. One way to understand this is to simply look at commodity futures; contracts of things like cattle and coffee. Yes again, futures are derivatives that allow for extensive speculatory trading. Counting all gold future contracts being traded at any one time will prove that most of them are being traded for speculation and will never be turned in for commodity delivery. There are a lot more contracts that goods available. Moreover, while Goldman Sachs has every intention of making money from gold price fluctuations, they have no interest in receiving truckloads of bullion at contract expiration. As such, SDR create a natural shortcut for speculation.
The first real estate residential community in Dallas, Texas is been securitized with SDR's. Due to US regulations, no Americans can participate in such SDR's. Well, I'm sure Goldman Sachs has a way of going around the rules. But I sure can't participate.
It does sound fantastic to think that our next global currency will be based with real assets. But who said citizens would barter with SDR's?
Enter crypto currencies. The recent craze for Bitcoin and all the other copycaters represents the best early Christmas gift central bankers never asked for. They fell in love as soon as they got their hands on it. Let me explain.
One of the problems central bankers have is how to convince citizens to switch from physical currency to cloud-based currency. Fortunately for them, the market has created a solution to their dilemma. Central bankers don't have to convince anyone. People are tripping over themselves as they bid up the price of crypto currencies in fear to be left out.
I know that the promise of crypto currencies is one of a system that lies outside of government watch and control. But the IMF and central bankers are not keeping the secret; they have publicly announced their love for crypto currencies. Have you noticed the recent headlines that Goldman Sachs is recommending its customers to buy Bitcoin? Coincidence? Give me a break. After seeing the depth of corruption in our US system, I'm even in doubt of what real mom is. From Google, to Facebook, to Goldman Sachs, to Bank of America, to my local electoral polling system, I don't trust any of them. Here in Broward County, just south of where I live, there are 40% more registered voters than citizens. Broward county was won, hands down, by the Democrats. We even have 140-year-old voters who seem to love the Democrats.
Bank of America Refuses Cash
For Mortgage Payment
And if that's not enough cheating, asking to get more than $1,000 in cash from my Bank of America account could get me arrested. It seems that the bank's liabilities are now backed by my money in their possession. Understand this: If they fail, government won't have to bail them out. I am going to bail them out without being asked. It's all part of the new contracts every US citizen unknowingly signed.
So, are you still excited about having a cloud-based society? Ponder the question of who, in the end, holds title over your property and money? Now that crypto currencies have been incorporated into the IMF's SDR plan and after experiencing what it is to hold title over a cloud-based asset, you see how this begins to seem much more like a medieval system where the powerful reside within the castle and the rest of us toil the rented land while being the first exposed to elements and foreign attacks?
I don't know about you, but nothing about this Ponzi scheme bubble makes me like it at all. Central bankers and the IMF will promise SDR's as the next stage in a healthy and vibrant economy. I just don't buy it. We are simply gaining speed right before impacting the wall.

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