By JC Collins
It is widely expected that the current trend of money creation cannot continue indefinitely without a much larger collapse of the world’s monetary and financial systems. The act of creating money is perhaps the biggest problem facing the international community today. The ability of banks to create money from deposits and inject the highest percentage of that money into the financial markets, as opposed to the real economy, needs to be corrected as the multilateral framework emerges further.
Most readers understand that the multilateral monetary framework is being built around the broader use of the Special Drawing Right (SDR) of the International Monetary Fund. The SDR is a basket of national currencies which was first introduced in 1969, but has since went through frequent transformations on weighting and composition.
The latest incarnation of the SDR will be effective this October when the Chinese renminbi is added to the basket alongside the US dollar, euro, pound, and yen. Though the SDR is the seed of a true-to-form global currency, the process of transmutation itself will take an extended period of time as adjustments and corrections are made to the macroprudential policies of the global institutions, as well as the banking and financial regulations of each nation and region.
In the meantime the monetary and financial frameworks will begin functioning on both a multicurrency reserve methodology and the broader role of the SDR as an additional form of reserve diversification and injection point of liquidity.
Those that protest such a transformation of the international monetary framework and functionality must consider that this new age of money creation will in fact remove the ability of most banks to create money out of deposit slips.
I say most banks for the simple reason that the central banks of nations will temporarily retain the function of money creation during the transformation process. The immediate changes will come at the domestic level as the internal relationship between private banks and capital within each nation is reworked to accommodate the larger and more macro mandates of the multilateral framework.
The move towards a single global economy will require a further democratization of capital as the relationship between that capital and labor is redefined. This changing functionality is constructed around the basic relationship between the sources of capital and the users of capital. (Readers can reference The Fundamentals of Multilateral Investing series for additional information on savers and users of capital.)
The changes to the domestic banking functions of each nation will likely be implemented alongside the broader use of the SDR as a method of providing liquidity to distressed nations. The Basel 3 Banking Regulations of the Bank for International Settlements is the first step in this process.
The old economic values and standards are shifting. The subsequent changes will be imminent and far reaching as the relationship between capital and labor is redefined and a third methodology emerges. How this third and evolved group functions will depend on the additional socioeconomic trends and mandates which merge alongside it.
It is a strange wonder that those who protest the existing method of money creation, as well as protesting the supra-sovereign mandates of the global institutions such as the IMF and BIS, will witness the realization of one from within the other.
It is a similar diametric evolution which will see the ideological blending of the once opposing positions of communism and capitalism. The recent statement by Obama about there being very little difference between the two ideologies, and how you can utilize what works best from within each, is a well-placed statement which communicates the path forward.
The onset of robotics and AI technologies will further release man from the long hours of labor. This will fundamentally alter the existing relationship between capital and labor. Capitalism and Communism, the diametric manifestations of capital and labor, will consolidate around a new form of socialism which is meant to accommodate the expansion of man’s creative and spiritual “sovereignty”.
The straightforward manner in which I communicate this information should not be taken as outright and unconditional support. As in all things, there are some parts of the whole which are more easily assimilated, and some parts which require further consideration, and perhaps rejection.
The focus and take-away for the reader should be the evolution and merging of once opposed diametrics.
The demand and movement for a fair money creation process has been strategically injected into the collective consciousness of the socioeconomic lifeform of most nations. The fact that this expectation will be realized upon the movement towards the consolidation of sovereignty within the macro multilateral framework should be carefully processed by the disorganized masses.
The problem, reaction, solution aspect of the well-rehearsed and promoted economic and financial collapse has been harmonized within the collective consciousness of the masses with tuning fork perfection. The demand for changes to how money is created is one of the fundamental injection points for the new age socialism which is emerging. – JC
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