The biggest news last week was that the BRICS bank has been formed and being funded. Some may argue that the downing of the Malaysian airline flight was bigger but I don’t think so. From a money and banking standpoint, the formation of the BRICS bank is the BIGGEST news since either 1971 or 1973 when the U.S. defaulted off of the gold standard or when the Saudis stepped up to the plate for the petrodollar.
The formation of the BRICS bank is in direct competition with both the IMF and The World Bank. Both of these are “U.S.” controlled banks and the currency that they lend to “help” or “save” countries with are dollars. During our lifetimes these two banks have been the lender of last resort for troubled banks, banking systems and sovereign countries. Often the loans led to alleviating liquidity problems in the short term but then created bigger problems for borrowers in the long term.
Stepping back to look at what has happened and “why” the BRICS decided to form this bank is an important exercise. This will allow and facilitate trade between nations without using dollars. This is important because of the recent “fine” paid by French bank PNB Paribas and the looming fines for both Commerzbank and DeutscheBank of Germany. They transacted business for customers which broke U.S. sanction “rules” regarding Iran and Sudan. These fines as I understand it were levied because the money transfers were in dollars. Anyone even simple minded would understand that to avoid any future “fines,” you just don’t use dollars. It is this simple and foreigners will now use fewer dollars because they don’t have to use them and it is “safer” for them from a “risk” standpoint.
The BRICS bank has been a long time coming and certainly not done in secret. This news has been widely known by foreigners in real time. It has been a different story for Americans. Mainstream U.S. press has barely even whispered the news yet it is the most important event for at least a generation. To put it in perspective, this is the nullification of Bretton Woods outright.
I think that it’s important to understand that the action of forming a non-dollar competitive bank could only have been done if “everyone” went along with it. We have seen in the past what has happened when a country spoke of no longer using the dollar. Their “ruler” was displaced and the country as in the case with Iraq was bombed back into the Stone Age. This is now a simple case of all the schoolyard kids lining up against the bully and “saying” (not asking) “what are you going to do about it?”
I have been very boisterous in my opinion that Saudi Arabia would be the final straw that breaks the back of the dollar. They have had top level talks with both Russia and China with very little comment or “statement” after the meetings. What was said? What was decided? My guess is that Saudi Arabia was “told” what was going to happen. This is no different than a marriage that breaks up or even when “Mafioso” migrate from a weakening family to one that is strong and getting stronger. Saudi Arabia will move to the East.
If you recall the movie “Rollover” from 1981 you will remember the scene where Kris Kristofferson talks about the Arab’s selling Treasuries and dollars. Any announcement by the Saudis that they will accept currencies other than dollars will make “Rollover” come true …exponentially! I say “exponentially” because the system is now 35 years into the futures and at least $1 quadrillion more bloated with debt and derivatives. The system will implode and “wealth,” paper wealth will evaporate overnight. As is said in the movie, “$2,000 gold will be cheap by tomorrow morning,” gold at the time if you remember was $400-$500.
Please understand the “what and why” of the BRICS bank. The Chinese, Russians and the rest of the world know that the petrodollar system is on its last legs. The case can even be made that the rest of the world has “carried” the U.S. for a few rounds so that they could get their ducks in a row ahead of time. The BRICS bank has been put into place because there has to be “something” to “start over with.” Prior to this bank being formed, were the Western banking system to implode the rest of the world had no alternative. When I say “alternative” I am talking about no other clearing system and no place to “hide” so to speak.
It is clear to me that the BRICS bank formation and the massive accumulation of gold over the last several years has gone hand in hand. “The rest of the world” has known for some time that the dollar, the U.S. and the entire Western financial system was on shaky ground and had finite lives. A plan to distance them from the inevitable was formed and has been carried out. All that now remains in my opinion is for Saudi Arabia to defect from the U.S. and knock the last remaining leg out from under the dollar.
My opinion as you already know is that within two weeks of a Saudi announcement, our world will change. The purchasing power of the dollar will crash; this in turn will mean that more dollars will be needed to pay for foreign imported goods. This will affect you directly when you “shop”… for anything. The inflation which we have been exporting for all these years will wash back onto our shores. The “baton” of world reserve currency issuance is being passed right before our eyes. Actually I should reword this; the baton is being TAKEN from us because we have so badly abused the privilege.
Excellent article fully agree
thank you Mark, all a guess as the parts are moving quickly.
Germany might also be a huge factor in all of this.
http://usawatchdog.com/germany-secretly-planning-on-joining-brics-jim-willie/
very well could be.
Another winner. This says it all in succinct, clear language.
thanks Todd but it is only my speculation, not fact yet.
The article leads me to believe you are certain of what is going to happen. It also gives me an opportunity to ask a question for next weeks Wednesday Question Section.
I am not certain of anything. My guess is that thee are 50 or less people who totally know what the plan is.
What about the possible establishment of an SDR currency. The globalist
banksters claiming of course that it is gold backed at a better ratio?
the SDR is a solution proposed by only one side, not both sides.
I agree. Great article Bill. Question: How much would you estimate the $ will crash (Devalue) in the first two weeks of the Saudi’s making the announcement that they will now accept payment for oil in one, two, three or more other currencies? Do you think maybe 30% to 35% and no more (which would be huge)? Then this would be followed over the next year by further devaluations? Thanks for your thoughts.
To determine the amount of dollar devaluation, just watch the gold price. If, on a Monday morning, you discover that the gold price has suddenly jumped $200 on its way to $2000 and beyond, just apply the % increase in gold and, voila, the USD devaluation will be the inverse %. So initially, probably at least 25%, with 50% a possibility.
yes, rather than the devaluation against other devaluing fiats.
I agree, AndyB. The dollar WILL devalue because the dollar MUST devalue… and the crying, whining, and moaning done by the absolutely unprepared will be biblical in its scope and depth.
But then, this IS a very dangerous time for the US and for many others around the world. Great wars have been waged for less cause than the loss of one nation’s standard of living and that IS what is at stake here.
As the dollar shrivels like a balloon with the air coming out of it, gold and silver will rise dramatically in price; not just in fiat terms but also in terms of what one can purchase with them.
Many people do not fully grasp what a dollar devaluation will mean. Basically, it will mean that instantly the US dollar will buy fewer goods and services. This will not be like inflation nibbling constantly but in relatively small amount at the dollar’s value but rather a terrific whack that takes away perhaps 1/3 of the dollar’s value literally over-night. This will be the 1st devaluation of the dollar since 1933 when it was devalued by 2/3 when gold was re-priced from $20.67 per oz. to $35 per ounce. Something that cost $10 one day will cost about $13.50 the next day. A $100 item will go to $135. I believe that this devaluation will occur in about 3 or 4 steps and that the end result will be about an 80% reduction in the value of the dollar. These devaluations will phase in over the course of a year or perhaps 2 years but probably not longer than that.
This will be a hard and bitter lesson for those who only have paper wealth. Those with REAL wealth, which is to say gold, silver, land, and many other things with real intrinsic value will become the new standard of being wealthy and not stocks, bonds, derivatives, debt, futures, options,or any other made-up banking fantasy. They will be utterly crushed and the process by which this happens will be completely without mercy. Prepare yourselves accordingly or join those on the financial ash-heap of history. It’s not going to be pretty.
very good.
True. What I was asking is; what would the devaluation of the $’s purchasing power look like relative to things like groceries and gasoline, since it would be the currency we use for purchasing our daily needs. This is where it would have an immediate impact upon the daily life of all Americans. So, in percentage terms what would a $ crash look like in two weeks in your estimation? Thanks.
I don’t think that 20% is out of the question at all and could be much much larger.
Bill:
You need to read this.
http://wallstreetonparade.com/2014/07/lawsuit-stunner-half-of-futures-trades-in-chicago-are-illegal-wash-trades/
It’s all a Potemkin village.
are you surprised?
Not in the slightest…