Abandoning the US$ for a Basket of Currencies is the Beginning of the End for America and the Global Sovereignty of this Once Great Nation
America is on an almost unstoppable Democratic juggernaut that will destroy this country.
10.7.2009
Written by Russ Magarity
Edited by Chris Janelli, CEO, Distressed Patriots for America
Howdy Folks,
I have been hunkered down all day and was lucky to get out of my pajamas. I didn't go to bed until dawn as I was following a regime changing event (in my mind anyway) that started to unfold last night that has been bothering me all day. I feel compelled to write about it.
You have to wake up America!
No kidding this time.
I think I have figured out what is going on out there, and you probably are not going to believe me, and may even think I have really lost it this time. Well I haven't, and I am worried; more so than usual.
Last night, I couldn't get to the newsletter because I was trading. Since we have a couple of new folks out there, you should know that I trade FX during London hours and usually I pass the time waiting on something to happen, by ranting and raving to amuse you. Well last night a couple of really REALLY important things happened:
The Reserve Bank of Australia (the “RBA”) raised their interest or bill rate 25 basis points. You see Australia is largely a hotel (tourism), a rock (mining) and a bank (financial center), but they do have a Central Bank that works like Central Banks are supposed to work, i.e. it protects the value of the country’s currency and acts as the inflation fighter through monetary policy. Australia is the first of the G20 (remember them they just met in Pittsburgh) to raise rates.
I have written about this before, but you have to understand interest rates to understand how the world works. In the case of Australia, they are a commodity driven economy, i.e. gold/minerals, oil, cattle etc. When these commodities are exported they are priced in US Dollars.
They raise interest rates to start slowing the economy, which undoubtedly is already slow, because they want to get ahead of the inflation affecting their currency, i.e. stop devaluing it, or watching local prices rise too rapidly from any stimulus, including how it may impact government bonds that were probably issued to pump liquidity into the system following our recent worldwide financial crisis and bank bailouts. Once inflation takes hold (and starts to rise), the yields on financial instruments have to go much higher to provide a positive return on such investments over and above inflation. Otherwise, why else would an investor invest?
What is important to understand here is that the RBA is on top of this and the US isn’t! The Australian dollar (the “A$”) jumped up over 100 pips on this announcement and now rests 29% stronger against the US dollar in just the last 6 months. What did our Fed do? A couple of Fed Governors were quick to respond saying our Central Bank will not be raising rates any time soon. Want to know why?
Because of the housing problem and by this I mean the banks holding the toxic crap on their balance sheets don't want any more of it. The peak of adjustable rate mortgages to be reset is not until Oct 2011. Also, the overall myth that we need to give the green shoots a chance is just delaying the inevitable because the US dollar will continue to weaken (barring temporary spikes associated with flights to safety when Israel decides to smoke Iran) given that hyperinflation is coming down the track. Watch for other countries to begin to raise interest rates too.
Now you might wonder why this is so important. Well, it is because at Bretton Woods the US convinced everyone that after WW-II ended the US dollar was as good as gold. We didn't need to be on the gold standard anymore, the rest of the world could simply depend on the United States of America and use the US dollar as the world's reserve currency. At the time I don't think they realized the side benefit of being able to print US dollars at will, but I digress.
At Bretton Woods the US convinced the world that any country's reserves could be held in US dollars instead of gold and henceforth world trade would be based on the almighty US dollar. Such is not the view today.
Oil exporters were convinced that they could and should sell their commodity (oil) in US dollars and then use those dollars to buy US Treasury bills, and in this way we could export our inflation in this petrodollar recycling scheme. However, the Arabian exporters soon found themselves losing money due to the devaluation of the dollar, and so started sniffing around at alternatives to re-price their commodity. Iraq was so bold as to actually try to start an Oil Exchange in Bagdad in order to sell oil in Euros. There are many conspiracy theories surrounding this as reason enough and alone for starting the first Desert Storm under Bush 41. If oil were to be allowed to be priced in something other than US dollars, the purchasers of oil would no longer need to buy our dollars; you have to know that oil can now only be bought and sold in NY and London oil exchange in US dollars and with such a fall in demand, the US dollar would have collapsed as well.
China has been a bit smarter because they have taken their stack of USDs, getting more worthless every day, and are running around the world buying up commodities and companies owning natural resources, buying billions in gold for their Central Bank reserves, as well as setting up what are called swap lines with a number of countries to diversify their foreign currency holdings. The latter would include the IMF currency, called Special Drawing Rights (SDR). Remember this about SDRs; they are a basket of currencies from the Central Bank of Central Banks. These are the folks that run around bailing out countries, in exchange for almost a complete loss of economic sovereignty.
American president Barry, while down in Pittsburgh hob knobbing with the G20 before jetting off to Copenhagen, essentially told the G20 as part of the apology tour that the US was no longer the “King” and agreed to submit and surrender our economic sovereignty to the IMF. Are you listening America?
OUR PRESIDENT HAS SOLD OUR NATIONAL SOVEREIGNY TO THE INTERNATIONAL MONETARY FUND.
Dick Morris writes about this sell out as follows:
“The result of this conclave, which France's president Nicolas Sarkozy hailed as "revolutionary," was that all the nations agreed to coordinate their economic policies and programs and to submit them to the International Monetary Fund (IMF) for comment and approval. While the G-20 nations and the IMF are, for now, only going to use ‘moral suasion’ on those nations found not to be in compliance, talk of sanctions looms on the horizon.
While the specific policies to which the U.S. committed itself (reducing the deficit and strengthening regulatory oversight of financial institutions) are laudable in themselves, the process and the precedent are frightening.
We are to subject our most basic national economic policies to the review of a group of nations that includes autocratic Russia, China and Saudi Arabia. Even though our gross domestic product is three times bigger than the second-largest economy (Japan) and equal to that of 13 of the G-20 nations combined, we are to sit politely by with our one vote and submit to the global consensus. Europe has five votes (Britain, France, Germany, Italy and the EU), while we have but one.
And the process will be administered by the IMF, whose counsel to less-developed nations over the past two decades has consistently called for social pain and economic austerity. The IMF's misguided policies have been responsible for more revolutions than Marx, Engels, and Lenin combined. Its bureaucrats' arrogance is legendary, and its search for appropriate punishments to fit the crime of spending too much on the poor smacks of colonialism and imperialism. They are our new overseers.”
But all this is not what got me all twisted up; pissed off yes, but not twisted. What started me thinking was watching the price of gold, which hit a new high today at $1045 spot price. What is significant is why it jumped some 24 dollars. It was because it was leaked that there was some secret meeting of Gulf States to ditch the dollar as the “go to” global currency. Apparently there are ongoing discussions among not just oil states, but also including Russia, China, Japan and France as co-conspirators to dump the dollar in favor of a basket of currencies that guess what? DOES NOT even include the US dollar as one of the basket’s currencies! But it will include the Yen, Yuan, Gold, and SDRs or some sort of Arab League unified currency. (Source: the Independent in UK and WSJ)
If this is true folks, we are in for a rough ride and it may be the beginning of the end for the great USA. If and when this idea of dumping the dollar gains traction, it will fall like a rock on America because this inept and inexperienced administration HAS NO ECONOMIC PLAN; I believe that is on purpose. There is no other explanation.
We are on the road to intensifying America’s economic and financial problems all the more with a ram through Health Care package that will cost trillions; Cap and Trade legislation that will raise both energy prices and consumer product prices that are manufactured with energy (what isn’t?) and export more jobs, all because of controversial unscientific findings that are being forced onto Americans. The Stimulus packages to date have done nothing productive. AND seemingly there appears to be a government agenda that is designed to bankrupt America for some power play that will put the United States of America at the mercy of the IMF or the United Nations.
Please Wake up and do something. A crisis unlike anything this country has ever seen is coming and we are going to be asked to submit to the very folks that brought us the crisis. There will be no free market left and you can forget about freedom.
I don't know who is behind all this, but I do know this didn't just get dreamed up yesterday and rolled out in the past ten months; this is way too much way too fast. We had better just stop everything until we know where all of this is going. Email, write and telephone all your Congressmen and women to “Just say no” and put the brakes on this rush to disaster.
I am not going to be trying to explain to my kids and grandkids how I just sat around and let this happen. I used to think that we might stand a chance to clean up this mess by throwing all these bums out next November. Now I am not sure we have the time. If you don't believe me, then at the very least stick this commentary in the back of your mind and be vigilant like you have never been vigilant before.
Watch your stock portfolios and put in trailing stops or stop losses. Bonds are no good either; remember who owns all our debt. Forget that no one is buying, wait till you see what happens when they start selling. Please consider diversifying some money into Foreign Currency CDs (see Everbank. I know they don't pay any interest. If I get enough inquiries, I will talk about what I like and why).
Please “inflation proof” your portfolio with some positions in hard assets, i.e. gold and commodities, and if you have a lot of cash to hang in for the long term look at real estate. If you own a variable rate mortgage you are not paying attention, get into a fixed one now. (If you are already protected with some of these suggestions, well you had also better learn how to use a gun and stock up on ammo and seeds to take it to the next level.
The Boy Scouts have it right. Be prepared. I hope I’m wrong about all of this, but I sure do not see a way out given this administrations inept rush to national implosion and global subservience. The only alternatives I see begin with STOP. This country has to get real discussion going about real issues and solutions, not huge government run social programs, which the government has proven time and again they can’t run. The truth wouldn't hurt either, but where’s the media? I am afraid the fix is in and America is on an almost unstoppable Democratic juggernaut that will destroy this country. I may not have it all right, but if I am you won't have time to get out from under the collapse.
Best to protect yourself. And start fighting back in 2010 by VOTING our the political idiots who think a weakened America and subservience to foreign countries – global community organizing? – is in the best interest of the greatest country in the world.
Good night
Your humble writer, Russ Magarity
PS This is not about fear; it is about surviving this administration fueled insanity.
About Russ Magarity
Jackson, Wyoming Distressed Patriot Russell Magarity and Chris Janelli, Chief Distressed Patriot, have been business associates and close friends since working together at Chase Manhattan Asia in Hong Kong. Russ grew up in Cuba and Panama and graduated from High School in Peru. He received a BA in International Relations from the University of Oklahoma (Norman), an M.B.A. from the Universidad Autonoma de Guadalajara (Mexico), and a Masters in International Management (with Distinction) from the American Graduate School of International Management (Thunderbird).
Russ spent his career with Chase running countries and managing corporate finance businesses in Brazil, Mexico, Hong Kong and throughout SE Asia. Prior to joining Chase, he served in the US Navy for 9 years first as a Midshipman and Naval Aviator. As a carrier pilot, he served 3 tours in Vietnam and flew over 250 missions.
|
2.8.2010
When the Census Clowns Come Knocking, Remind Them the U.S. Constitution Enumerates Exactly What You Need to Answer; and Nothing More
I love my country, but I am appalled by my government
12.21.09
The Republicans Had 6+ Years to Legislate Changes to America's Health Care Problems
12.15.09
Nobel Peace Prize Recipient Honest Al Say's Planet Core Millions of Degrees Hot
For all the hoopla, earth's atmospheric temperature has risen one half of 1% in the last 100 years.
12.11.09
Meet Ted Cruz, the Republican Obama
Republican leadership must speak to the values of mainstream Americans; there are few doing that. The Republican Party must elect people who have firm principles; backbone and the ability to communicate.
12.10.09
American Prisoner Labor to Put More Americans on Unemployment
The title of their new playbook should be: American Gulag by Barry Soetoro and Van Jones
11.8.09
THE SCIENCE OF CLIMATEGATE, MULTIPLE SCLEROSIS, AND THE PSYCHOLOGY OF PARADIGM CHANGE
What Might They Have in Common?
|
