May 21, 2014
Sovereign Valley Farm, Chile
Busy day today… one of those days that reminds me how fast things are moving, and how quickly this version of our monetary system is being reset.
Out of Beijing, Chinese financial magazine Caijing has reported that the vice president of China’s central bank Pan Gongsheng made some rather candid remarks about the dollar and renminbi at a recent monetary seminar.
Over the past several years, the dollar has lost significant ground to other currencies, in its share of international trade transactions and national reserves settlement.
This means that, more and more, people around the world are dealing in currencies other than US dollars when they trade with one another.
Not to mention, central banks and national governments are starting to hold larger proportions of non-dollar currencies.
Mr. Pan pointed out that China has signed bilateral currency swap agreements with central banks and governments from nearly two dozen countries, in an amount exceeding 2.5 trillion renminbi ($416 billion).
Granted, this is just the tip of the iceberg. But Pan’s view is that the market is pushing for even greater internationalization of the renminbi.
Not to mention, two banks in China and Russia signed deals yesterday to bypass the US dollar and pay each other in local currency.
Again, while a drop in the bucket, it’s a major symbolic step towards undercutting the US. There will be more to follow.
Pan told his audience, as well as any foreign investor that cares to listen, that China would continue to promote “a new and more efficient system”, i.e. specifically one which is not dominated by the United States and the US dollar.
The entire world is screaming for this to happen.
Think about it– most of the world’s population, its productive capacity, its savings, and much of its natural resources, are in developing markets, especially in Asia.
The West has just a small percentage of global population… and nearly all of its DEBT.
How much longer can the West expect to continue to finance its debt-based standard of living on the backs of laborers earning $10/day in developing countries?
There will be a rebalancing. To believe otherwise is absolutely foolish.
And as China is set to overtake the United States as the world’s largest economy this year, they’re the obvious candidates to lead the charge.
Like a boxer telegraphing his punches, China is practically banging its shoe on the podium telling the rest of the world what’s going to happen… and soon.
Meanwhile, some other interesting news I want to point out today:
1) Switzerland bucks the trend, refuses to jump off the cliff
Swiss voters happily REJECTED an increase in the national minimum wage, refusing to follow in line with what just about every bankrupt western nation has done or proposed in recent months.
They also rejected a huge purchase order for 20+ new fighter jets.
Congratulations to the Swiss for maintaining a modicum of common sense and financial prudence.
2) How to invest in Myanmar
Our Chief Investment Strategist Tim Staermose is fresh off a trip to the Myanmar Investment Summit… and he tells readers about different ways to invest in the most exciting frontier market in the world.
3) US government takes aim at St. Kitts economic citizenship program
This one is concerning.
If you’re looking at different ways to obtain a second passport (which is a very sharp strategy), St. Kitts has probably come across your radar at some point.
St. Kitts is one of the ‘economic’ citizenship programs out there whereby you can pay a fee and potentially qualify for citizenship.
But it seems the US government has put this program squarely in its crosshairs, blasting the St. Kitts government for having ‘lax controls’, and comparing St. Kitts passport holders to criminal terrorists.