Tuesday, August 27, 2019

Where Are Central Bankers Taking Us?

Source: Zero Hedge

In Unprecedented, Shocking Proposal, BOE's Mark Carney Urges Replacing Dollar With Libra-Like Reserve Currency

by Tyler Durden | Sat, August 24, 2019


After Jerome Powell's neutral-to-slightly-dovish-but-mostly-boring speech on Friday morning, investors could be forgiven for suspecting that this year's Fed-sponsored gathering in Jackson Hole might be disappointingly dull (especially with all that's going on in Trump's twitter feed, the escalating trade war and escalating geopolitical unrest).

Then along came former Goldman banker and current (outgoing) BOE governor, Mark Carney, who in his lunchtime address laid out a shocking, radical proposal - perhaps the most stunning thing to ever be unveiled at Jackson Hole - urging to replace the US Dollar with a "Libra-like" reserve currency in a dramatic revamp of the global monetary, financial and economic order.

While it was unclear if Carney was focusing on Libra as the new reserve currency, or simply was hoping to find something against which the dollar could be devalued, the proposal was clearly shocking as it suggests that the central bank quiet acceptance of cryptocurrencies (especially in Japan) has been what many have speculated all along: a "currency" against which fiat money can be devalued in hopes of sparking fiat hyperinflation that inflates away record amounts of fiat debt.

Of course, such a new system would bring about the end of US hegemony, and effectively end the dollar-based global financial system, dramatically scaling back the US's influence in the global economy, and making rising powers like China and Russia critical players an increasingly multipolar world.... especially if they propose a gold-backed dollar alternative to the world. That this would quickly emerge as the new reserve currency - together with whatever stablecoin/crypto central bankers deign to be the dollar's replacement - goes without saying.

Carney's proposal comes just a few months before he's due to step down from his position leading the Bank of England.

We note that, because it is a well known fact that central bankers tend to speak the truth once they have quit their position of power and influence. Yet it is quite shocking for Carnery to do so while still in office; the bottom line, Carney sounded like nothing less than an Austrian-school economist, who admits that the existing neo-liberal/Keynesian system has collapsed.

Speaking to fellow policy makers and academics at Jackson Hole, Wyoming, he said that in the short term central bankers must deal with the situation as it is. But he also warned that "blithe acceptance of the status quo is misguided," and dramatic steps will ultimately be needed. It's what he said next that was stunning:
"In the longer term, we need to change the game," Carney said. "When change comes, it shouldn’t be to swap one currency hegemon for another."
This is where, if Carney indeed speaks for his central banking peers, one can say "game over" for the fiat system, which now even establishment members admit will need to devalue against something outside of the fiat system, such as Gold (as Pimco's Harley Bassman suggested back in 2016), or cryptocurrency/stable coins, like Libra.

There has hardly been a more appropriate time for such a proposal. Trade wars and now the threat of currency wars are upending multilateral cooperation. Central bankers are trapped in a low interest-rate world, and the threat of Modern Monetary Theory has reared its ugly head. Yet, the establishment has so far been unable to come up with its own alternative to combat MMT.
"The combination of heightened economic policy uncertainty, outright protectionism and concerns that further, negative shocks could not be adequately offset because of limited policy space is exacerbating the disinflationary bias in the global economy," Carney said. "What then must be done?"
Well, the creation of a virtual non-fiat currency, against which all other central-bank backed fiat currencies could be devalued, is certainly one solution.
But if the notion that the economic establishment which Carney represents might some day accept these ideas sounds like a fantasy, that's because it is.
Please go to Zero Hedge to read the entire article.
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Ed.'s note: Analysis of the above Zero Hedge article.


Source: Giza Death Star

BACK TO SCHAUBLE: NO WAY FORWARD THAT IS NOT A REFORM

August 27, 2019 | By Joseph Farrell


Remember German Finance Minister Wolfgang Schauble, and his statement a few years ago that there was no way forward in the global financial system that was not a reform? Schauble couched his remarks in the context of the Keynesian-debt finance model, specifically stating that it had reached its limit. In this context, Schauble's remarks about "reform" were - in this author's opinion at least - a euphemism for "reset," because the real culprit - besides the central bank fiat-monetized debt-as-money model - was the rampant financial speculation introduced in the 1990s, allowing deposit banks also to become investment banks, tearing down a wall that had been a legacy of the 1930's New Deal of Franklin Roosevelt. As a result, vast fortunes could be acquired merely by speculating on paper, while real productivity - we'll call it production capitalism - languished. With all the paper floating in the system, auto prices skyrocketed, auto production increased, but largely as a result of what was going on in the finance capitalism-croney crapitalism world.

Well, in that context, consider this article that many regular readers here shared (and a big thank you for bringing it to our attention):

In Unprecedented, Shocking Proposal, BOE's Mark Carney Urges Replacing Dollar With Libra-Like Reserve Currency
After Jerome Powell's neutral-to-slightly-dovish-but-mostly-boring speech on Friday morning, investors could be forgiven for suspecting that this year's Fed-sponsored gathering in Jackson Hole might be disappointingly dull (especially with all that's going on in Trump's twitter feed, the escalating trade war and escalating geopolitical unrest).

Then along came former Goldman banker and current (outgoing) BOE governor, Mark Carney, who in his lunchtime address laid out a shocking, radical proposal - perhaps the most stunning thing to ever be unveiled at Jackson Hole - urging to replace the US Dollar with a "Libra-like" reserve currency in a dramatic revamp of the global monetary, financial and economic order.

While it was unclear if Carney was focusing on Libra as the new reserve currency, or simply was hoping to find something against which the dollar could be devalued, the proposal was clearly shocking as it suggests that the central bank quiet acceptance of cryptocurrencies (especially in Japan) has been what many have speculated all along: a "currency" against which fiat money can be devalued in hopes of sparking fiat hyperinflation that inflates away record amounts of fiat debt.
Now, I don't know about you, but where central banksters are concerned, I'm skeptical. And especially so if their plan involves crypto-currencies, and even more especially so if that plan incorporates some version of a "gold" or bullion backed crypto. And yea, I plan to crawl to the end of the twig of high octane speculation once again on this one.

I'm skeptical for several reasons: (1) humans somehow need the physical medium of exchange, whatever that medium may be. But more importantly (2), the central banks and major prime banks have been caught - repeatedly - rigging the game in the past; think only of the LIBOR business, or the "robo-signing" of fake mortgages and so on, prior to the 2008 meltdown. And that was with the physical exchange of securities and so on. Imagine the cornucopia of rigging that can be done at the push of a button in a cashless cyrpto-world. (3) I've said it before and I'll say it again: no cyber system is secure, and thus the opportunity for malfeasance from any actor - including banks - expands accordingly. (4) The coupling of crypto-currencies to any kind of bullion backing is itself suspect, though you'll never see the real reason being discussed in any standard banking narrative. That real reason is that the amounts of bullion - and particularly gold bullion - are not only obfuscated but deliberately so. It is a closely held secret both by banks and by governments. Thus, any price of any bullion may not, and probably does not, reflect reality.

And let's add to that inconvenient detail the fact that no gold bug - to my knowledge - wants to talk about: what if there was a lot more gold in existence than we've been told? That certainly seems to be the implication of the story of Yamashita's gold, the gold looted from Asia by Japan during the Second World War and much of it cached in the Philippine archipelago. How much was there? We don't know. Estimates are in the billions of dollars. How much was recovered? Again, we don't know. Who recovered it? All indications are that both the Philippine government of Ferdinand Marcos, and the U.S.A., recovered some of it, but again, we don't know how much, nor where it went. The problem here is that if one is on the "inside" of this story, and has access to that information, gold prices could be driven up, and then, a bunch of that hidden gold could be dumped on the market, putting prices into a nose-dive in another convenient form of wealth-harvesting.

In effect, Mr. Carney's proposal - in my opinion - strikes me not so much as a Schauble's "reform"/reset, although that certainly looks to be the way it will be "sold", as it does of being "more of the same", on steroids. In fact, the article suggests precisely this as being the scenario they have in mind: turning all your savings, pensions, 401Ks and whatever else you may have struggled to save, into a pile of paper worth as much as a 1923 Reichsmark, for look at that last papagraph cited above once again:
While it was unclear if Carney was focusing on Libra as the new reserve currency, or simply was hoping to find something against which the dollar could be devalued, the proposal was clearly shocking as it suggests that the central bank quiet acceptance of cryptocurrencies (especially in Japan) has been what many have speculated all along: a "currency" against which fiat money can be devalued in hopes of sparking fiat hyperinflation that inflates away record amounts of fiat debt. (Emphasis added)
In other words, more punishment of the middle classes for the banksters' own malfeasance. Something tells me that this is not what Herr Schauble had in mind.

See you on the flip side...
________


Bank of England Governor Mark Carney speaks 


Banks in Japan have been using accounting tricks and in their parlance in this interview are "running out of runway"...in other words, banks in Japan are in deep shit.

Will A Japanese Banking Crisis Lead to Global Recession? | Recession Watch
 

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