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Hi Pointy, The SDR system which was assumed and implemented to...

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Manabouttown

3,004 Posts.

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20/06/21

19:28

Post #: 53953212
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Originally posted by Pointyfigures: ↑

On the debt, gold and financial stability issues, for what they are worth, here are my views.
On previous programs, I have untaken the following approach for major programs and suspect BIS have done something similar.
First thing you do is establish benchmarks and performance measures.
If there are big deviations from the benchmarks, particularly negative, you know you have a problem. In this case, think financial stability.
On the performance side you might want to consider how much growth is generated from additional debt. Shrinking all the time.
There is too much bad debt and too many zombie companies in the system.
The US have been abysmal custodians of the reserve currency system and abused it for far too long. Behind a lot of this is greed.
Big moves in USD create currency crises and allow exporting of inflation.
Pretty well all the measures are deteriorating.
Demographics and dynamics are changing rapidly.
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Where do we want to be?
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Stable systems and sustainable growth without too much disparity is a good start. Nothing like Utopia, just basic foundations.
Can't deal with other issues when your own house is not in reasonable order.
Neither should it be prescriptive as that shuts down alternatives. I place state owned digital currencies in this space. Big brother.
One thing that is required is a common and interchangeable medium of exchange to facilitate trade, etc.
We also need a system difficult to corrupt, swindle or defraud. Think blockchain.
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I believe gold is to become part of a new stable financial and trading system. I have not considered exactly what role it will play but banking collateral (asset base) seems the logical first and most likely step.
If gold is to be integral then the first thing you would do is elevate its' status. Tier 1, Done.
Without this you would likely fail to get other necessary changes in place.
Next thing to do is stabilise value. The NSFR rules go some way in doing this.
There are two components yet to be addressed/unfold before the real game begins.
Price is too low to be useful and where the hell is all the gold (transparency)?
The NSFR will go some way into exposing how much gold is where. But more will need to be done. The paper system obscures real gold.
With BASEL there will only be a few players with the necessary gold backing to play the game and transparency will improve. Not sure they would be too willing to put hard-to-get gold on the line to manipulate prices.
The BIS are now players and I suspect they will allow gold to rise at a regulated rate to be useful before further significant rule changes.
For gold to useful it will have to float against all currencies. This is where the gold standard advocates constantly fall down - suggesting it needs to be pegged to anything. If anything , something like gold SDR's (using blockchain) will be created to facilitate trading without having to send gold all over the place. Reconciliation quarterly?
This does not require mandatory gold confiscation though some countries may try. When the price is high enough it will be exchanged for goods and services, enter the system and not come back out.
Negative real rates are a price driver for gold. Timing could not be better.
A sudden increase in price would destabilise the system. Kick the can in the meantime.
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It would not surprise me if other commodities/PM's came into the mix as the futures markets have basically become a tool for price manipulation. Leverage and rehypothecation are the main culprits so only minor changes required.
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Changes in gold status and management seem to be early stages of a program to bring gold into the fold as part of financial system stability. Reversing the Tricky Dicky decision and it needs to float and be incorruptible. Otherwise, why bother?

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Hi Pointy, The SDR system which was assumed and implemented to correlate currencies with the asset backing of USD, Gold, Silver looks to have failed miserably. My thoughts are, it has only failed the Western World due too the manipulation of the US.
Blockchain is similar too saying one will drive a hydrogen powered vehicle in Europe, one will drive a LNG vehicle in SA and one will drive a diesel vehicle in Aust. A world cannot fit into a one box suits all. Blockchain does not adapt to demographics, nor does it adapt to War. My 2bob.
Great post once again PF.
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0 Great analysis

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