Global Rebalancing Begins as China Opens Up Massive $9 Trillion Dollar Bond Market

JC CollinsEconomics, Premium POM

The internationalization of the Chinese renminbi has been the foremost objective which needs to be realized in order for the rebalancing of the international monetary system to take place. The plethora of policy adjustments and reforms to global institutions have all been building towards lower demand for USD denominated assets and increasing demand for RMB denominated assets.

Those working towards transforming and rebalancing the international monetary system have been managing in the direction of creating a framework which will be based on a multi-currency reserve system. This system would utilize predominantly the USD and RMB to achieve this rebalancing, with other currencies taking up the responsibilities which come with minor reserve positions.

One of the core methods by which these objectives can be reached is by China opening up their massive $9 trillion dollar bond market to foreign investors. This would create the dollar alternatives which will assist in shifting the wealth of the world. This shift will free the USD up for some much needed devaluation. It will also assist in stabilizing the renminbi and encouraging a much needed appreciation.

The Worlds Waning Appetite for the USD

JC CollinsEconomics, Premium POM

So much has changed so fast. These changes haven’t been discussed on the evening news and broadcasted across the airwaves. They haven’t been streaming on YouTube with millions of views and subscribers, nor have they been used as political platforms. But the changes have happened and most of us go about our lives with little, if any, knowledge and awareness about them.

The need for these changes has been building for decades and has now become one of the most important aspects of international relations. Economic and monetary specialists have been warning for a long time that imbalances are developing in the international monetary system. These imbalances are a direct result of the role of the American dollar as the primary reserve currency used in global trade.

When the post war dollar system was established at Bretton Woods in 1944 the United States had a larger percentage of the worlds GDP. It is estimated to have been at 50% and made the case for the use of the dollar as the primary reserve currency all the more reasonable. Nations began to accumulate large amount of US dollars in their foreign exchange reserve accounts.

Vietnamese Dong and a Possible Currency Crisis

JC CollinsEconomics, Premium POM

A Pretext for Exchange Rate Adjustments

The Asian Development Bank Institute (ADBI) published a working paper which suggested there was an increased probability of a Vietnamese currency crisis in the event there were sudden international financial shocks or changes in monetary policy. The paper detailed a broad scope of economic parameters and monetary fundamentals to support the thesis of potential overvaluation. Missing data sets included capital flows and changes to the exchange rate arrangement which the dong holds against the US dollar.

It is difficult for the ADBI to make firm conclusions without including information which determines capital flows, such as foreign direct investment, foreign portfolio investment, worker’s remittance, and official development assistance in the nation. None of this was included in the report, so we must consider the conclusions of enhanced overvaluation risks associated with a currency crisis to be somewhat speculative.

Still, there are some patterns which can be assumed based on the Asian Financial Crisis of 1997 and 1998. That crisis was sparked by a strong dollar which put additional stress on the emerging markets in Asia. The incremental and methodical interest rate increases by the Federal Reserve is once again causing concern as it could lead to a stronger dollar and a repeat of the 1997 scenario.

The ASEAN nations and trade bloc have taken some steps to minimize the repeat of such impacts but whether they are enough is not known until the time comes. This is where a currency crisis becomes possible.

The Trump pull out of the TPP (Trans Pacific Partnership) trade deal with the ASEAN nations has forced a restructuring amongst the regional trade group. Vietnam, who was one of the strategic and broad particpants in the TPP, is now forced to look towards deeper integration within the ASEAN bloc to ensure it has access to foreign markets for its exports.

The Political Revolution of Canada has Begun

JC CollinsCultural, Economics, FREEPOM, Geopolitical10 Comments

Apparently we need government to ensure that government doesn’t get in the way of capital investment and productivity. But I’m getting ahead of myself. Let me backtrack a few days to a time when it was Friday.

The 3 hour drive south from Edmonton to Calgary was relaxing and uneventful. The sun had been shining and the Queen Elizabeth II Highway was dry and smooth. Later that afternoon the Progressive Conservative (PC) Party Leadership Convention would begin. It was the first time in 30 years that the PC’s were using the delegate method of selecting a new leader.

Yours truly was elected as a delegate for my riding in Edmonton. But my motive was not solely related to helping overturn the current socialist left government which grabbed power in Alberta back in 2015. No, my motive was more personal and specific to the objectives and mandates which have been organically developing within Philosophy of Metrics (POM) for over 3 years now.

First on the agenda in Calgary was a business lunch with my big mining customer. Meeting at a place called the Swine and Sow (such an Alberta name) we went through the usual laundry list of friendly action items and began conversing about some more personal matters.

The first question he asked was why I was in Calgary for the weekend. Fair enough. Explaining the twisting and treacherous path I have taken to arrive at my current political ideology was a good place to start, but it quickly turned into a discussion about accountabilities and key performance indicators (KPI”s), or lack thereof, related to government.

We both agreed that if we performed as poorly as government in our careers we would have been skidded and replaced a long time ago. Efficiency and return on investment are the cornerstones of what we do every day and every week. Through safe and productive work practices we manage towards profitability and meeting pre-determined objectives.

Having the opportunity to work beside, and learn from, some of the best people in the mining industry in the world has been the backbone of my own personal and professional development. At times it almost feels like an extended family of likeminded individuals who share cultural and socioeconomic characteristics. It has truly contributed to the hardworking, ethical and strategic person I have grown to become.

One other benefit is that it has provided me the skill of sniffing out BS and insincerity in those who come in and out of my world. The intelligent and down-to-earth people in mining are some of the best in the world. Hands down.

Parting ways I headed off to check into the hotel and get my delegate badge at the convention registration. This was going to be a new experience for me but one which was much needed as I continue developing the wisdom of the POM brand and further define the seedling mandates and platform of the Republican Party of Canada (RPC).

Since starting POM many have messaged me privately and made comments within the community regarding actions which can be taken to regain control of our political and economic sovereignty. The traditional responses I have given were always focused on our own personal responsibilities and accountabilities. It is easy for us to point the finger and blame governments or banks for the faults and troubles in our world. I have been, and continue to be, reluctant to run down that rabbit hole for the same reason as I push all conversation towards inward reflection. The reason is simple. We are all humans with the same pattern of corruption, incompetence, and predisposition to seek out gain for selfish reasons.

Blaming others for the same negative and destructive characteristics as ourselves is tantamount to a sort of treasonous cultural self-exploitation. The differences between us and them are found in the socioeconomic level which we find ourselves as opposed to the method. Those further up the ladder are better positioned to take advantage of the inherent deficiencies in the system than those near the bottom with less means. The difference between us and them is one of means and not character traits.

Please don’t send messages stating that you are different and not corrupt. We are all corrupting to varying degrees and levels. Some of this corruption is conscious while some are unconscious, or subconscious if you will. The statements above are broad and meant to convey the average generalization from a high altitude and are not targeted at you as an individual.

Over the last few months I have been interacting with the Jason Kenney campaign to “Unite the Right” in Alberta. Here there are two conservative parties. One is the old elitist PC party and the other is the Wildrose Party. The wildrose is the symbolic flower here in Alberta.

The New Democratic Party (NDP) is far left and has socialist ideals and mandates. Since gaining power they have taken out the coal industry, exploded debt, and are even rewriting the educational curriculum in secret. The last one is obviously meant to assist in transforming the right-leaning Albertan demographic forever, which would ensure future electoral wins for the NDP, or whatever liberal-left party crawls forth to feed off the hard work of the people.

There is a great need to remove this group from the halls of power at the legislature building here in Edmonton. That much is clear, and my involvement and intention are true from that perspective. But I also wanted to learn about the inner workings of the political process and how such a “grassroots” campaign can get off the ground and be coordinated through the application of strategy and the use of social media.

If the Republican Party of Canada is to be successful it will need to understand the political strategies and gamesmanship of those who move and position within the current system. For awhile I even considered that maybe I would put the idea of the RPC on the back-burner and get more involved with the Unite the Right movement here in Alberta. But after the interactions with the Kenney campaign I have decided to stick with the original strategy of the RPC to exact fundamental change in Canada while using POM as a tool to transfer information, ideas, and wisdom to a new and growing demographic of populist idealists who are sick and tired of the same old politics of flashy talking points and reneged promises.

Now don’t get me wrong, Jason Kenney strikes me as being a fine human being, but one who has had his character and edge defined by the traditional political system of leverage between the left and right which has developed in the Western world over the last few centuries. The idea he expresses to unite the right and remove the socialist NDP from power is a good one. The problem is that he is supported by the same old elitist power players who have controlled Canadian politics for generations.

These players represent not just the political “dynasties” here in Alberta and Canada, but also business interests related to those political idols and identities. This far reaching incestuous relationship between business and politics is the same throughout the world. It represents the idea of means vs character traits we had just discussed a few paragraphs ago.

Being an astute observer has always been one of my best characteristics. Just interacting with the political process here in Alberta has provided the insight which I needed to reflect further and make some firm decisions regarding the path forward for the RPC. Every time I shock Jason Kenney’s hand he transferred hidden information about himself. Every interaction I had with riding captains and those managing the campaign from behind the scenes provided a new depth of understanding about the process and those involved.

The hard work and dedication is there. No doubt. One evening I was at a private residence were some of us delegates got to meet with Kenney and ask some questions while getting a photo taken with him. When he arrived he looked exhausted. The long days traveling across Alberta and meeting with people was obviously taking its toll. You have to admire such dedication, no matter the motivation.

During the convention I had the opportunity to talk with Kenney some more. There were also short introductions with others who worked on the campaign at a higher level than the delegate selection organizers who I had been interacting with. These were strategists and organizers who are the brains behind the overall plan to unite the right and install Kenney as the next Premier of Alberta.

On Saturday morning there was a Big Ideas discussion with a business person from Calgary, a current Member of Parliament (MP), also from Calgary, and some other guy who seemed to be promoting bigger government. Sitting in the room with around another 1000 people I listened as each presented their big idea and talking points.

One of the points which stood out to me was the promotion of Alberta government bonds being sold to Albertans as a way for them to invest in their own future. The idea of bonds is associated with the inefficiencies and accumulating debt of the central banking system. Bonds, or bondage, whichever twist you prefer, will not be the base of tomorrows socioeconomic system. The world is changing and these yesterday thinkers will live long enough to watch their ideological methodologies drift away on the winds of tomorrow.

The Impossible Interest Rate Increases

JC CollinsEconomics, Premium POM

Japan QE Tightening & the Trump Xi Jinping Meeting

The idea of the Federal Reserve increasing interest rates was considered by some to be impossible. It was speculated that if interest rates were to climb it would tank the whole system and cause a stock market crash. Though such statements and conclusions make for frightening headlines and increased website traffic the reality of the situation has been far less dramatic.

The semi-logic of such expectations does follow a sort of fundamental pattern. Interest rate increases cause the costs of debt management to escalate. The system has a lot of debt and has been in a growth contraction for some time. In such an environment it is understandable to consider rate increases as a bad idea.

What if the environment changed? How would this cause debt management to become more sustainable and allow for incremental interest rate increases over a period of time?

This is what we are dealing with now as the world continues to change and past assumptions are discarded for new realities. It was widely considered that the Fed couldn’t end QE and it did. It was assumed that the Fed would never begin the process of increasing interest rates and it did. It was said that Trump would never get elected and he did.

Now we are entering into a time period where even Japan is openly talking about ending and tightening Quantitative Easing. It is being considered that the Federal Reserve may even be increasing the frequency and amount of rate increases as job performance increases and the economy in America begins to improve.

The Mole Inside the Bank for International Settlements

JC CollinsEconomics, Geopolitical, Premium POM

Winning Back Control of America was Only the First Step in Trumps Grand Plan

By JC Collins

Taking control and transforming the systems of the world is no small undertaking. A clear strategy would need to be implemented which could leverage the existing frameworks while encouraging the enemy (the existing power establishment) to develop and implement the additional frameworks and mechanisms which you would later hijack and turn to your own advantage.

The status of the United States on the international stage is indisputable and undeniable. Both its economic and military prowess assures that whomever controls the gears and levers of power within the American establishment has the ability to direct and steer the course of world events.

And It Begins….

JC CollinsEconomics, FREEPOM24 Comments

Trump Treasury Secretary Mnuchin tells the IMF he expects a “frank and candid” exchange rate analysis. POM readers will not be surprised by this development. Article can be read at the following link:

Reducing American Influence Over Global Institutions

JC CollinsEconomics, FREEPOM22 Comments

The Trump Doctrine and the Promotion of Free and FAIR Trade

By JC Collins

It would appear that even International Monetary Fund Managing Director Christine Lagarde is picking up on the Trump language and doctrine when she recently stated that “the IMF has always been a supporter of free and fair trade”. This comes as no surprise as the Donald Trump Presidency has in essence hijacked the international process through its strategic take-over of one of the world’s largest economies and contributors to the Funds financing arrangements.

The Trump and Renminbi Negotiations

JC CollinsEconomics, Premium POM

By JC Collins

When Donald Trump labels China as a currency manipulator there is more to that broad accusation which should be considered. The obvious truth to economists and those who seriously study such matters is that China has been working hard to prevent the renminbi from depreciating as opposed to implementing monetary policies which directly encourage or force renminbi devaluation.

Is this the Path to Trump’s Middle Eastern Peace?

JC CollinsCultural, Economics, FREEPOM, Geopolitical11 Comments

The Original “Seven Countries in Five Years” and the Seven Nation Trump Ban

By JC Collins

“Jerusalem’s only rational and historical choice is to link up once more with the Christian community of Lebanon.” – Trump Foreign Policy Advisor Walid Phares writing in a 1997 paper.

Ten days after the terrorist attacks of September 11, 2001 a member of the Joint Staff told General Wesley Clark that the United States was going to take out seven countries in five years. The countries were listed as – Iraq, Syria, Lebanon, Libya, Somalia, Sudan and Iran. This story and the subsequent history which unfolded are well known to most readers.