Guest Post: A Look Ahead To 2018 from James Gibson

With all the recent talk of the death of the petrodollar, and the rise of the petroyuan, with the possibility of the Chinese yuan eventually assuming the mantle of the world’s premier reserve currency, I thought that Turdites might be interested in an extract from my book: FROM WEST TO EAST: The Greatest Transfer of Power and Wealth in the History of Mankind

This particular subject matter is covered in greater detail in the book, particularly the pros and cons, but it should give Turdites a flavour of what might lie further down the road, as the global dominance of financial and economic power gradually passes from the USA to China.

I have thought about producing a second edition of my book, updating it by incorporating recent developments, but decided against it, because predictions made in the book are now increasingly beginning to unfold, and I wish the contents of the book to stand, and going forward, recognized as being prescient.

For those Turdites that have not yet purchased the book, I believe it is a worthwhile purchase, as it becomes more relevant by the month, and ties together many apparently diverse and seemingly unconnected events, which are shown to very much linked, and part of a very carefully prepared, long term plan to create a One World Currency, and a One World Government. But a world which none of us would willingly choose to adopt.

The Chinese-Russian bloc have regularly lobbied the G20 since 2008, to have them agree to, and draw up, the basis for sweeping reforms to the current international financial system. Such reforms should not only address the symptoms, but also the root causes of the current, challenging, financial and economic problems being faced by the world, which includes the acceptance of a multipolar world, rather than the current USA dominated unipolar world. The USA obviously strenuously seeks to maintain and defend the current status quo.

In my opinion, it is not worth worrying about events over which one has no control. However, the book should provide food for thought as to how one might minimise any negative impacts, and perhaps enable people to come out ahead, particularly if one is prepared to keep an open mind, and think globally. The relevant extract from the book now follows:

The Expansion of the Special Drawing Rights’ Role Appears Convenient to Both West and East

The Chinese have all the necessary building blocks in place to support a new international financial system independent of the US dollar. They have worked extremely hard, and since 2008 with increased intensity, to reach their current position.
The Chinese focus is now on promoting the internationalisation of the yuan, establishing an oil futures exchange priced in yuan, and refining their various financial systems and institutions so as to be in a position to provide a seamless international financial platform across the full spectrum.

All things considered, it is highly likely that the Chinese preference would be to have more time to refine and bed in their financial systems in an orderly manner. However, bearing in mind the current fragile state of the international financial system, and the increasing Second Cold War tensions, circumstances might well overtake them, necessitating a baptism by fire.
At this point in time, there are two types of SDR: the O-SDR (“O” stands for Official and is only traded between national central banks), and the recently reintroduced M-SDR (“M” stands for Market, for trading on the open financial markets). The M-SDR has recently been reintroduced for use as an investment vehicle in the form of bonds initially available in the Chinese market. These bonds will be purchased with yuan, and upon maturity, they will be settled in yuan.

China’s renminbi/yuan officially became a component of the basket of currencies that are used to value the SDR on 1 October 2016. The SDR currency weightings are now as follows:

• The US dollar has a 41.73 percent weighting.
• The euro has a 30.93 percent weighting.
• The Chinese renminbi/yuan has a 10.92 percent weighting.
• The Japanese yen has an 8.33 percent weighting.
• The pound sterling has an 8.09 percent weighting.

It is important for the reader to realise that the SDR is just another fiat currency. It has no backing whatsoever other than the faith and confidence in the financial standing of the IMF. The involvement and weighting of the five currencies mentioned above is solely to provide a mechanism for the calculation of the SDR’s value in the foreign exchange markets. Just like any other fiat currency, it is created out of thin air.

A   2009 article written by Zhou Xiaochuan, governor of the PBOC (Peoples Bank of China) , was posted on the official PBOC website, in both Chinese and English, in which he called for a sweeping overhaul of the global monetary system. In that article he stated:
The price is becoming increasingly high, not only for the users, but also for the issuers of the reserve currencies. Although crisis may not necessarily be an intended result of the issuing authorities, it is an inevitable outcome of the institutional flaws.
Special consideration should be given to giving the SDR a greater role. The SDR has the features and potential to act as a super sovereign reserve currency.

This indicates to the writer that China has no aspirations to see the yuan replace the US dollar in the role of the world’s premier reserve currency, because the “price is becoming increasingly high,” and suggests that in China’s opinion, the SDR is best suited to the role of the world’s premier reserve currency, because the IMF has no trade deficit or surplus.

SDR policies and strategy would be driven solely by its role as a reserve currency, whereas the US Fed is continually conflicted as to its US dollar strategy, as it impacts both domestic and international markets. What is good for the US domestic market can be detrimental to the international market and vice versa. Using the SDR would eliminate any such conflict and seems a pragmatic solution, but there are cons as well as pros, as will be highlighted shortly.

In his article Zhou went into some detail as to how the O-SDR could become a reserve currency, which included:
using the O-SDR for the settlement of global trade and financial transactions and
promoting the O-SDR in the pricing of commodities, trade, and investments.
Zhou also wrote:
The basket of currencies forming the basis for SDR valuation should be expanded to include currencies of all major economies, and the GDP may also be included as a weight. The allocation of the SDR can be shifted from a purely calculation-based system to a system backed by real assets, such as a reserve pool, to further boost market confidence in its value.
With the O-SDR now actively being considered for an expanded role, it would make sense to include all the G20 currencies in the SDR basket. It would also make sense that the O-SDR have some tangible backing, as suggested by Zhou. Gold would be the obvious choice.

It is very likely that the O-SDR is viewed by the Chinese as a way to sidestep the yuan being looked upon as a potential future successor to the US dollar as the world’s primary reserve currency, as they view the downside of that role as being a route to possible continuous trade deficits, something that they seek to avoid.

The pricing of commodities, including energy, in O-SDRs would certainly assist China in its stated policy to reduce reliance on the US dollar. It would also be the death knell of the petrodollar.

The Puppeteers and TPTB may well be supportive of an expansion of the O-SDR’s role, as they would probably view that as a stepping-stone to the creation of a One World Currency, even at the expense of the death of the petrodollar. Remember, the Puppeteers and TPTB do not think in terms of individual nationhood per se; they only look at the global picture and how they can make something work in their favour within the context of achieving their ultimate goals.

So, for very different reasons, both the West and the East appear to be in favour of expanding the role of the O-SDR into that of the world’s premier reserve currency.

62 Comments

s1lverbullet's picture

1st

Just because

ArtL's picture

PMs looking good this morning

What happens to a beach ball that is let go after being held under water?

Lurker's picture

In the spirit of looking ahead to 2018...

https://blog.smartmoneytrackerpremium.com/2017/12/the-surprise-for-2018.html

Gary Savage also sees rough roads for the dollar.

streber's picture

Re, re, the EO

this is "Freddie" in the comments...

(George Webb has been covering all this)

here is a pretty good video about Eric Schmidt, Google and Darpa. We all thought the Google boys, Zuckerberg, Bezos and the rest of the wunderkind in Silicon Valley were cut out fakes. They get a good idea and then get Deep State backing.

Many citizen journalists on youtube are often well meaning but do not know that much. This guy nails it how Schimdt was a Bell Labs (aka NSA USSA Inc) exec-thug. Goes to Sun Microsystems, Novell (spy on networks), then Google.

Schmidt is an evil POS. Building killer robots, probably human cloning on the Google ship, the Google data centers spy on everyone and some wacky satellite based global wi fi?? Good stuff.

Helped rig 2008 and 2012 elections - they also put McCain and Romney in to lose. Tried to rig 2016 too.

I hope Schmidt is hanged for treason.

RickshawETF's picture

fifth

2018 is lookin' good!

Angry Chef's picture

BREAKING: Roy Moore has not conceded! Massive voter fraud in....

....Alabama

https://conservativepost.com/breaking-roy-moore-has-not-conceded-massive-voter-fraud-in-alabama/

With all the exposure of the corruption of late would this really surprise anyone.

Beez's picture

@Lurker...Thanks!

Info in your link will save me some money.  I was going to transfer some money from a CAD acct. to USD acct. today. Checked currency exchange and yep, dollar going down.

AGXIIK's picture

James Events in 2018 will move so fast

you'd need a squadron of keyboard monkeys pounding out revisions from page 1 to keep the second edition current  with events.  

Even a million monkeys on a million keyboards couldn't write the Tale of 2018.  It'll  unfold at a blistering pace, catching even the most aware of us by surprise.  The best most of us can come up with will be the inevitable statements:

"We've been vindicated, finally"

"I knew this was coming,  eventually"

"This does not surprise me a bit"

"It's high time this happened"

"Couldn't have happened to a group of scumbags"

Unlike  the  generic, breathless but short-lived sagas of the last 8 years, most of which rolled out of sight like tectonic plates,  brought back 4 years later by Jim Willie, reminding us he predicted that thing and was right along (and he was),  2018 will be a seminal year that could start the beginning of the end of the evil empire.  

Speaking of which, we finally got some decent seats to the new Star wars movie.  Hopefully gold will hit $1,300 before the film ends today  

All we need is the price out our tickets in the bump of gold price and we're---Golden.

Markedtofuture's picture

BRICS the Rise & Fall

Posted Dec 27, 2017 by Martin Armstrong

The first thing to go when a country is moving into economic crisis is the arts. This is intermixed with various social programs. As the economic crisis broadens, demand for taxing the rich rise. However, all this accomplishes is to cause capital to hide and hoard even more refusing to invest or spend and this then adds to the economic decline.

The BRICS were touted as the new rage in the world economy. The BRICS were even holding their own summits and they were supposed to surpass the G7, were all the forecasts. Brazil, Russia, India, China and South Africa became known as the “BRIC” nations back in 2001 which was a term coined by of course Goldman Sachs.

This curiosity about how the BRICS would displace the G7 as the world leading economic power was up there with the DOT.COM bubble and more recently the BitCoin Bubble. This five-country association of emerging economies has demonstrated that such hype of counting on such fades to alter the future have always ended in disappointment.

Russia ran into an economic headwind and sanctions, China has slowed remarkably and has now shifted its focus to try to build its internal economy as we see in Suadi Arabia and the UAE in the Middle East. India committed suicide trying to force its economy out of a cash-based economy with his leftist Prime Minister who has done far more harm to India than good.

South Africa has seen political change sweeping the nation because of the failure of this BRIC dream. The new ANC government of South Africa wants to nationalize the central bank and expropriate the white minority. They want to now take control of the central bank 100% and you know what that means – total economic disaster. The bank will now become the political tool of government divorcing any economic management whatsoever.

Then there is Brazil, burdened with corruption and everything within the social structure is collapsing. The symbol of this economic failure is the effective closure of its Rio de Janeiro’s splendid Municipal Theatre which has gone dark as months of unpaid wages forced ballerinas and opera singers into poverty.

https://www.armstrongeconomics.com/armstrongeconomics101/economics/brics-the-rise-fall/

OOOBuck's picture

BRICS - was never really an alliance like the G7

and it's inaccurate to portray it as such.  It's also much to soon to rule some or all of the BRICS out the game. 

A more accurate appraisal is that of the health and unity in the G7.  With a declining G7, the gauntlet will be picked up by others and the most likely 'others' at this time appear to be Russia and China at the core with India, Iran and Turkey on the periphery.  But WTFDIK

boomer sooner's picture

Pulled this comment

From the PBOC chair in the 4th paragraph above.

"The allocation of the SDR can be shifted from a purely calculation-based system to a system backed by real assets, such as a reserve pool, to further boost market confidence in its value."

Last time I looked, the US had zero reserves and a pile of unaudited gold.  Now, not having reserves is understandable due to being able to digitally conjure out of thin air all the reserves needed, but if the ODSR required reserves that are tangible and audited, the US is fooked.

I would imagine the MIC would not be a happy go along.

RickshawETF's picture

Pearl of Wisdom from John Hussman

Posted today on ZeroHedge:

"Frankly, the notion that corporate tax cuts will unleash some renaissance in U.S. real investment and growth would be laughable if the bald-faced corporate giveaway wasn’t so offensive. The policy not only vastly favors the wealthy, but is even more preferential to wealthy individuals who take their income in the form of profits rather than wages. The current tax legislation isn’t some thoughtful reform to benefit Americans. It’s a quickly planned looting through a broken window in our nation’s character."

lakedweller2's picture

@AC

Moore needs to convince someone in the Secretary of States office or the Ag.  Wildass claims and requesting funds from voters is not getting the job done unless he is running another scam for funds.

Call the Secretary of States Office and provide proof.  Or find someone that actually can prove something. Or validate your postimgs. Enough is enough.

He was a bad judge and a bad candidate.  Racist, homophobe, self centered, power seeking, fascist.  

jaba's picture

@boomer sooner

It is very questionable, as to whether or not there will be time to establish the O-SDR as the premier reserve currency, but the possibility is examined in the book, as it cannot be discounted.

The IMF has its own official gold reserves of twenty-eight hundred tonnes. However, there is a question mark as to whether or not the IMF holds that gold on a segregated and allocated basis, or whether it is commingled and also included in the official gold reserves of the relevant IMF member nations. Ergo, is the IMF gold being double counted, appearing both on the books of the IMF as well as the on the books of the relevant national central banks?

Yes, it is entirely possible that the USA does not have the physical gold to even put up their share of the gold backing for the O-SDR. There are other cons which are also covered in the book.

The current international financial system is so dysfunctional, and subject to such egregious abuse, that it is long overdue substantive reforms. Why not start those reforms with the expansion of the O-SDR's role and fully back it with gold?

The 'Puppeteers' control the MIC. If they thought that participation in the creation of an O-SDR would materially assist them in achieving one of their principal goals, that of a One World Currency, then they would be prepared to examine the possibilities.

From a pragmatic viewpoint it is very unlikely that a gold backed O-SDR could be agreed upon, and up and running, before the wheels fall off the financial markets. When the wheels do fall off the financial markets, IMO, that it be crunch time for the G20. If unanimous agreement cannot be quickly reached, as to what reforms need to be introduced to address the root causes of the problems facing the international financial and economic systems, then the Chinese-Russian bloc will most likely go its own way, with the possibility that some of the major G20 countries join them.

That would free up the Chines-Russian bloc to swiftly introduce those reforms deemed necessary to bring order and confidence back to their newly revamped international financial system, which would probably include, amongst many other initiatives, either the BRICS New Development Bank or the AIIB issuing a gold back equivalent to the O-SDR in support of international trade.

Angry Chef's picture

lakedweller2

Time will tell. I'll call Dom Lemon at CNN and see if he can verify for me. I'll get back to you.

Mickey's picture

tax benefit to Corporations IMO

was done to defer a crash. Increase EPS also helps money managers via AUM.

in the end though, PEs cannot remain at multiples of growth--the numbers for the future ROI do not work.

another reason to pump corp earnings and thus stock values is to keep pensions going. last thing pensions need is a 50% asset decline as that  means if the  asset decline is more than a week or two, the funds start eating up assets to pay benefits and if the plans run out of assets in a few years even a recovery will not help.

by the way, its also corp pension plans that get in the worst type of trouble and as well the government plans around the country, city, county and state.

The rank and file population does not grasp the  gravity of unfunded soc sec , Medicare, medicaid, prescription drugs, Obamacare and all the pension plans.

canary's picture

@Lakedweller....

"Power seeking and self centered"...Quite a popular trait there.....The more they talk about the People, the more they think about themselves.

Btw... Buying CDE now...Will add to my Novo position after New Year...very tempting to do it now.

Markedtofuture's picture

2018 Predictions & Beyond – Almost All Positive – Clif High

By Greg Hunter’s USAWatchdog.com 

Internet data mining expert Clif High says he’s “heartened by the positive nature of the information” he’s received in his latest report. Clif High uses something he calls “Predictive Linguistics,” which sorts through billions of bits of information to predict future trends and events.  One of many big predictions Clif High made several months ago involved sexual misconduct would be revealed, especially in the mainstream media.  So, are the sexual misconduct revelations over?  Clif High says, “No, the part we saw in 2017 was kind of like the titles.  We’ve got the main feature coming up in 2018 and in 2019.  The volume of words involved in this scandal is going to quadruple or larger.  It will take a couple of years to lay out.  It will also involve a third or more of Congress, many of whom will elect to not continue in order to sidestep or try to sidestep legal issues as a result of their past behavior. . . . The data sets seem to indicate that some of the people taking hits now are doing so because they know there are far worse crimes they could be accused of, and so they are happy to get out of town, or get out of Dodge on just this little charge so to speak.”

So, does President Trump win the so-called “Fake News” war? In a word, Clif High says, “Yes. . . .  It’s been kosher for the media to lie because they have been given some level of protection with their propaganda act.  The data is suggesting that somebody is going to find a legal way to sue what we call the mainstream media for, I guess you could say, consumer fraud.”

Clif High says there is good news coming, but not just for 2018, many years after. Clif High explains, “There is a really interesting set of data that’s been building for some time, and we have had this big flush of long term data, which is why I decided to do this report that is going out five years.  I named it the “Soaring Twenties,” even though we are not into the 2020’s. . . . Our 2020’s, to some extent, are replicating the kind of language in the newspapers and limited news reels they had at the time of the 1920’s.  Only instead of being “The Roaring Twenties,” we’re going to have a “Soaring Twenties” because it’s a combination of an economic boom and a technological boom that are feeding off each other.  This positive feedback is being sparked around the language of the (Trump) tax redo.  It’s not a reform, it’s a total redo. . . .The money coming back is going to create a resurgence.  A new kind of American is going to be rising out of this resurgence.  We are going to be in a new great generation forming, not the Millennials, but the ones that are behind them.”

Clif High also talks about a coming “bond debacle,” soaring gold and silver prices in 2018 . . . the future of Bitcoin and other crypto currencies, legal actions taken against the bad actors in government and the “Deep State.” Clif High also predicts some “fantastic levels of business failures.”

Join Greg Hunter as he goes One-on-One with Clif High of HalfPastHuman.com.

https://usawatchdog.com/2018-predictions-beyond-almost-all-positive-clif-high/

lakedweller2's picture

@Canary

If Moore or anyone can prove voter fraud, then I am all for it.  I would rather have a bad candidate win than a corrupt system.  If the State officials are allowing corruption to occur, then take the complaint Federal.  If Federal doesn't help, take it to the Press.  If they can't force recognition of factual fraud, then we are all screwed.  But, why does Moore need money, if there are no pending procedures.  

Anyway, CDE has performed well during up moves but, like First Majestic, it goes down heavy also.  Last December, I sold some First Majestic, CDE and EXK for gains to offset oil stock losses.  All 3 tanked and stayed down during 2017, but I didn't have enough gains this year, so I held them.  But, I think all 3 will out perform if miners allowed to enter the world of the living. My guess all 3 on the lists of managed money favorites if miners get by the moving average thresholds that TF keeps us up to date on.

happycamper515's picture

low volume week

Hopefully we can get a disproportionate move up in the PMs this week with very little change to the COT due to the light volume.

silver10sguy's picture

Exodus Crypto Wallet

I was impressed by the Exodus wallet at first glance so decided to email one of the CEO's with a "congratulations."   I shared that I had enjoyed my first impressions and loved its simplicity.  I also shared I was presently storing crypto in a KeepKey device.   He replied quickly to thank me and surprised me to say that the bulk of my crypto was safer in my Keepkey device.  What?  Guess I will follow his advice. 

AGXIIK's picture

Globalist cash repatriation

Good point  Mickey.    I've read a bit about where that  $3-5 trillion in offshore cash held by big corporations and the like will land once the new tax bill is law.  

It's expected that more than 80-90% will be used for corporate stock buy backs.  That translates to higher faux profits, stabilized PE ratios, support for the unicorn FAANG prices and bigger dividends plus stock bonuses and rewards for those at the top of the chain and who control how the cash is spent.  All I'll got is a $5 discount for a new Apple I phone.

Their political influence, bribes, contributions and other baksheesh no doubt controlled and tipped the vote to approve this bill.  

Like I said the other day, this one part of the bill is a trickle up for the 1% that makes Niagara falls look like wet spot.  The rest of us get the trickle down effect, just enough to get a BOGO Mickey D Happy meal.

Like the man said "Don't piss down my neck and tell me it's raining"

I'd say this entire tax bill scam can be summed up in the words of Bob Corker, a retiring senator worth around $40-50,000,000.  His income real estate LLC pass through was logged in at $7,000,000 in the last tax year.  This scum bag is either criminally stupid or stupidly criminal.  He actually said

"I didn't even notice this in tax bill.  It'll  make me a lot more money if it's passed"

Yes, this deviant SOB voted for it.  

He was as likely to have missed that tax saving measure as I would miss noticing that Melania Trump has a really sweet derriere.  

Keep stackin'   Gold $1,300 here we come

One more comment  Jim Rickards mentioned Ice Nine again, noting that the interconnected markets are so tied together that when one fails they all fail  That will include Bit Coin and could even hammer PM prices as people dump them to get liquidity.  

The Brisbane Agreement of 2014 was signed by the G20 as a measure to both mandate that all bank accounts (presumably stock accounts) would be considered unsecured liabilities on financial institution balance sheets.  Unsecured creditors get nothing when the crash comes. 

This agreement also recognized BAIL INS as the preferred means of saving failing financial institutions rather than the old school tax payer supported bail outs.  Thus the customer's money will be used to stabilize the bank, pay creditors, save shareholders, pay interest on non-performing loans and provide general liquidity to secured creditors.  Any outside claims from super collateral creditors would be paid immediately.  Greece and Cyprus were testing grounds for bail ins.  The EU just made their form of FDIC insurance optional. In other words those accounts protected by insurance are no longer insured in times of financial crisis

I can only say this.  We are being set up like ducks in a gallery. When the crap hits the fan we lose

matt_'s picture

My article on Seeking Alpha

Here is my look at the Treasury charts written up in full article form:

https://seekingalpha.com/article/4134147-treasury-yields-point-looming-bear-market-2018

I just did this for fun, but if I get enough clicks I will be paid.

rhammelman's picture

GLD and SLV

My GLD and SLV March call options are looking much better now from 12/13 entry.  Relief in sight.  Thanks Turd for the suggestion.  Happy Gold and Silver New Year!

lakedweller2's picture

@matt

Great article.  Taking on the big boys. Sound argument and charts.

NW VIEW's picture

Break Time!

 The day finally came, the fan had been hit, the board had thrown their cryptos/gold and silver into the street.  Long time posters headed into a local theater, finding a seat and just getting away from all the stress:

>>>>>>>>

boomer sooner's picture

US Gold, Jaba

My feeling is Trump dispatched Munchin to Ft Knox to find out if the tally was correct.  We still don't know.  It did make for some interesting discussion tho.  

cashonly's picture

flashback

The Puppeteers and TPTB may well be supportive of an expansion of the O-SDR’s role, as they would probably view that as a stepping-stone to the creation of a One World Currency, even at the expense of the death of the petrodollar. Remember, the Puppeteers and TPTB do not think in terms of individual nationhood per se; they only look at the global picture and how they can make something work in their favour within the context of achieving their ultimate goals.

Righting Moment's picture

An Excellent Read...

To all those giving consideration to purchasing James Gibson's book:  I highly recommend doing so as I found it to be a clear, concise and quick read that was well organized and certainly well documented.  It is also an authoritative source that can be handed to those who might not believe you but may believe an international banker.  

"A prophet is without honor in their own land."  Believe this guy !!

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