The collapse of the monetary system awaits the world in the near future, says financial expert James Rickards. Russia and China's desire to rid the US dollar of its global reserve currency status is an early sign of the “increasingly inevitable” crisis.
“China has three trillion dollars, but they are buying gold as fast as they can. China worries that the US is going to devalue the dollar through inflation so they want to have a hedge if the dollar goes down, so the gold will go up,” Rickards told RT.
Rickards’ book about the demise of the dollar was released in April under quite an apocalyptic name – 'The Death of Money.' However, the author is surprised that the events are unfolding much faster than he predicted.
“If anything, the tempo of events is faster than expected. Therefore, some of these catastrophic outcomes may come sooner than I wrote about.”
Last Wednesday, China and Russia signed a historic US$400 billion gas deal which will provide the world's fastest growing economy with the natural gas it needs to keep pace for the next 30 years. Experts say this could be the catalyst that dethrones the greenback as the world's reserve currency.
“If anything, the tempo of events is faster than expected. Therefore, some of these catastrophic outcomes may come sooner than I wrote about.”
Last Wednesday, China and Russia signed a historic US$400 billion gas deal which will provide the world's fastest growing economy with the natural gas it needs to keep pace for the next 30 years. Experts say this could be the catalyst that dethrones the greenback as the world's reserve currency.
The best-selling author writes that the “linchpin” of the collapse is the approaching failure of the dollar since it is at the foundation of the system. Powerful countries such as Russia, China, Iran, and India do not rely on the US in their national security and would benefit from the US economy being weaker, thus desiring to break free from the dollar standard.
He elaborates that the dual collapse “looks increasingly inevitable.”
“The mistakes have already been made. The instability is already in the system. We’re just waiting for that catalyst that I call the snowflake that starts the avalanche,” he said, as quoted by ETF.
There are three big international factors that are pressuring the dollar right now – Russia, China, and Saudi Arabia.
He elaborates that the dual collapse “looks increasingly inevitable.”
“The mistakes have already been made. The instability is already in the system. We’re just waiting for that catalyst that I call the snowflake that starts the avalanche,” he said, as quoted by ETF.
There are three big international factors that are pressuring the dollar right now – Russia, China, and Saudi Arabia.
The threats to the dollar are “ubiquitous,” the author states in his book. The only way the US can pay off its $17 trillion debt is with inflation, which would drive other countries away from the dollar while the accumulation of gold by Russia and China presages the shift to a new reserve asset.
“The next time we will have a liquidity crisis in the world it’s going to be bigger than the ability of central banks to deal with it. The IMF will basically have to bail out the world by printing the SDRs (an international reserve asset created by the IMF in 1969 to supplement its member countries' official reserves). By that time, you will see the SDR emerge as the new global world currency,” Rickards told RT.
“The next time we will have a liquidity crisis in the world it’s going to be bigger than the ability of central banks to deal with it. The IMF will basically have to bail out the world by printing the SDRs (an international reserve asset created by the IMF in 1969 to supplement its member countries' official reserves). By that time, you will see the SDR emerge as the new global world currency,” Rickards told RT.
The US economy contracted sharply in the first quarter and bond yields have been falling at the fastest rate since the recession scare two years ago, in signs that bond tapering by the Federal Reserve is biting more than anticipated.
The slowdown comes as a key indicator of the US money supply flashes slowdown warnings, though the picture remains murky after extreme weather conditions over the winter.
Professor William Barnett, a former Fed official now at the University of Kansas, said the weak M4 figures are a sign that the US is not recovering properly, leaving the Fed with a grim choice as it tries to wean the economy off emergency policies that are themselves causing havoc. “The Fed faces a 'Catch 22' decision. I am glad I am no longer on the Board's staff,” he said.
The Fed has cut its bond purchases from $85bn to $45bn a month, and is expected to halt quantitative easing altogether by October as it pares back $10bn at each meeting. The taper is clearly chipping away at a key prop of the economy. The stock of narrow M1 money has not grown for four months, and M1 velocity has fallen to an all-time low of 6.3.
The Fed fears it has exhausted its arsenal. “It is too awful to think about what will happen in the next recession, so nobody does,” said Mr Achuthan.
According to the World Bank, internationally traded food prices increased by a sharp 4.0 percent. The leap was led by wheat and maize, up 18 percent and 12 percent, respectively.
As a result, international food prices in April were only 2.0 percent lower than a year ago and 16 percent below their record level in August 2012, the bank's quarterly food price report said.
"Increasing weather concerns and import demand -- and, arguably, to a lesser extent, uncertainty associated with the Ukraine situation -- explain most of the price increases," the report said.
Overall, international wheat prices soared by 18 percent quarter-over-quarter.
"Such a steep price increase had not occurred since the months leading to the historical peak in the summer of 2012," the report said.
International maize prices rose by 12 percent, with Ukraine, the third-largest exporter of maize, experiencing a 73 percent rise in domestic prices because of delayed plantings and increasing costs.
The United Nations reported last month that world food prices reached their highest level for 10 months in March due to poor weather in major producing countries and the crisis in Ukraine.
The UN Food and Agriculture Organization said its monthly food price index in March rose by 2.3 percent from February to the highest level since May last year.
Experts are concerned that rising prices will hurt the world's most vulnerable and could foment food riots and other social unrest.
In 2007 and 2008, soaring food prices had sparked dozens of riots across the globe, including in Haiti, Cameroon and India.
According to the lender, 51 food riots have occurred in 37 countries since 2007, most of them linked to a jump in food prices and aimed at local authorities.
This was the case in the crises in Tunisia in 2011 and in South Africa in 2012, the bank said.
"Food price shocks can both spark and exacerbate conflict and political instability, and it is vital to promote policies that work to mitigate these effects," the report warned.
The deputy commander of Iran’s Revolutionary Guard, Brig.-Gen. Hossein Salami said that the US’s status in the world has deteriorated and that its collapse is near.
“Today nowhere in the Muslim world” does anyone pull out “a red carpet for American officials and that’s why [US President Barack] Obama secretly” showed up at Bagram military base in Afghanistan without first letting President Hamid Karzai know, said Salami according to a report by Iran’s Fars news agency.
“And this shows that the US empire is coming to an end,” he said.
Obama made a surprise visit to Afghanistan on Sunday and spoke to the Afghan president, but did not meet with him.
Meanwhile, Iran’s Foreign Minister Mohammad Javad Zarif slammed Israel’s attempts to set redlines on the country’s nuclear program at a ministerial conference of the Non-Aligned Movement in Algeria on Wednesday.
“Is this not insolence towards the international law and the Non-Proliferation Treaty that [Israel], a non-member of NPT, which has massive nuclear arsenals and poses major existential threats to the entire Middle East region, sets redlines on Iran’s peaceful nuclear program?” asked Zarif, Iran’s Tasnim news agency reported.
A senior Palestinian Authority official announced that the US has invited the new Palestinian unity government's prime minister, Rami Hamdallah, to an official visit in Washington.
According to a report by Maariv on Friday, a Palestinian official stated that the invitation is a declaration of American recognition for the unity government . The official added, "The visit will take place in June, during which Hamdallah will meet with American president and visit the US Congress."
Head of the Fatah reconciliation team , Azam al-Ahmad said that, "The US administration has renounced its previous disapproval of the national unity government and will now support the new government."
Washington has previously announced that it expects any Palestinian government to refrain from violence as well as recognize Israel and agreements.
A US official has previously stated that the United States would have to reconsider its assistance to the Palestinians if Islamist group Hamas and the Palestinian Liberation Organization form a government together.
While the "use of armed [unmanned aircraft systems] is not authorized," The Washington Times uncovering of a 2010 Pentagon directive on military support to civilian authorities details what critics say is a troubling policy that envisions the Obama administration’s potential use of military force against Americans. As one defense official proclaimed, "this appears to be the latest step in the administration’s decision to use force within the United States against its citizens." Meet Directive 3025.18 and all its "quelling civil disturbances" totalitarianism...
Directive No. 3025.18, “Defense Support of Civil Authorities,” was issued Dec. 29, 2010, and states that U.S. commanders “are provided emergency authority under this directive.”
In these circumstances, those federal military commanders have the authority, in extraordinary emergency circumstances where prior authorization by the president is impossible and duly constituted local authorities are unable to control the situation, to engage temporarily in activities that are necessary to quell large-scale, unexpected civil disturbances” under two conditions.
The conditions include military support needed “to prevent significant loss of life or wanton destruction of property and are necessary to restore governmental function and public order.” A second use is when federal, state and local authorities “are unable or decline to provide adequate protection for federal property or federal governmental functions.”
“Federal action, including the use of federal military forces, is authorized when necessary to protect the federal property or functions,”the directive states.
Military assistance can include loans of arms, ammunition, vessels and aircraft. The directive states clearly that it is for engaging civilians during times of unrest.
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