Wednesday, November 09, 2016

A Reversal In The Trend
Of International Reserves
5* 
[Cliff asks you to please consider: In a world that can't pay its debts, what are 'International Reserves'? They are I.O.U.s representing the debts of nations that can't afford to pay their I.O.U.s. How crazy is that? Why would anyone save & hold 'Reserves'?How would you like to have been China? .. working hard for years to accumulate & save $4Trillion of U.S. I.O.U.s. Then in 2008 China was forced to to realize the U.S. couldn't pay those I.O.U.s except by printing more I.O.U.s that would be paid by issuing more I.O.U.s. Do you think yesterday's election is going to fix more than 4 decades of the corruption of our country's money? The new President is likely to regret that he won a 'no win' situation. Küle Küestion: “many who are first will be last"?]
Hugo Salinas Price* explores the drivers of international reserves between reserve currency issuers & the rest of the world .. What's happening to international reserves in Central Banks? - "International Reserves stood at about $10 Trillion in 2011, but the rate of growth slacked off; the weekly increases in Reserves stalled and became smaller, week by week. As mid-2014 came around, the increases were quite small. It was clear that the trend was for ever-smaller increases, and that could only mean that finally there would be no increase, which would be immediately followed by decreases in the total of International Reserves held by Central Banks. That is exactly what took place. All 'money' today represents debt: fiat money comes into existence as the counterpart to the creation of a credit. So the falling International Reserves are really the contraction of credit in the world .. When a trend has been firmly in place in the world for 45 years, a reversal of that trend must be the result of a profound change which will produce a new trend that will not be easily altered, just as the previous trend was unalterable for 45 years. The new trend is deflation, contraction of credit." .. what will be the result? - "After the failure of insane policies of ZIRP or NIRP, it is likely that we shall see another lunatic policy: extensive government spending to 'get the world economy moving again' and prevent deflation from taking hold .. Inflation is always and everywhere, the result of governments and their banking systems working together to increase spending; inflation can be a long drawn-out process, little noticeable by the population. Deflation on the other hand, is the result of actions on the part of the public, and deflation can take place at great speed, feeding on itself as fear of losses in investments propels the public to liquidate investments as quickly as possible .. we are likely to see a desperate attempt at world inflation of money through further expansion of credit to finance government spending ..Which would, of course, only postpone the final collapse of the world's economy to some point in the future."
LINK HERE to the essay

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