Dollar and BRICS Usher in SDR Liquidity
More and more evidence and analysis is
emerging every day and week in support of the Multilateral Financial System
which is being structured around SDR denominated liquidity. Like a swell
beneath the surface it begins to rise and make itself known. Readers and
other analysts are beginning to discover this swell and realize that the calm
before the engineered storm can be trended. Below is the excellent
analysis of someone named Macjik at The People’s Talk
Radio investment forum. Thanks to reader Dee for sharing
this information and thanks to Macjik for compiling it. Macjik has broken down
the composition of the foreign reserve accounts of the worlds powers. The
conclusion is that there is an extremely high probability that SDR’s make up a
larger percentage of these “unallocated” foreign reserves than previously
thought. Links to supporting documentation are included. This should
eliminate any remaining doubt about the BRICS inability to overthrow the international
bankers. – JC
____________________________________________________
THE POWER OF THE
DOLLAR !!!
Ok everyone this is
going to be a very technically oriented post… my goal for this piece is to have
a referencing point to come back to. The other aspect is that I want to see if
I can quantify the POWER OF THE DOLLAR and show that China is not taking over
as the Reserve Currency but rather it is being allowed to take a Pillar
position to help hold the world’s safety net. China will play a key part in
adding liquidity to the new platform at the same time bare some of the weight
of the world. As both D&G have shared that China wants us to keep our
position because without it they collapse harder and faster with their 1.4
billion people. Also note that the stats that I will share are the official
data that these other writers use in their pieces to push their agenda.
RESERVE CURRENCY
In researching this subject I have the
official numbers that many articles like to quote from… by which many have
misrepresented the numbers to make their point rather than gain the true
perspective. The document is called: Currency Composition of Official Foreign
Exchange Reserves (COFER) from the IMF.
From 1996 to 2013 US
Reserve Currency grew by a factor of 5 in the world…
1996- $760,041,000,000
(Billions)
2013-
$3,805,744,000,000 (Trillions)
From 2007 to 2013 US
Reserves Currency grew by a factor of 1.67 in the world…
2007-
$2,285,398,000,000 (Trillions)
2013-
$3,805,744,000,000 (Trillions)
What is so interesting
is that the dollar is not going down in the quantity of the reserves but so
many quote percentages that are skewed. This is where it gets really
interesting. It is true, on the surface our total percentage is going down but
It is not because of the dollar leaving the market but rather the Pie of
Reserves is getting bigger, much bigger.
This is where I will
introduce the 2 pieces of the Pie:
Allocated
Reserves: There is statistical data where we know the details of the
currencies in the Reserve. List of those currencies listed are: US, Pounds,
Deutsche Mark*, French Francs*, Yen, Swiss Francs, Netherlands Guilder*, ECU’s*,
Canadian Dollar, Australian Dollar, Euros, Other Currencies. (*-They are not
being used in our time lines.)
Unallocated
Reserves: We don’t know the statistical breakdown of the currencies in the
Reserve.
ALLOCATED RESERVES: Let’s tackle
those percentages
End of 2007 – Total:
$4,119,319,000,000 (Trillions) US: $2,631,280,000,000 (Trillions) US%: 64% of
Total Allocated Reserves.
End of 2013 – Total:
$6,220,795,000,000 (Trillions) US: $3,805,744,000,000 (Trillions) US%: 61% of
Total Allocated Reserves.
So, in looking at these numbers did the
US dollar really drop in relevance to the world??? Are countries really leaving
the dollar… the Answer is NO!!! What is very obvious though is the pie is
getting bigger.
Without getting to deep into it, you
will find that several of the known currencies grew a little to make the pie
bigger… including the YEN, Pound, Euro, Canadian, Aussy, and Other Currencies.
None of which were quantitatively significant. Percentage wise Other Currencies
jumped but was only about $100 Billion. Not to mention the fact that it peaked
in the 3rd quarter of 2012, then it dropped approx. $160 bill in the 4th Quarter
and has been on the decline.
Currency Composition
of Official Foreign Exchange Reserves (COFER) PDF Historical Data
Currency Composition
of Official Foreign Exchange Reserves (COFER)
UNALLOCATED RESERVES: again the
reserves that are held by Central Banks that are reported without details of
their composition.
This particular piece
of the pie is the one that is the most interesting in my mind. Because it opens
up some really interesting conversations.
From 1996 to 2013 the
Unallocated reserves grew by a factor of 16 in the world
1996: $339,845,000,000
(Billions)
2013:
$5,452,832,000,000 (Trillions)
From 2007 to 2013 the
Unallocated reserves grew by a factor of 2.11 in the world
2007:
$2,585,118,000,000 (Trillions)
2013:
$5,452,832,000,000 (Trillions)
Now let’s look at the
Percentage growth of the Unallocated to the Total Numbers (Allocated +
Unallocated)
1996: TOTAL:
$1,566,054,000,000 (Trillions) UA: $339,845,000,000 (Billions) UA%: ~22%
2007: TOTAL:
$6,704,435,000,000 (Trillions) UA: $2,585,118,000,000 (Trillions) UA%: ~39%
2013: TOTAL:
$11,673,628,000,000 (Trillions) UA: $5,452,832,000,000 (Trillions) UA%: ~47%
Currency Composition
of Official Foreign Exchange Reserves (COFER) PDF Historical Data
Currency Composition
of Official Foreign Exchange Reserves (COFER) Click Link to see Great
Infographic
WHO HAS WHAT IN THE UNALLOCATED????
This was my next question… what details
can I find about this unallocated since they have totals… they must have some
idea. Because there are many that are assuming this is the growth of the
Chinese Yuan… They are only partially correct on that. So, researching the IMF…
I found that what doesn’t go in the COFER is tracked by the IMF’s International
Financial Statistics (IFS).http://www.imf.org/external/np/sta/c…g/glossary.htm
HERE IS THE LINK TO IFS DATA: http://elibrary-data.imf.org/DataRep…169393&fpw=200
What I find very interesting is that all
the numbers shared on this are in SDR’s. And for conversation sake we need to
understand what are the details roughly $5.5 Trillion in unallocated reserves.
In doing some research I ran across
several articles that List China, India, Russia and Saudi Arabia as countries
who do provide Currency Reserve Details.
Saudia Arabi: $725
Billion in Reserves : heavy with Petro $ and store their money at the NY FED.
Russia: $434 Billion
in Reserves : As of Feb had $126 billion in Treasuries (30% of their Reserves)
India: $267 Billion in
Reserves : As of Feb had $67 billion in Treasuries (25% of their Reserves)
China: $3.82 Trillion
in Reserves : As of Feb had $1.273 trillion in Treasuries (33% of their
Reserves)
MAJOR FOREIGN HOLDERS
OF TREASURY SECURITIES
Adding up these 4 countries Reserves it
gives us a Total of about $5.246 Trillion (I think that is pretty close for
what we need to discuss).
Let’s tackle China
because the concepts can be applied to all the others and since they are the
one everyone is worried about. There is one thing you have to understand that
these Treasuries are no longer debt but are considered assets. If you were to
rid your Central banks from them they would collapse on themselves. Everyone
who has sold their Treasuries has devalued their currency (Russia the most
recent one). In doing so has the dollar really depreciated … NO!!!
Now according to the
US GOV document and one I found at Princeton has estimates that China’s
Reserves could be has high as 60%-70% in dollar. And through different
government companies they have built up strength through using the dollar and
not the Yuan.
Let’s apply 60% to the total Unallocated
($5.452832 Trillion) and apply it the totals for the US:
2013: 3.805744 +
$3.271699 Trillion TOTAL US %: 61% of total World Reserves. Again all this
emphasizes the importance of the dollar in the world economy.
So let’s give China
the 40% and the small other currencies totals on the Allocated side… in doing
that China max’s out at 20% of the Global Reserves. And that was being really
liberal that they would be the only other currency.
China’s Foreign
Exchange Reserves and Holdings of U.S. Securities
RENOVATION OF THE
GLOBAL RESERVE REGIME
SWIFT
Some statistical data shows China is
growing in world transactions but is far from taking over… In looking at SWIFT
DATA , the US has 81% of the World Trade Finance Currency and China is #2 at
8.66%. The US sits at 38% of World Payments Currency where China is #12 at
.84%.
SWIFT (Society for the Worldwide
Interbank Financial Telecommunication) acts as a Global funds transfer system
for WORLD.
TREASURIES
Another observation is if you look at
our foreign treasuries data from 2007 to Feb 2013 there is a very interesting
trend… our treasuries are in huge demand. When most would think to get rid of
their treasuries it grew by a factor of 2.77. Which correlates pretty well with
the Unallocated rise which was a growth factor of 2.11.
2007:
2,123,600,000,000 (Trillion)
2014 (FEB):
5,885,300,000,000 (Trillion)
MAJOR FOREIGN HOLDERS
OF TREASURY SECURITIES
I think it is also important to point
out who owns our debt based on several sources but this one I like the most
because of the graphic. Roughly 67% of our 17.2 Trillion debt is owned by US.
So, 33% is Foreign own of which China has roughly 8%. Again China doesn’t own
us! In fact 40% of our debt is held by our own federal government.
Who Holds Our Debt?
Click link to see Great infographic
FINAL OBSERVATION
I can’t help but go back to a point that
I made earlier that the IFS data was in SDR’s. With the conversation that we
have with the role of the IMF in this new global platform… the numbers do start
to also somewhat correlate with their strength and prominence. Could part of
the IFS data really be telling us how far the IMF and the SDR have penetrated
the global market??? That it really isn’t about China but more about the IMF???
Time will tell with this one but it is definitely something we have to put on the
table. Especially now that every IMF member country holds SDR’s in their
Reserves. And if the SDR’s are playing a major role in the Unallocated Reserves
then that means that 42% of every SDR is weighted in Dollars.
Let’s apply 42% to the
total Unallocated ($5.452832 Trillion) and apply it the totals for the US:
2013: $2.290189 +
$3.805744 Trillion TOTAL US %: 52% of the Global Reserve Currency.
No matter how I look at all the
statistical data there is no way to remove the $ without causing a collapse.
And as long as the trend continues that when the world gets freaked… they come
running to the dollar. The dollar will be here to stay for a long time.
CONCLUSION
I think it is really important that I do
not down play China’s role too much here. They are growing and will someday
(maybe very soon) become a reserve currency but the biggest issue always comes
down to convertibility. Now that isn’t to say they are not a part of a basket
of the Petro currency either. I think we could view this as a stepping stone
for China to the SDR. As well as a stepping stone for the world to accept the
SDR as the World Reserve someday.
I also believe it is crucial that China
step up in this new Global Platform and take their place as a pillar to hold up
the Global Safety Net. For me it is very obvious that this is the role they are
taking by the actions they are taking with their currency, country and how they
have handled Russia by supporting Ukraine and by warning Iran when they warned
North Korea that they will not tolerate nuclear proliferation.
At the end of the day when the world
freaks out about anything… they always coming running to the US and her allies.
Why? Because for one we have the Biggest Stick and two, we are the largest
economy and if we go down they all go down harder and faster. Not matter how
many games countries play when you own the game itself it allows you to change
the rules as you see fit.
Please be aware that the stats are very
often used out of context to help make a point. This exercise is to show you
that the US dollar is not declining and that the true numbers that these
professionals quote are actually increasing. And note the links I shared are
the official numbers that are recognized and used.
Finally, I want people to understand
that the Dollar is Evolving and not Dissolving… When you put the dollar into
the context of it’s role globally and with it’s role with the IMF… you start to
see where the IMF is going and you realize that the Dollar is going to help
usher in the SDR as the global currency. Thus keeping power where they have
always wanted to keep it with the US and her Allies. You also start to think
that in 1999 when they opened the financial gates on purpose, it was to cause
the collapse so that the world again would rely on the US and thus forcing the
changes and conformity we have seen around the world… and they did it all
through ECONOMIC WARFARE!!!
Another step is to see how the FED or
Treasury aligns itself with the IMF. I think it will be the FED but watch for
their language and if they mirror each other you will know that US has created
the bridge to the beginnings of the new centralized power. We already see how
the IMF/BIS/UN/WB all help lay the foundation now for the US and it’s Friends
to take advantage of a location. Africa is a Prime example right now.
Now, for me, China becomes a distraction
for the population and for the PTB’s, a new pillar to help keep liquidity in
the market place while this new Global Platform is installed. There will be
some volatility in this change but the more you understand the less you will be
caught up in that craziness.
(Please remember this was more about sharing
research and thoughts that I have been working on for a bit and it is not
perfect and doesn’t encompass all my thoughts and feelings. ButI hope you get a little something from
this info. And may even spark
conversation, research and even a good debate.)
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