China’s New Crude Benchmark

Economics, Geopolitical, Premium POM9 Comments

How Iranian Oil & Saudi Dollar Peg Will Change the World of Energy

By JC Collins

At some point in the first quarter of 2016 China will introduce their version of London’s Brent and the WTI crude futures contracts. The Shanghai International Energy Exchange (INE), a third international crude benchmark, will price energy in renminbi and will serve as an alternative to the western dominated contracts.

Alternative benchmarks have been attempted before, and Russia is attempting to develop its own benchmark based on the ruble. The challenge which any new and alternative benchmark will face is one of sustained liquidity. The internationalization of the Chinese currency and its inclusion into the Special Drawing Right basket of the International Monetary Fund will create a yuan liquidity market which can support the INE through the initial start-up phase.

Seven Confirmations of Seven POM Trends in Seven Days (FREEPOM)

Economics, FREEPOM, Geopolitical22 Comments

And it’s Only October

By JC Collins

“Somehow it seemed as though the farm had grown richer without making the animals themselves richer – except, of course, for the pigs and dogs.” - George Orwell, Animal Farm

Seven important stories emerged in the global media over the past week which further confirms the analysis presented here on POM. Though timeframes and specific data points may vary and fluctuate, such as interest rate movements, the overall trend is moving along the multilateral path which has been defined and discussed here through thousands of pages of research and laborious writing.

It was presented here back on March 25, 2015, in the post When Will China End the Dollar Peg that China would in fact be moving towards ending the peg which it manages against the US dollar. In that post I stated the following:

“One of the biggest questions which we need to consider as the world moves closer to the full implementation of the multilateral financial system is when will the RMB end its managed peg to the USD? Now that the official request has been made to the International Monetary Fund, for the yuan to be included into the SDR basket composition, it is only a matter of time before the ending of the peg occurs.”

The Monetary End Game

Economics, Geopolitical, Premium POM20 Comments

The Division in America on the Middle East and Monetary Reform

By JC Collins

As the value of gold continues its wild ride of increases and decreases, the latest US jobs report is less than stellar. A lower amount of jobs were created than expected, and wage growth is almost non-exist.

What this means for interest rate increases is anything but good.

There is a very real possibility that the Fed missed the best opportunity it would have had last month when it declined to raise rates a miserable quarter of a point. But to think that rates will never increase again is delusional.

The problem the Fed, and other central banks are now facing, is a growing risk of a loss of faith in fiat currency. The aging structure of the current monetary framework, based on the supreme unipolar role of the USD, has ran its course, and will soon be replaced with a multilateral framework which will more equitably represent the economic realities of the financial world.

The China, Russia, Iran Axis and the Creep of Monetary Reform

Economics, Geopolitical, Premium POM17 Comments

Could a Regional Force Turn Against Saudi Arabia & Israel?

By JC Collins

With the growing concentration of military power in Syria comes the increased potential of a major regional conflict. Such a conflict, between China, Russia, and Iran, as well as Syria, on one side, and the US, Jordan, Saudi Arabia, France, Canada, Australia, Britain, etc.., on the other side, could very well be considered a war involving the world’s major powers.

But consider the possibility that such sides will not materialize, and influential leaders will be successful in their attempts to organize and consolidate all under one collective mandate. With Germany’s Angela Merkel stating today that Assad must be a part of any Syrian peace talks, and Russia and China both becoming more involved in the conflict, such a possibility is now appearing to be more probable than it would have appeared only a few weeks ago.

United Nations & the Sept 15th Convergence of IMF/BRICS Mandates

Economics, Geopolitical, Premium POM4 Comments

By JC Collins

The Russian Foreign Minsiter Sergey Lavrov, speaking at a University in Moscow yesterday, made it very clear that the BRICS institutions, being the New Development Bank (NDB) and Contingent Reserve Arrangement (CRA), hold the primary function of supporting the interests of its five members within the existing international monetary framework.

“It was formed to uphold the interests of these “new countries” in the framework of international financial relations, including the IMF and the World Bank. It’s not some whim but a reflection of objective reality.”

As I’ve long stated, the BRICS will be facilitating, along with the IMF, World Bank, and United Nations, the transformation of the international monetary framework from the existing unipolar model to a more reflective multilateral architecture.

US Dollar Will Devalue by 20% to 30% (FREEPOM)

Economics, FREEPOM, Geopolitical102 Comments

Interest Rate Increases & Continued Gold Devaluation

By JC Collins

I’m just going to come right out and state it with absolute clarity. Gold will continue to depreciate.

Not only that, but the Fed will continue with the planned incremental interest rate increases which are set to begin at any time now. The normalization of monetary policy is considered impossible by many analysts and economic commentators. This is mainly because the larger play, being the transformation of the monetary framework, is not fully understood.

The incorrect assumption is that the US dollar will be replaced as the international reserve currency by the Chinese yuan, which in turn will cause the USD denominated assets (Treasuries) in the foreign exchange reserve accounts around the world to be “dumped”, leading to a flood of dollars coming back to American shores and causing the ever-threatened and often-predicted hyper-inflation.

The Sovereign Debt Complex

Economics, Geopolitical, Premium POM42 Comments

How China and America Are Waging a Quiet War over Sovereign Debt Restructuring

By JC Collins

Note: This large article of 2300 words is one of the most important pieces I’ve written on the multilateral transition, as it ties much of the previous material together to present the reader with a conclusive and realistic analysis of what is happening internationally, both economically and geopolitically.

The most pressing issuing facing the international monetary order today is the threat of sovereign debt defaults and the loss of confidence in sovereign bonds. The sovereign debt crisis is growing at a brisk pace with most of the attention on Greece. But many other countries could quickly slide into the limelight and steal the show. Some of these countries are Spain, Italy, Ireland, and even the United States.

If China can successfully cut the United States out of the South China Sea, than it would put immense pressure on Japan, another larger holder of US debt, to support the SDRM solution to sovereign debt restructuring. Japan, a country on the verge of its own sovereign debt crisis, much like Greece, cannot hold out much longer before a solution will need to be implemented. Both Japan and Greece will take the world with it, including China and the United States.

China Gold Deposits to the IMF

Economics, Geopolitical, Premium POM13 Comments

The world has never used a supra-sovereign (non-domestic) currency as the global reserve asset, and as such, there are some unknown factors which could swing valuations and volumes. The agreement between all countries and global institutions on a multilateral framework has been in negotiations since at least 2009, if not earlier. Many of the geopolitical and macroeconomic adjustments (such as the tension with Russia and the Swiss franc depeg) are symptomatic of the challenges presented by attempting to draw all countries into a multilateral framework.

There are so many moving pieces to this transition, but some semblance of pattern is beginning to take shape. Based on the demand of China to have their own domestic currency added to the SDR composition, and the agreed upon accumulation of gold by China, along with the “multilateralization” of gold exchanges, such as in London, and the rise of the yuan denominated SGE, can be interpreted as early indicators of the intent of Chinese authorities to place a large amount of gold on deposit with the IMF, in anticipation of the implementation of the SDR as the global reserve asset.

Conflict and Commonality Between Multilateralism and Democracy

Cultural, Economics, FREEPOM, Geopolitical, Premium POM95 Comments

By JC Collins

With the increasing socioeconomic tension in the United States, it is reasonable to expect that the population could begin to see the scaling back of police state methodology and the beginnings of a more democratic process which reflects the growing demand for fair and equitable representation.

Whether its protests and rioting against the abuse of power by police, or legislative bills demanding an audit of the Federal Reserve, the pattern of reversal is beginning to take shape. Some assumption can be made and discussed regarding the rise of multilateralism and the effects of a waning unipolar American world.