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Monday, February 27, 2017

BACKDOC UPDATE, 27 FEB

BACKDOC:  WE ALL KNOW WE ARE NOT RETURNING TO A GOLD STANDARD AS PER THE IMF, BUT AN ASSET-BACKED (GOLD, BLACK GOLD, AND OTHER QUALIFYING ASSETS)

CURRENCIES ARE BEGINNING TO RISE OUT OF THE ASHES OF THE NON BACKED CURRENCY WORLD.  

SOME OF THESE ASSET BACKED CURRENCIES WILL LIKELY BE 100% BACKED BY GOLD AS IS POSSIBLE WITH THE NEW DOLLAR!
 
YES WE ARE RETURNING TO A MODERNIZED GOLD STANDARD, IT'S CALLED THE NEW ASSET-BACKED DIGITAL DOLLAR! HEE HEE   DOC   IMO

Thunderhawk:   THE NEW DOLLAR AND TRUMP - WOW!!!!

Backdoc Alert

President Trump: Replace The Dollar With Gold As The Global Currency To Make America Great Again

Inside President Trump’s otherwise “standard Trump stump speech” at CPAC was nestled what might be a most intriguing observation:

Global cooperation, dealing with other countries, getting along with other countries is good, it’s very important. But there is no such thing as a global anthem, a global currency or a global flag. This is the United States of America that I’m representing.

There's a keen insight in there that could, just maybe, transform our lives, America, and the world. No "global currency?" Was this, with the poetic observation that “there is no such thing as a global anthem…or a global flag,” just a trope? Or could it contain a political portent with potential high impact on world financial markets? Let’s drill down.
As it happens, there is a global currency.

It’s called the "U.S. dollar.”

Most international trade is priced in dollars. The Bretton Woods international monetary system invested the dollar, which then was defined as and (internationally) was legally convertible to gold at $35/oz, with global currency status. France’s then-finance minister, later its president, Valéry Giscard d'Estaing, called the “reserve currency” status of the dollar -- its status, along with gold, as global currency -- an “exorbitant privilege.”

By this d'Estaing was alluding to the fact, as summarized at Wikipedia, that "As American economist Barry Eichengreen summarized: 'It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one.'" That privilege, which made great sense during the period immediately after World War II, became a curse.

In 1971 President Nixon, under the influence of his Svengali-like Treasury Secretary John Connally, "suspend[ed] temporarily the convertibility of the dollar into gold." That closure proved durable instead of temporary. The dollar became, and remains, the world's global currency.

What had been an “exorbitant privilege” devolved into an exorbitant liability. As my former professional colleague John D. Mueller, of the Ethics and Public Policy Center, formerly Rep. Jack Kemp's chief economist, writing in the Wall Street Journal in Trump's Real Trade Problem Is Money recently and astutely observed:

a monetary system based on a reserve currency is unsustainable, since foreign official dollar reserves (for example) are acquired and must be repaid in goods. In other words, the increase in official dollar reserves equals the net exports of the rest of the world, which means it must also equal U.S. international payments deficits—an unsustainable situation.

In other words, if President Trump wishes to address America’s merchandise trade deficit (balanced to perfection, of course, by a capital accounts surplus) he will find that allowing the dollar to be used as the global currency is the real snake in the economic woodpile. The dollar’s burden as the international reserve currency, not currency manipulation by our trading partners or bad treaties, is the true villain in the ongoing melodrama of crummy job creation.

Mueller’s Wall Street Journal column enumerates the three options open to President Trump:
First, muddle along under the current “dollar standard,” a position supported by resigned foreigners and some nostalgic Americans—among them Bryan Riley and William Wilson at the Heritage Foundation, and James Pethokoukis at the American Enterprise Institute.

Second, turn the International Monetary Fund into a world central bank issuing paper (e.g., special drawing rights) reserves—as proposed in 1943 by Keynes, since the 1960s by Robert A. Mundell, and in 2009 by Zhou Xiaochuan, governor of the People’s Bank of China. Drawbacks: This kind of standard is highly political and the allocation of special drawing rights essentially arbitrary, since the IMF produces no goods.

Third, adopt a modernized international gold standard, as proposed in the 1960s by Rueff and in 1984 by his protégé Lewis E. Lehrman …and then-Rep. Jack Kemp.

To “muddle along” would, of course, be entirely antithetical to Trump’s promise to Make America Great Again. It would destroy his crucial commitment to get the economy growing at 3%+ -- vastly faster than it has for the past 17 years -- which also happens to be the recipe for robust job creation and upward income mobility for workers. It also is the essential ingredient for balancing the federal budget while rebuilding our infrastructure and military.

To turn the IMF into a world central bank would, of course, be anathema to Trump’s economic nationalism. To subordinate the dollar to the IMF’s SDR would be equivalent to lowering Old Glory and replacing the American flag with the flag of the United Nations on every flagpole in America. Unthinkable under a Trump administration.

That leaves the third option, to “adopt a modernized international gold standard, as proposed in the 1960s by Rueff and in 1984 by his protégé Lewis E. Lehrman … and then-Rep. Jack Kemp” (whose eponymous foundation I advise). To this one should add, as Forbes.com contributor Nathan Lewis has shrewdly observed, the removal of tax and regulatory barriers to the use of gold as currency.

As I have repeatedly observed Donald Trump shows a strong affinity for gold. He has also shown a keen intuitive grasp of how the gold standard was crucial to having made America great:

Donald Trump: “We used to have a very, very solid country because it was based on a gold standard,” he told WMUR television in New Hampshire in March last year. But he said it would be tough to bring it back because “we don’t have the gold. Other places have the gold.”

Trump’s comment to GQ: "Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money."

Trump has been misled to believe that “we don’t have the gold. Other places have the gold.” In fact, the United States, Germany, and the IMF together have about as much gold as the rest of the world combined and America has well more than Germany and the IMF combined. [Note: This column has been updated to clarify that the United States has well more gold than Germany and the IMF combined but not, as originally stated, more than twice as much.]

We have the gold. Bringing back the gold standard would not be very hard to do.

https://www.forbes.com/sites/ralphbenko/2017/02/25/president-trump-replace-the-dollar-with-gold-as-the-global-currency-to-make-america-great-again/#57622cd4d543

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BACKDOC:  I LIKE THE FACT THAT THEY SAY CHINA WILL BE ONE OF THE FIRST TO COME ON LINE.  FORTUNATELY THE DOLLAR IS FIRST.  AMAZING THAT THE SWIFT IS ALREADY HOOKED UP TO 60 COUNTRIES AND WE ARE JUST BEGINNING TO SEE THE ADMISSION OF THIS.  MARCH IS GOING TO BE CRAZY IN THIS ARENA! DOC  IMO

Thunderhawk:  'Bityuan' Won't Kill China's Banks. Yet

Now it's becoming clear that China's central bank will be one of the first to issue a digital currency, it's legitimate to ask if "bityuan" will send the country's banking system over the edge. The short answer: Not just yet.An initial version of bityuan will probably be a tame affair.

https://www.bloomberg.com/gadfly/articles/2017-02-26/-bityuan-won-t-push-china-s-banks-over-a-cliff-yet 
BACKDOC:  BETTER SPEED, EFFICIENCY, AND SECURITY, ARE ALL OF THE AMAZING BENEFITS INDIA HAS DISCOVERED.   WITH MORE AND MORE COUNTRIES MOVING TOWARD THE DIGITAL REVOLUTION, THE LEADER OF THE PACK IS ABOUT TO STAND UP AND BE COUNTED!  THE REFERENCE OF VALUE (THE ASSET-BACKED DIGITAL DOLLAR) SHOULD BE ANNOUNCED NOW!  WILL HIS JOINT SESSION OF CONGRESS  SPEECH BREAK THE ICE?  MMMM    DOC   IMO

Thunderhawk:  DIGITAL INDIA. WE TOLD YA SO !!!!!

Backdoc Alert

A Billion Identities at Risk as India Goes Cashless

“It seemed like a fake identity was made up using my e-mail to corner government benefits,” he said. “Or it could’ve been a mistake. But I’m sure no one wants all his personal information leaked to strangers. And this is happening at a time when the government wants a cashless, digital India.”

Aadhaar is getting more attention: Modi, who scrapped 86 percent of India’s currency in early November to curb the illegal hoarding of cash, has urged citizens to enroll. With a 12-digit number assigned to users, Aadhaar is key to Modi’s plan to move transactions online. He wants to make it compulsory.

Saving Money

Modi opposed Aadhaar before coming to power, saying it violated national security and the privacy of citizens. Now, Aadhaar has become part of his push for cashless transactions in a nation where a quarter of the people can’t read or write but a third own phones that can be used for online transactions.

The direct transfer of state benefits through Aadhaar-based services has helped India save $5 billion, Information Technology Minister Ravi Shankar Prasad said in November. Modi’s office didn’t respond to calls seeking comment.

The database has multiple layers of technology and hasn’t received any complaint about security, said UIDAI Chief Executive Officer Ajay Bhushan Pandey. Still, there is a need to monitor private databases created with Aadhaar data, he said.

More than 46 million people have joined the program since Modi’s cash ban. Aadhaar is now a requirement for state recruitment, and the Reserve Bank of India allows the use of Aadhaar to verify customers for new accounts. The Aadhaar-enabled payment system is linked to 119 banks with 338.7 million recorded transactions, Prasad said Jan. 27.

https://www.bloomberg.com/politics/articles/2017-02-26/a-billion-india-identities-at-risk-as-modi-widens-digital-reach

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