Pattern Recognition and Rent Seeking Limitations
At first there was nothing but an absolute whiteness. It was an endless emptiness of infinite possibility. With a whisper there appeared a single black dot in the middle of the white vastness. The dot was less than - but would become more. The whisper echoed throughout the absolute and the dot smeared outward from both sides becoming a line. The single line filled the void with purpose and direction.
The line eventually duplicated itself followed by the two opposing ends turning inwards and outwards until they touched each other forming a letter “L” shape. The whisper sound returned but louder this time. The “L” shape also duplicated itself with only one of the two turning itself opposite until all four ends of both shapes connected forming a square.
The square sat in the whiteness of the absolute. It was both large and small at the same time. An impossible translucence that was almost solid.
My first thought was one of curiosity as I studied the square. Time was of no relevance so I do not know how long I stared at the shape before it also began to transition into something more than. I watched as the square duplicated itself five times. This made a total of six squares which floated in the absolute. All seemed to change size from small to large before finally positioning themselves into a conjoining shape.
The cube solidified in my mind’s eye as I began to differentiate patterns in the sound of the whisper. Some patterns made me feel sad while others brought feelings of security and comfort. As the whisper became a voice, and the voice a language, I felt the cube pull me into its center. There in the center of the cube I waited and watched as other shapes and colors formed outside the cube.
One by one the cube pulled the other shapes into its confined vastness. All the shapes of varying sizes and colors became a blur of motion. The motion also took on patterns which I slowly began to recognize as things of importance. The sensation of heaviness enveloped me.
There was hunger and tears.
Seeking out pleasure I roamed around in my heaviness, grabbing at objects, touching, smelling, and hearing distant sounds of satisfaction. Always one object became another until there was a chorus of material piling up around me. But always the pattern repeated. Endless, back into the infinite possibility from which it came.
In my early years I knew on a deep level that the world was not as it was presented to me by others. Giants walked around inside my world planting seeds from which truth would eventually blossom. But the truth would never come. The giants became smaller and smaller as I grew larger and larger. And the truth seemed to be lost within the geometric shapes that made up the material world around me.
It would take many years for the truth to be extracted from the patterns. And at times the truth would hide itself within false truths and sink back into the patterns. Many would waste valuable time and energy to pull forth false truths while the true truths lay embedded deep within the subconscious of our minds. The greatest true truth of all is the infinite possibility of the absolute just before the black dot materialized.
Like the black dot, fiat currencies are a false truth. Yet they are what we collectively gravitate towards in times of massive centralization. History proves this pattern. So what will it take for the world to back away from the fiat currency and transition to a more stable shape?
In the other parts to this series, we have discussed the 2010 Code of Reforms as agreed upon by the members of the International Monetary Fund. Though the agreements were made, the United States Congress has yet to pass the supporting legislation required to restructure the Executive Board of the I.M.F. The obvious reason for this is that once the reforms are passed and the board restructured the quotas for each country will change and the dollar will be stripped of its reserve currency status.
Congress knows this all too well and is pushing negotiations into dangerous territory as the world is threatened with currency collapse and sovereign debt defaults. As such many countries have been developing workarounds to the dollar by way of currency swap agreements.
The intention is not to repeat what we have already stated in previous posts. A quick refresher on some of the information will help as a lead in to the additional information contained within this part.
In part one we were introduced to the 1913 Chinese Gold Reorganization Loan bonds. A final payout on these bonds is indeed in the works and is one part of the overall 2010 Code of Reforms process. Every time a deal was to be finalized with the bonds it corresponded to the debt ceiling debate and Code of Reforms within Congress. They hopscotch each other onward until we find ourselves here today with no resolution on either.
It’s important to know that by China honoring the 1913 bonds, they will be able to access their full gold reserves, including the portion that was used to support the 1913 bonds. This is the same gold the Chinese government after the communist revolution denied having. They couldn’t now all of a sudden materialize said gold without explaining where it came from, or honoring the bonds which they supported.
With that being said, the bonds will not be honored at their full face value. These bonds will be considered a part of the overall sovereign debt of China and will be integrated within the SDR composition of the renminbi and re-allocated as securities through the BRICS Development Bank.
Like any debt consolidation, all sovereign debt most be included. The owners of the Chinese bonds will get their payout. The payout itself, is based on a flat amount already set for the historical bonds. This amount is specifically valued within the renminbi’s SDR composition. The more bond holders that come forward will decrease the individual payout for each bond holder. This is what has been agreed and implementation of the buyback program is simply waiting for the 2010 Code of Reforms to be passed through Congress.
Since most countries have sovereign debt and outstanding historical bonds, it stands to reason that other situations like the Chinese bonds will be handled in a similar fashion.
Another pattern that emerges as we study the history of reserves currencies is that with each reserve currency the centralization has become tighter and tighter. The reserve status of the U.S. dollar has brought this centralization to a whole new level. In simple terms the dollar has exported inflation to other countries. But when we realise that inflation is in fact a mechanism for further centralization the more complete picture comes into focus. Through increased centralization the countries of the world have sunk deeper into sovereign debts from which even more centralization will be offered as the solution.
The SDR solution, with a focus on further centralization, may have been the intended plan back in its inception. Hard to imagine, but perhaps the collective mind of the rent seeking small elitist group of organized special interests has unknowingly pushed forward on this path.
The International Monetary Fund is riding fast and hard on getting these reforms passed through Congress. Even to the point where Christine Lagarde is calling a new multilateral economic system non-negotiable. Sovereign debt restructuring is something the I.M.F. is taking extremely seriously.
Within America the Treasury is in favor of the reforms and is also putting pressure on Congress. The important question to answer here is why is there a division between the Treasury and Congress on the 2010 Code of Reforms? The Treasury is saying yes to the dollar losing its reserve currency status and Congress is saying no. Make no mistake about it, the power the United States has experienced since 1944 and the Bretton Woods Agreements has come from the reserve status of the dollar. After the reforms are passed and the Executive Board restructured, the U.S. will become a regular country like every other country in the world.
This of course will leave a huge void in the geopolitical world which will be filled by a consortium of foreign countries. We can see the anticipation of this opportunity by measuring the military buildup in other regions of the world. Especially in China.
But it’s not only geopolitical ramifications. There are profound cultural consequences to America as its stature in world affairs is minimized to that of a regular participating country. It’s a humble pie that perhaps some members of Congress, and other industrial and banking interests, are yet prepared to suffer.
Moving forward the potential threats posed by delaying the implementation of the SDR system are real and measurable. The reforms could come too late for effective sovereign debt restructuring. Or the debt restructuring, when finally implemented, could be insufficient to meet the expanding debt contracts under which the economies of the world toil. Banks exposed to debtors could see the confiscation of their assets. We are already seeing this as China has and will continue to purchase banks within the United States.
The rest of the world will not wait for Congress. But it’s my prediction that Congress will in fact pass the 2010 Code of Reforms and allow for the restructuring of the I.M.F. Executive Board. Its matter of timing, planned or unplanned. From the moment the reforms are implemented, the dollar will see multiple devaluations staged to coincide with a multi-staged restructuring of the debt.
It’s important to mention that with the passage of the reforms, the world will not see an overnight immediate response. The new system will take time to fully integrate. The Global Currency Reset will happen in levels as currencies are allowed to free float within the parameters as set forth by the SDR composition of each country.
As stated previously, this composition will include the following economic fundamentals:
- GDP – Self Explanatory
- Human Development - Research how China engineered a middle class to fill the empty cities they built over the last ten years.
- Ecological Sustainability – Programs through the United Nations make more sense now.
- Concentration and Diffusion of Assets – Investigate precious metal price manipulation.
- Income – Examples include the growing middle classes of not only China, but also Vietnam and other emerging economies.
- Demographics – Immigration and the mass movement of people are directly related to the planning of the new system.
The economic system as it stands today is out of balance and will be corrected by a supra-sovereign reserve currency by way of the SDR mechanism. Between the time the reforms are implemented and the year 2018, the currencies of the world will slowly adjust and fluctuate as their true SDR composition weight settles out.
As another pattern of note, the Basel 3 regulations from the Bank for international Settlements are also set to be fully implemented by 2018. They were originally scheduled to be completed by 2014 but also had to be pushed out because of the delays within Congress in regards to the I.M.F. Code of Reforms. This is not a coincidence.
As we touched on in a previous post, the SDR compositions will be segmented into different regions. Based on what I’ve learnt and what information is publically available, it is my best estimate that these regions are going to be as follows:
- Asia and Pacific Region
- Lower Middle East and Northern Africa
- Upper Middle East and Central Asia
- Western Hemisphere
- Southern Africa
- South America
Right now the Ukraine is the hinge between Central Asia and Europe. Syria is the hinge between the Upper and Lower Middle East. The border area between both will become major trade zones with Lebanon regaining much of its past glory.
The hinge between the Western Hemisphere, comprising Canada, Mexico, and the U.S., along with some Central American countries, will find its hinge in the Nicaragua region as the Chinese funded alternative canal project takes form. This new canal through the center of Nicaragua will include two international airports, one at each end, oil and gas pipelines, and a shipping lane almost ten times the length of the Panama Canal. It will take eleven years to complete and is considered the largest construction project in the history of the world.
The SDR compositions themselves will be based on both macro and micro weights and measures. The macro breakdown of each country’s currency composition will be as follows:
- 25% Production Commodities (such as oil, gas, rice, wheat, iron ore, etc…)
- 25% Foreign Reserves and Precious Metals
- 50% Fiat – Pegged to increase and/or decrease based on the fluctuating values of the above 2 factors.
How the SDR composition system is setup will in essence work as a form of self-limiting rent seeking for the purpose of economic balance between the small elite organized group and the larger worker disorganized group. For a more detailed explanation of rent seeking and what is being proposed here, read the post “What Are Conspiracy Theories?”.
It was my intent to also discuss the cultural impact that the New Bretton Woods will have on the world. But I have stretched this post out too long I’m afraid.
In parting, I’d like to close this essay off by saying that every manner of concept and design can be implemented into the world economy. Like the black dot which limited the possibility in the white world of the absolute, all systems will invariably self-corrupt and begin anew the process of centralization or the movement towards decentralization, which is collapse. The world has seen complete decentralization on all levels, both macro and micro, before in the era of the so called dark ages. This came after the gradual collapse of the Roman Empire. There was nothing organized and semi-centralized to take its place. Though there were “pockets of prosperity” sprinkled throughout the world.
What I ultimately propose is a system of balance between micro decentralization and macro centralization. The New Bretton Woods which I have been attempting to describe could be such a system. It’s an opportunity for regions and economies of the world to earn a composition value through local energy expenditure and production while safe guarding a new method of energy storage from rent seeking groups. It is my belief that the SDR composition system holds the potential for such energy storage and economic efficiency. We can be more than. – JC