Jul 042017
Some Central Banks Are Exploring the Use of Cryptocurrencies By Alexandria Arnold June 28, 2017, 11:18 AM CST In a world were financial transactions are largely electronic, central banks are exploring the idea of using virtual currencies, even as cyberattacks and price swings dominate the headlines. "The central bank digital currency would be like a paper bill except digital," Dartmouth College economics professor Andrew Levin said in an interview on Bloomberg Television. For example, "it would be representing a U.S. dollar, but it would be basically free to use."     Dartmouth’s Levin tells Bloomberg TV why central banks are exploring the move to digital currencies. Source: Bloomberg Whereas credit cards charge transaction fees and interest, and paper currencies can be costly to process, digital currencies could be a "real benefit" to small businesses and consumers, Levin said. Central banks from across Europe and Asia are looking into virtual currencies. In March, Vietnam’s central bank said it was "seriously" studying the possibility of using bitcoin. The People’s Bank of China has run trials of its prototype cryptocurrency, and the Danish central bank is considering minting e-krone. But Federal Reserve Board Governor Jerome Powell said in March the U.S. central bank is not considering a digital currency. For a replay of the inaugural Bitcoin Facebook Live show launched yesterday. Skeptics have questioned whether one of the key features of cryptocurrencies — their decentralized nature — makes them a good fit for central banks. But in a recent proposal published by Levin and Rutgers University economics professor Michael Bordo, the pair said central banks could provide a secure store of value in their own digital currency. "In contrast to bitcoin, the value of the central bank’s digital currency would be fixed in nominal terms," Levin and Bordo wrote. "Moreover, the central bank’s digital currency could be implemented using an account-based system, thereby avoiding the resource-consuming ‘mining’ operations involved in generating virtual currencies like bitcoin." Source: Some Central Banks Are Exploring the Use of Cryptocurrencies – Bloomberg Share this:FacebookLinkedInTwitterGoogleTumblrPinterestReddit (more…)
Aug 032015
The Quadrillion Dollar Derivative Debt and the “Bail-in”: When you Deposit Funds in a Bank, it Becomes “Their Money” By Bill Holter Global Research, August 03, 2015 Url of this article: http://www.globalresearch.ca/the-quadrillion-dollar-derivative-debt-and-the-bail-in-when-you-deposit-funds-in-a-bank-it-becomes-their-money/5466586 The world is awash with “promises”. Nearly everything we think of as having “value” is because of a promise behind it. A few examples; your bank accounts, retirement funds, bonds and even the dollar bills in your pocket. Your bank account for example, once you deposit the money it is no longer yours. You can argue this if you wish but we now know this is true for sure after recent “bail in” legislations passed throughout the west. When you deposit funds into a bank, it then becomes “their money” held for you …they “owe” it to you. Do not take this lightly, lawmakers around the world have made this the new reality. A little known fact, in 1845 Britain passed banking law that made depositors (unsecured creditors), this is still precedent to this day. When you deposit money you “accept a liability” from your bank and are classified as an unsecured creditor. In other words, “get in line with everyone else”! Same thing with many retirement accounts. Think about Social Security. When you get your annual statement form, it comes with an asterisk. This is to inform you they “might need to reduce benefits”. With any retirement account you are relying on the custodian to make payments to you upon retirement. Think about state and municipal retirement accounts promising the good life, they are nearly ALL underfunded. Meaning there is not enough money in there to make (promised) future payments unless some sort of magically higher returns are realized. These are underfunded by the TRILLIONS of dollars! Bonds are an obvious asset class where a “promise” is relied on. Dollars on the other hand seem the most misunderstood by the public while being the biggest leap of faith in all asset classes. Dollars rely on the “full faith and credit” of the U.S. government (a bankrupt entity) yet the populace sleeps through the night secure knowing they own dollars. ALL non backed, fiat currencies in the past have failed. The dollar is the widest spread and widely owned fiat the world has ever known, its failure will be spectacular upon arrival! I wanted to point out the above “promises” as a basis to speak about trust or (more…)
Mar 042015
Editor’s Note: This is a warning shot. The global economy is undergoing a sever change.  I suggest buying precious metals. “metal-in-hand” is the best an option is finding an asset backed digital currency to invest in. Why This Greek Tragedy Could Mean Global Disaster One of the assumptions of the eurozone – those 19 countries in Europe that use the euro as their national currencies – is that if any country left the zone, economic disaster would follow in its wake. Only a few days ago, it appeared that heavily indebted Greece might be forced to drop the euro and return to the drachma, the currency it used before the euro. During the 1990s and early 2000s, Greece was spending money like a sailor on shore leave with a limitless credit card. The government ran up debts amounting to hundreds of billions of dollars to prepare for the 2004 Olympics, among many other infrastructure projects. It also promised retired Greek citizens some of the cushiest pensions in the EU. In 2002, Greece was among the first EU members to adopt the euro. Entrance into the eurozone was contingent on Greece’s accomplishing certain reforms and demonstrating a threshold level of economic prudence. Among the requirements was to maintain a budget deficit of less than 3% and a total government debt under 60% of GDP. Greece never even came close to meeting these targets. To make it look as if it were, Greek politicians engaged in such sleights of hand as not counting military spending as a government expenditure. But if it wanted to join the euro, Greece needed to do more. And Greek politicians weren’t about to ask voters permission to dismantle the cradle-to-grave welfare state financed by borrowed money. To solve the problem, the government hired Goldman Sachs to help tidy up its balance sheet. Goldman created a series of currency swap arrangements using fictional exchange rates. The swaps took billions of dollars of debt off Greece’s balance sheet and allowed the country to issue far more debt than what was actually showing up in its account ledgers. Goldman used similar financial engineering to help prop up ill-fated energy trader Enron Corp., and we all know how well that experiment turned out. In other words, Greece never, ever should have been allowed to join the eurozone. But now that it’s part of it, there seems to be no end to the willingness of EU (more…)
Dec 212013
Source: GoldSeek.com “When push comes to shove… [central] bankers turn on the monetary taps. The result has been a loss of confidence in the dollar.” – The Economist, July 2010 As we near the end of the first quarter of 2011, the potential for a widening of the uprisings in North Africa and the Middle East has pushed oil prices past the $100 mark. Long before the riots began, commodity prices had risen to uncomfortable levels, having soared over 30 percent in a matter of months. Currency creation by emerging market central banks was, and is, a major factor behind the rise in oil prices. Egypt’s M2 money supply, for example, rose 13.3 percent during 2010, while China’s M2 money supply increased by 17 percent and India’s M3 money supply increased by 15 percent. When currency creation outpaces GDP growth, too many artificially created rupees and yuan and pounds and euros chase too few goods, and price inflation results (Figure 1). In an economy largely propped up by quantitative easing and money supply expansion, three dominant factors are likely to impact gold and precious metals prices in 2011. They are: Movement away from currencies Central bank buying China Factor 1: Movement Away From Currencies Major currencies, including the US dollar, have been declining in purchasing power for years, but now the rate of depreciation is accelerating. Investors are losing confidence in the ability of the world’s largest economy to lift itself out of its $14 trillion debt. When (not if) interest rates rise from their artificially low levels, interest paid on the debt will soar. The Washington Post estimates it will quadruple by 2014. “When governments reach the point where they are borrowing to pay the interest on their borrowing they are coming dangerously close to running a sovereign Ponzi scheme,” says economist Nouriel Roubini. The US is rapidly approaching that point, and investor anxiety is increasing in concert with the realization that currency creation for bailout purposes – the knee-jerk monetary response to the financial crisis – is no longer a temporary matter. As quantitative easing becomes institutionalized, the “safe haven” US dollar continues its decline, sending precious metals prices higher. The Petrodollar Dilemma As the world’s reserve currency, the US dollar has enjoyed special status. Since 1973, the dollar has been the only currency in which oil could be traded, a key reason the US has been able to amass over (more…)
Apr 202011
By Ben Rooney, staff reporterApril 15, 2011: 2:36 PM ET   NEW YORK (CNNMoney) — The push to replace the U.S. dollar as the world’s reserve currency has been gaining steam, with one expert arguing that America “must give up on the dollar.” In a Financial Times op-ed, Michael Pettis, a finance professor at Peking University, said U.S. policymakers should lead the charge to create a more diverse reserve system, “in which the dollar is simply first among equals.” The dollar has been the dominant reserve currency for decades, with central banks and other institutions around the world amassing vast reserves. Pettis argues that this has resulted in dangerous trade imbalances that threaten to destabilize the global economy. He contends that countries such as China have been able to “game the system” by stockpiling dollars, which has allowed them to grab a larger share of global demand for goods and services. At the same time, the U.S. economy has suffered as money rushes out of the country and into red-hot emerging markets. Pettis said this leaves the United States with a stark choice between further pain in the job market, as demand continues to shift overseas, or adding to already massive deficits to finance domestic growth. “Americans, in other words, must choose between higher unemployment and higher debt,” Pettis wrote. As such, the United States may eventually need to force the rest of the world to gradually “disengage” from the dollar as a reserve currency if it continues to decline. Tales from inside the manufacturing boom The dollar index, which measures the greenback against a basket of currencies, has fallen 5% so far this year to around 74.80. That’s down from a high near 87 in June of 2009, as jittery investors flocked to the dollar for safety. However, there is not an obvious alternative to the dollar. Pettis suggested that the euro could emerge over the next decade, since no other world currency has “the necessary characteristics to allow it plausibly to serve the needs of the global economy.” But he suggested that European officials would resist taking on the responsibility, since it would saddle the European Union with the same burdens currently facing the United States. Meanwhile, the International Monetary Fund has proposed a larger role for its special drawing rights, or SDRs, in the global reserve system. SDRs represent potential claims on the currencies of IMF members. They were created (more…)