by Chris Campbell
On Nov 5, 2015
Chris Campbell notifies you on the digital currency that you should avoid and it might surprise you. Hint: it isn’t Bitcoin. Read more…
by Chris Campbell
On Aug 27, 2015
Nathanael Greene returns to talk about the dark side of the Currency Wars “they” don’t want you to know…
It’s called “Unrestricted Clearance.”
It’s a new program that was created only a few feet from my desk — inside the confines our Baltimore HQ.
What does it mean?
“Imagine,” Peter Coyne of the Daily Reckoning explained yesterday, “having an insider show you around EVERY room of the Pentagon… opening up every door in the Capitol building and sneaking you inside every secret meeting of every central bank in the world.”
Unrestricted Clearance, he explained, is your skeleton key. It’s how you gain access to the same kind of ideas that are reserved for the U.S. intelligence community. And once you’re in, you’re in for life.
Sure. You have a right to be suspicious. Indeed, Peter Coyne has something up his sleeve. In a moment, I’m going to lay his cards out on the table for all LFT readers to see. If you’re a fan of Jim Rickards, I think you’re going to like his hand.
But let’s not get too ahead of ourselves. You’ve only just arrived. First, I have one question for you. The answer of which, as you’ll see, may surprise you.
Think the “one world currency” narrative is just bollocks dreamed up by wingnut conspiracy theorists?
If so, you might be severely disappointed by today’s episode. Read on at your own risk.
The unfortunate truth is this: the conspiracy theorists are spouting old news. The global currency already exists. It has for decades. Not as a potential. Not as an option. Not as an opinion. Nor as a goal or plan. But as something which is already in place. And here’s the strangest part about it: The only hold-up to the central banks rolling it out is, according to Rickards, China and her small(ish) gold reserves.
I’ll explain what I mean in one moment. But there’s something else you should know first…
Last Friday, if you recall, I had exciting revelations to share from our company party on Friday, April 17. Little to my knowledge… at about the same time I was downing my second Corona at the party… something big was happening an hour away in D.C.: Central bankers were passing around revelations of their own in one hush-hush meeting. And these revelations were, of all things, about the construction of a global currency.
Here’s what you need to know…
The meeting was conducted by one organization called The Official Monetary and Financial Institutions Forum (OMFIF). According to OMFIF’s website, this meeting was attended by “a select group of central banks and other official sector institutions.” And, says the website, the briefings took place “during the International Monetary Fund and World Bank Group spring meeting in Washington.”
And get this…
“If there’s any indication of how critical this meeting was,” Filip Kanja from Birch Gold Group wrote last week, “the European Central Bank (ECB) actually moved their scheduled meeting on monetary policy from Thursday to Wednesday just so they could be in attendance. You’d think that should be enough to get a few mainstream reporters asking questions.
“Yet the mainstream media completely missed the story.”
If that doesn’t make you scratch your chin, consider the name of the meeting itself:
“Gold, the Renminbi, and the Multicurrency Reserve System.”
With a little digging, we found that it was a bit more than just newsworthy… it could be a clear signal of what’s to come this year. To prove it, we got our hands on the original briefing report, first published back in January 2013.
I’ll share the link to the entire document with you in just a moment. On a related note, I’ll also share with you the new “Unrestricted Access” program Peter Coyne and Jim Rickards just cooked up shortly too.
First, though, Jim is going to explain how this one world currency plan will play out. And show you how it ties into seemingly-unrelated global events you read about every day.
“Since Federal Reserve resources were barely able to prevent complete collapse in 2008,” Rickards writes in his New York Times best-seller, The Death of Money,“it should be expected that an even larger collapse will overwhelm the Fed’s balance sheet.”
Everyone knows that the powers-that-be never allow a good crisis go to waste. That’s why, when the next bust takes place — without missing a beat — the global currency will slide in like a cool Tom Cruise in Risky Business. Rickards goes on:
“The specter of the sovereign debt crisis suggests the urgency for new liquidity sources, bigger than those that central banks can provide, the next time a liquidity crisis strikes. The logic leads quickly from one world to one bank to one currency for the planet.”
This one world currency, to no one’s surprise, was created within the walls of the IMF. In 2010, in just one example, the IMF released a paper titled, “Reserve Accumulation and International Monetary Stability.”
In this paper, the organization recommends the entire world adopt one global currency called the “Bancor,” an idea inspired by the economist John Maynard Keynes. It also proposed that one global central bank administer this currency. (Hmmm… wonder who that might end up being…)
To ensure the plan works out, all the IMF has to do is stand in the right place with its glove out when the dollar starts to crash.
“The task of re-liquefying the world,” Jim Rickards goes on, “will fall to the IMF because the IMF will have the only clean balance sheet left among official institutions. The IMF will rise to the occasion with a towering issuance of SDRs, and this monetary operation will effectively end the dollar’s role as the leading reserve currency.”
SDR, if you don’t know, is shorthand for “special drawing rights.”
“The name is cryptic,” our executive director Addison Wiggin wrote in the Daily Reckoning a few months back. “The mechanism will prove far more inscrutable than the Fed’s alphabet-soup bailout programs in 2008. But the objective will be the same… to print money in the interest of keeping a rotten system functioning.
“Boiled down to its essence,” Addison says, “the SDR is a kind of super money printed by the IMF and then circulated among central banks and governments. Indeed, the IMF has issued SDRs three times since their creation more than 40 years ago. Each time was linked to a crisis of confidence in the U.S. dollar…
1969: “The French and others recognized the United States was printing too many dollars. At the time, foreigners could still exchange dollars for gold, and there was a run on Fort Knox. The IMF created the SDR to smooth the rough monetary seas, issuing 9.3 billion SDRs through 1972.”
1979: “U.S. inflation soared out of control, past 14%. Oil-producing countries fretted the value of their dollar reserves was plunging. The IMF issued 12.1 billion SDRs through 1981.”
2009: “In response to the Panic of 2008, the IMF issued 182.7 billion SDRs during August and September.”
And here’s how the SDR “works,” as explained by Jim: “Any inflation caused by massive SDR issuance would not be immediately apparent to citizens. The inflation would show up eventually in dollars, yen and euros at the gas pump or the grocery, but national central banks could deny responsibility with ease and point a finger at the IMF.”
But, as one design upgrade, the IMF may back the SDR, fractionally, with gold…
“Since the SDR already exists,” Rickards says, “it is a perfectly suitable candidate for new global money. But this new SDR would be gold backed and freely convertible into gold or the local currency of any participant in the system. It would not be the paper SDR that exists today.
“In order to participate in the new gold SDR system, a member nation would have to have an open capital account, meaning that its currency would have to be freely convertible into SDRs, gold, or currencies of the other participating members.”
China, Jim notes, does not have an open capital account: “However, China may find the attractions of a non-dollar, gold-backed currency such as the new SDR sufficiently enticing that it would open its capital account in order to join and allow the new system to succeed.”
Think that’s an unlikely scenario? Think again.
Think that’s an unlikely scenario? Think again: “China,” the country’s Premier, Li Keqiang, told the press last month, “will speed up the basic convertibility of yuan on the capital account.”
And how fast do they plan to “speed up” the yuan’s convertibility? Here’s a hint: The day following the Premier’s announcement, Zhou Xiaochuan, the governor of the People’s Bank of China, promised to reform the exchange rules of China “relatively radically” in 2015.
So let’s say, hypothetically, this gold SDR is being rolled out under our feet. If China were to be among the countries to embrace this hypothetical gold SDR, it would, along with every other member, says Rickards, “be encouraged to adopt the new gold SDR as a unit of account as broadly as possible. Global markets in oil and other natural resources would now be priced in SDRs, and various economic metrics, such as global output and balance-of-payment accounts would be computed and reported in SDRs.
“Finally, an SDR bond market would develop, with issuance by sovereign nations, global corporations, and regional development banks, and with purchases by sovereign wealth funds and large pension funds.”
But there’s one sticking point: Before the gold SDR can be made the reserve global asset, China needs a much bigger pile of gold.
That’s why, Jim says, the western powers want the Chinese to have gold. To launch this currency (and have China be a part of it), China needs its own reserves. The gold price, therefore, has been quietly manipulated by both sides for that purpose. And when China reaches its goal reserves, the true(er) price of gold will reveal itself to the world.
“The gold price must be kept low,” says Rickards, “until gold holdings are rebalanced among the major economic powers, and the rebalancing must be completed before the collapse of the international monetary system. The United States and China have a shared interest in keeping the gold price low until China acquires its gold. Once the rebalancing is complete, probably in 2015, there will be less reason to suppress gold’s price, because China will not be disadvantaged in the event of a price spike.”
What does a gold-backed SDR mean for the price of gold?
“Dividing the money supply by the gold supply gives an implied, nondeflationary price for gold, under a gold-backed SDR standard,” Rickards calculates, “of approximately $9,000 per ounce.
“The inputs in this calculation are debatable, but $9,000 per ounce is a good first approximation of the nondeflationary price of gold in a global gold-backed SDR standard. Of course, nothing moves in isolation. The world of $9,000-per-ounce gold is also the world of $600-per-barrel oil, $120-per-ounce silver, and million-dollar starter homes in mid-America. This new gold standard would not cause inflation, but it would be a candid recognition of the inflation that has already occurred in paper money since 1971.
“This one-time price jump,” Rickards goes on, “would be society’s reckoning with the distortions caused by the abuse of fiat currencies in the past forty years. Participating nations would need legislation to nominally adjust fixed-income payments to the neediest in forms such as pensions, annuities, social welfare, and savings accounts up to the insured level.
“Nominal values of debt would be left unchanged, instantaneously solving the global-sovereign-debt-and-deleveraging conundrum. Banks and rentiers would be ruined — a healthy step toward future growth. Theft by inflation would be a thing of the past, for as long as the system was maintained. Wealth extraction would be replaced with wealth creation, and the triumph of ingenuity could commence.”
But in the meantime, says Rickards, the central banks are “out there making the San Andreas Fault bigger so we can have even bigger earthquakes in the future.
“That’s exactly what’s going on.”
It’s all a question of what will happen first. An uncontrollable collapse of the monetary system, or a new world currency backed, in part, by gold. Or both. Those appear to be our options. Jim doesn’t recommend you stand by and hope that the global currency will “fix” what ails us.
“I would say two things about the monetary collapse,” says Jim. “It could happen very suddenly — and likely it will — and we won’t see it coming, so investors need to prepare now.
“Investors almost say to me, ‘You know, Jim, call me up at 3:30 the day before it happens and I’ll sell my stocks and buy some gold.’
“First of all, it doesn’t work that way… you might not be able to get the gold and that’s very important to understand. When a buying panic breaks out, you know, and the price starts gapping up, not $10.00, $20.00 an ounce per day, but $100.00 an ounce then $200.00 an ounce and then all of sudden, it’s like up $1,000.00 an ounce and people say oh, I got to get some gold. You won’t be able to get it. The big guys will get it, you know, the sovereign wealth funds, the central banks, the billionaires, the multibillion-dollar hedge funds, they’ll be able to get it, but everyday investors won’t be able to get it.
“You’ll find that the mint stops shipping it. That your local dealer has run out so there’ll still be a price somewhere. You’ll be able to watch the price on television, but you won’t actually be able to get the gold. It’ll be too late.”
As promised, here’s the document I promised earlier. Below, I also show you how to gain Unrestricted Access to Jim Rickard’s full intelligence.
This is probably your first time seeing this program. It’s definitely the first time I’m writing about it. Before we get into that, though, here’s the document…
Here’s a passage from within:
“If the spectre of collapse continues to haunt the main reserve assets,” the author of the report, Meghnad Desai writes, “and on the expectation that the renminbi will take time to get into its stride, the world will rush to safe havens.
“Gold may be the only one with the requisite size, clout and — dare I say it — history to help ward off the strains that will beset the world monetary system. It would be wise to draw up contingency plans for such eventualities.”