Happy New Year and Second Anniversary to All POM Readers (FREEPOM)

JcollinsFREEPOM33 Comments

By JC Collins

First I would like to thank all POM readers for the continued support over another year. We are two years into this experiment which I started on Dec 31, 2013, and I am still humbled by the comments of those who have found value and education in the material I produce for the site. To know that this site has become so important to so many is both inspiring and heartwarming.

The site had a big change this year, which was the switch to a subscription service. So many understood the need for such a change, as the amount of time and energy I put into every article for research and writing shines through in the accuracy of the material produced.

This One Event Signals the End of the Petrodollar Arrangement

JcollinsEconomics, Geopolitical, Premium POM14 Comments

But the US Dollar is Alive and Well

By JC Collins

Over the last few years there has been a lot of talk about the end of the petrodollar and the relevance of OPEC. Every time an energy deal was signed between Russia and China, or China and Saudi Arabia, or Russia and India, where the US dollar was not being used to balance the trade, it was considered another nail in the coffin of the petrodollar.

Many of these proclamations took the conclusions a step further and stated that the end of the petrodollar would be the death of the US dollar itself. This is in fact not the case. But the petrodollar arrangement is coming to end.

The Myth of China Dumping US Dollars

JcollinsEconomics, Premium POM13 Comments

Why America Has a Strong Position in the New Bretton Woods Negotiations

By JC Collins

Understanding how balance of payments work is key to understanding the monetary leverage which one country holds over another. Based on the modern method of money creation, the functionality of balance of payments is really a zero sum game.

Allow me to explain.

The importance of aligning all nations within the same structural central banking framework becomes obvious when the fiat method of money creation is considered. The intent of this post is not to debate the merits and faults of such a system (eg. Fiat money creation allowed for the expansion of the money supply which funded the industrial revolution, but also indebted nations to each other, and in turn, to an invisible web of international banking interests), but to demonstrate the ebb and flow of wealth as it shifts around the world.

Is this Man from China the Next Managing Director of the IMF?

JcollinsEconomics, Premium POM2 Comments

By JC Collins

When Christine Lagarde was seeking votes to become the Managing Director of the International Monetary Fund back in 2011, it came as a surprise to many that China supported her nomination. When many expected China to put their own candidate forward, a different strategy was implemented, and China, along with other emerging markets, threw their support behind Lagarde.

After taking the role of Managing Director of the Fund, Lagarde began to promote the implementation of the 2010 Quota and Governance Reforms. These reforms, which have now been enacted by the US Congress, will increase the quota amounts allocated to the emerging markets, such as the BRICS countries. The reforms also restructure the governance board by giving more seats to the emerging markets while taking away from Europe.

Merry Christmas and Happy Saturnalia

JcollinsFREEPOM40 Comments

Wishing all POM readers the very best on this oldest of holidays.  The origin of the traditions associated with December 25 are lost in the dark recess of human emotion and thought.  Having been celebrated by different cultures and societies in vastly different ways, today we can at least remember … Read More

China is Creating a Middle Class

JcollinsEconomics, FREEPOM10 Comments

For those POM readers who are following, the recent announcement by China of a points system for its citizens will not come as a surprise.  This was covered back in March in the post The Redback Revolution. In that post I stated the following: China has developed an urbanization plan … Read More

How America Lost its Sovereignty (FREEPOM)

JcollinsEconomics, FREEPOM21 Comments

The Dual Purpose of Debt Management and Debt Restructuring

By JC Collins

Just after World War Two the United States had a massive debt-to-GDP ratio of over 140%. Today’s debt-to-GDP ratio of 104% seems paltry in comparison. But along with a huge debt-to-GDP ratio after the war, the US also had one of the largest trade surpluses in the world. Much like China does now.

The difference, China’s debt-to-GDP ratio today, for government debt, is around 42%, with a balance of payments surplus of over $60 trillion. This puts China in a very strong position within the multilateral monetary transition which is taking place.

At present time, the US has a large trade deficit, with China being the biggest creditor, and a high debt-to-GDP ratio. The ability of the US to push its debt-to-GDP ratio down after the war had a lot to do with its strong balance of payments position at the time.

The Correlation between Fed Rate Increases and Renminbi Internationalization in 2016

JcollinsEconomics, Premium POM10 Comments

By JC Collins

The big macroeconomic strategies which will unfold over the next 12 month period will involve the following data points:

Incremental Fed Rate Increases
Expanded Renminbi Internationalization
Foreign Exchange Reserve Diversification, Substitution, and Reduction
Beginning Phases of Sovereign Debt Restructuring
Multi-Currency Baskets
Regional Trading Blocs
Though all strategies are linked together, our main focus for 2016 will be on the first three, with a spattering of the last three thrown in for good measure.

U.S. Congress Finally Approves IMF 2010 Quota & Governance Reforms

JcollinsEconomics, Premium POM31 Comments

America is Stepping Back on Some Geopolitical and Socioeconomic Fronts

By JC Collins

At long last the US Congress has adopted supporting legislation to the International Monetary Fund’s 2010 Quota and Governance Reforms. The last deadline given to the US by the G20 and the IMF was December 15th, which appears to have been met as Congress passed an omnibus spending bill Wednesday morning which included a provision to legally enact the reforms.

This milestone on the multilateral monetary transition further enforces the analysis presented here on POM and can be most realistically understood as movement on the US front to concede its unipolar geopolitical and socioeconomic positions.

China Just Ended the Dollar Peg (…for the most part) FREEPOM

JcollinsEconomics, FREEPOM, Multilateral Investment Strategies26 Comments

Rise of Multilateral Exchange Rates & the Feds Rate Hike

By JC Collins

On March 25, 2015 I published a post titled When Will China End the Dollar Peg. In that post we speculated that the USD based managed peg of the RMB will be removed before the end of the year. Just in time for the implementation of the AEC trade agreement which starts on January 1, 2016.

As we can now determine, China has in fact created an alternative valuation for the renminbi which will function outside of its dollar based exchange rate arrangement. This new composite index will help stabilize the Chinese currency as the Federal Reserve begins the process of policy normalization through incremental interest rate increases.