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Thread: weekend commentary - crackpot or crystal ball re upcoming G20 meeting ?

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    Default weekend commentary - crackpot or crystal ball re upcoming G20 meeting ?

    (snip)"If you think this weekend’s G-20 meetings in Washington are only about designing short-term fixes to the financial system and regulatory reforms for banks, hedge funds, brokers, mortgage companies and investment banks … think again.

    Behind the scenes, a far more fundamental fix is being discussed — the possible revaluation of gold and the birth of an entirely new monetary system.

    I’ve been studying this issue in great depth, all my life. And given the speed at which the financial crisis is unfolding, I would be very surprised if what I’m about to tell you now is not on the G-20 table this weekend.

    Furthermore, I believe the end result will make my $2,270 price target for gold look conservative, to say the least. You’ll see why in a minute.

    First, the G-20’s motive for a new monetary system: It’s driven by and based upon this very simple proposition …

    “If we can’t print money fast enough to fend off another deflationary Great Depression, then let’s change the value of the money.”

    I call it …

    “The G-20’s Secret Debt Solution”

    It would be a strategy designed to ease the burden of ALL debts — by simultaneously devaluing ALL currencies … and re-inflating ALL asset prices.

    That’s what central banks and governments around the world are going to start talking about this weekend — a new financial order that includes new monetary units that helps to wipe clean the world’s debt ledgers.

    It won’t be an easy deal to broker, since the U.S. is the world’s largest debtor. But remember: Debts are now going bad all over the world. So everyone would benefit.

    Fed Chairman Ben Bernanke … Treasury Secretary Paulson … President Bush … President-elect Obama … former Fed Chairman Paul Volcker … Warren Buffett … and central bankers and politicians all over the world agree a new monetary system is needed.


    So they’ll start hashing out the details to get the new financial architecture deployed as quickly as possible.

    If you think I’m crazy or propagating some kind of conspiracy theory, then consider the historical precedent …

    To end the Great Depression in 1933 Franklin Roosevelt devalued the dollar via Executive Order #6102, confiscating gold and raising its price 69.3%, effectively kick starting asset reflation.

    Only this time, it won’t be just the U.S. that devalues its currency. The world is too interconnected. Instead, the world’s leading countries will propose a simultaneous and universal currency devaluation.

    This time, they will NOT confiscate gold. There would be riots all over the globe if they even mentioned the “C” word.

    But they don’t have to confiscate gold. Here’s one scenario …

    They cease all gold sales and instead, raise the current official central bank price of gold from its booked value of $42.22 an ounce — to a price that monetizes a large enough portion of the world’s outstanding debts.

    That way, just like in 1933, the debts become a fraction of re-inflated asset prices (led higher by the gold price).

    And this time, instead of staying with the dollar as a reserve currency, the G-20 issues three new monetary units of exchange, each with equal reserve status.

    The three currencies will essentially be a new dollar, new euro, and a new pan-Asian currency. (The Chinese yuan may survive as a fourth currency, but it will be linked to a basket of the three new currencies.)

    The new fiat monetary units would be worth less than the old ones. For instance, it could take 10 new units of money to buy 1 old dollar or euro."(snip)

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    Default Re: weekend commentary - crackpot or crystal ball re upcoming G20 meeting ?

    reinflate all asset prices, meaning reinflate stocks, bonds, real estate and precious metals? What about oil and other commodities?

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    Default Re: weekend commentary - crackpot or crystal ball re upcoming G20 meeting ?

    reinflate all asset prices, meaning reinflate stocks, bonds, real estate and precious metals? What about oil and other commodities?
    Within the constraints of supply and demand, if asset prices of all kinds are inflated it means that currencies are devalued to accomplish that inflation. This would probably translate into any and all commodity prices going up to reflect the currency value going down.


    Also, a few more sources of analysis / opinion are starting to come out re this weekend's G20 meeting ... already termed 'Bretton Woods II"



    (snip)"Following calls by European leaders for a “Bretton Woods II”, the Bush administration has invited the “G-20” countries to come to Washington with the lofty goal to reform the world financial system. Will the way we do business change November 15?

    The first Bretton Woods conference, held in 1944, gave birth to the International Monetary Fund (IMF), the World Bank and – albeit with half a century delay – the World Trade Organization. The Bretton Woods conference is best known for firmly anchoring the U.S. dollar as the world's reserve currency. As we will elaborate on below, however, the dollar had to be devalued and taken off the gold standard in 1971 because of market dislocations that are not so different from what we are experiencing today.

    As of yet, there is no published agenda for the G-20 meeting. German Chancellor Angela Merkel and French President Nicolas Sarkozy call for “genuine, all-encompassing reform of the international financial system.” This doesn't sound like we will know on November 15 how the world will be structured in the coming decades. In 1944, 44 governments met for 22 days. Today, numerous competing groups are trying to seize the opportunity to shape tomorrow's world. The November 15 meeting will start a process that may take some time. Don't forget that the U.S. has a lame duck administration and foreign leaders will want to negotiate with the new, not the old administration. It will be interesting to see how much of a running start the new administration can deliver."(snip)

    (snip)"We do know that world leaders and the public alike are upset that the current financial crisis has spread to affect just about every business and person around the world – from the CEOs of what used to be investment banks; to Maine fishermen that have to dump Lobster at a loss making $2 a pound on the market because the processing facilities across the border in Canada have vanished as buyers as they relied on now defunct Icelandic banks for their lines of credit; to the retail industry in the U.S. because their suppliers cannot get lines of credit to ship containers from Asia despite an implosion of shipping rates by some 90%; to farmers that may be unable to buy the seeds for next year's crops; to starving children in Africa that may receive less aid. And why are we in this mess? From an Asian and European point of view, it comes down to a simple realization: because they loaned money to the U.S. The rest of the world wants to reign in what it perceives to be Wild West capitalism. There is also a lot of blame to be placed on foreign regulators, policy makers and financial institutions, but it is always more convenient to look for a scapegoat elsewhere, in this case in the U.S."(snip)

    (snip)"The big fear of Bretton Woods II to the U.S. Treasury is that financial innovation will be stifled. While that's precisely what the public and many policy makers around the world want, the U.S. as a center of the world of finance has the most to lose. Already, many traders and hedge funds are closing their businesses, not just those who have lost a lot of money, but many others who simply do not want to trade when the rules change every day. The damage inflicted here will cost New York and London billions in tax revenue. The likely winner is Singapore that will try to lure some of that business to come to the small state."(snip)

    (snip)"To give a little more background as to why the dollar may indeed become a topic of the G-20 “Bretton Woods II” meeting, some historic perspective may be in order. In a 2003 analysis entitled “Global Warming”, we wrote: “The most recent experience to a serious dollar devaluation dates back to 1971 when the U.S. abandoned the gold standard on August 15. There are parallels to the events at the time. When the 1944 gold standard (Bretton Woods agreement) was put in place, the US dollar quickly became the world's preferred reserve currency, as it was not only the only currency convertible into gold (at $35 an ounce), but – unlike gold – it also paid interest. In the second half of the 1960s, LB Johnson increased government spending in a booming economy with full employment causing major imbalances. LBJ was more interested in re- election than in taming the economy. As a result, more dollars were printed and foreigners started to exchange their US dollars for gold. By 1970, only 55% of the US dollar was backed by gold; by 1971, that ratio had fallen to 22%. To support the dollar, the German Bundesbank (Buba) purchased US$4bn in April 1971. On May 4, 1971, the Buba purchased US$1bn in 1 day, and on May 5, 1971, the Buba purchased US$1bn in the first hour of trading, after which intervention was given up and currencies were allowed to float freely. A severe devaluation of the dollar ensued”. Similar imbalances have been re-created today, except that the U.S. dollar is no longer backed by gold and foreigners hold U.S. Treasuries; Asian countries in particular may have little choice, but to sell their holdings as they feel obliged to inject money into their domestic economies."(snip)


    not wanting to build a 'wall of words' here, but the tone seems to be that the rest of the world is pissed off at America, is skittish about loaning America more money ( or skittish about buying or even continuing to hold US Treasury bonds, which amounts to the same thing), and is fearful about future US gov't intentions to devalue the US dollar as a means of dealing with America's domestic and international debt repayment problems.

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    Default Re: weekend commentary - crackpot or crystal ball re upcoming G20 meeting ?

    and at the risk of wearing my 'tin foil hat' ...



    (snip)Baron David de Rothschild sees a New World Order in global banking governance(snip)

    (snip)Among the captains of industry, spin doctors and financial advisers accompanying British prime minister Gordon Brown on his fund-raising visit to the Gulf this week, one name was surprisingly absent. This may have had something to do with the fact that the tour kicked off in Saudi Arabia. But by the time the group reached Qatar, Baron David de Rothschild was there, too, and he was also in Dubai and Abu Dhabi.

    Although his office denies that he was part of the official party, it is probably no coincidence that he happened to be in the same part of the world at the right time. That is how the Rothschilds have worked for centuries: quietly, without fuss, behind the scenes.

    “We have had 250 years or so of family involvement in the finance business,” says Baron Rothschild. “We provide advice on both sides of the balance sheet, and we do it globally.” "(snip)

    also ...



    (snip)""The Coming One-World currency"

    "On Wednesday, finance chiefs of five of the six-member, oil-rich Gulf Cooperation Council approved a proposal to create a monetary union as a move toward adopting a single currency, according to the AFP.

    The six Islamic states constituting the Gulf Cooperation Council are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Oman pulled out of the agreement last year.

    Five states in the compact have agreed to set 2010 as the target date for the creation of a monetary union and the adoption of common currency."
    ....
    "The monetary union will entail the creation of a central bank to issue the single currency."
    ...
    "One factor easing the transition toward a single currency is that the six Gulf Cooperation Council member states all currently peg their currencies to the U.S. dollar." (snip)


    regardless of the wacko factor, it would at least appear that the rest of the world now has plans to back away from the US dollar as the currency of choice for international exchange.

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    Default Re: weekend commentary - crackpot or crystal ball re upcoming G20 meeting ?

    Wearing the "tin foil hat" makes more sense than holding the party balloons!

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