ZeroHedge wrote a piece on the latest Thunder Road Report regarding our march towards the new financial system. After all, the signs are there as outlined below.
the two remaining “sacred cows” preserving the US dollar as the world’s reserve currency are:
- The belief that the Chinese will continue to buy US Treasuries; and
- The US dollar will maintain its monopoly on world trade.
Regarding number one, the Chinese have been sellers since the end of July 2011 (note the date). With regard to number two, have you noticed how China has set up currency swaps with nearly all of its trading partners? Have you noticed how Iran has been excluded from the SWIFT system and has begun selling oil to some countries in currencies other than dollars?
China has been preparing for dollar devaluation for nearly a year now, but hardly anybody has noticed. While everybody frets about the Euro, the dismantling of the US dollar’s reserve currency status is occurring within plain sight. I think a deal was done between the US and China in late Summer or early Autumn of last year. Have you also noticed how Ben Bernanke has used just about every unconventional method of monetary policy he’d discussed in his earlier writings on preventing deflation…bar one big one? Dollar devaluation. Let me repeat that, dollar devaluation.
We are heading into a truly mega-financial crisis. This is (another) classic “I hope I’m wrong, but…” report. I think the crisis is going to result in the transition to a new financial system as the current one implodes. Best guess is that it will be either happening, or perfectly obvious that it’s going to happen, within 6-12 months, i.e. within our investing time horizon.
This report connects a lot of dots and analyses each one of them. The dots include:
Dot – Loss of US AAA credit rating in August 2011
Dot – China lashes out at US “addiction to debt”
Dot – Peak in Chinese holdings of US Treasuries
Dot – China starts selling US Treasuries
Dot – Surge in the gold price in August 2011 followed by steep decline
Dot – Lock down of the gold price (using “paper gold”) ever since
Dot – Movement of large quantities of physical gold from London to Asia (notably China)
Dot – Collapse of MF Global
Dot – Radio silence on China being a currency manipulator
Dot – Exter’s Pyramid playing out in front of our eyes
Dot – Iran excluded from SWIFT system
Dot – BRICS countries signed the Master Agreement on Extending Credit Facility in Local Currency and the Multilateral Letter of Credit Confirmation Facility Agreement
Dot – US granted China a 6-month extension on sanctions for buying Iranian oil (India already had one)
Dot – Revisiting Bernanke’s old speeches on deflation
Dot – Operation Twist
Dot – Comments by World Bank President, Robert Zoellick
Dot – BIS proposal to upgrade gold to a zero risk weighted asset in line with sovereign debt as part of Basel III
Dot – Comments by Robert Rubin (“consigliere” to the elite)
Dot – Recent meeting between Kissinger and Wen Jiabao
Dot – Why debt deflation now would paradoxically precipitate hyper-inflation
Dot – Demise of the middle class (theme)
Dot – Putting all of the above in the context of the fourth (and ongoing) price upwave of the last 1,000 years
Dot – How each of the three earlier price upwaves came to an end.