When Will China End the Dollar Peg

Economics, Premium POM88 Comments

The Last Year of American Hegemony

By JC Collins

Update:  The IMF and China sign agreement on strengthening fiscal institutions and capacity development.  China is now heavily involved with the integration of its financial and monetary architecture within the macro multilateral framework.  This should eliminate any remaining doubt as to the validity of the transition. - JC


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.

There are a few time frames we are working with.  One is the May meeting of the IMF where the first formal discussions around the new SDR composition will take place.  The second is in October, which is when the new composition will be confirmed.  Finally, the new basket will come into effect on January 1, 2016.

There are some key indicators and trends which we can use to build a case for the time frame of this event(s).

The official IMF transcript of a speech Christine Lagarde gave in China yesterday will offer us our first clues.  The  excerpts below are from that speech, followed by my interpretations.

"The implementation of structural reforms as outlined in the 3rd Plenum Blueprint is underway. This should lead to slower, safer, and more sustainable growth--with a focus on innovation and entrepreneurship--which will be good for China and its people – and good for the world."

The market and financial reforms from China's Third Plenum detailed back in 2013 have been discussed across many platforms. The consensus is that the financial reform component of the Plenum, which included the mechanism for exchange rate adjustments, was a reference to the widening of the exchange rate band with the USD that took place last year.

It is my contention that this segment of the Plenum is referring to a larger move in the exchange rate mechanism, as would be necessary for the RMB to be included in the SDR basket.  Having the yuan remain pegged to the dollar would be pointless in the SDR framework, as it would not offer broader stability, which is the point of the inclusion in the first place.

"I noted the impressive efforts made by the Chinese government to reform in three key areas in particular: cleaning up the house, by promoting good governance through strengthening the legal framework and the anti-corruption campaign; cleaning up the air, by curbing pollution and preserving the environment; and clearing the path to even more engagement with the world, through China’s further participation in the multilateral dialogue and through more international investment and trade. I welcomed China’s various initiatives in this area, including through the newly established Asian Infrastructure Investment Bank (AIIB)."

This statement was thoroughly discussed in the previous post titled The Coming Western Tribunals.  The references made in that post to historical sovereign bond debts and environmental cleanup, as well as anti-corruption, is validated with this statement from the IMF.

“I am very impressed by the rapid internationalization of Renminbi (RMB) in recent years. The authorities’ commitment to accelerate reforms, particularly in the financial and external sectors, should further facilitate the international use of the RMB. The authorities have also expressed interest in having the RMB included in the SDR basket. We welcome and share this objective, and we will work closely with the Chinese authorities in this regard."

This statement confirms the information which was provided last year in the post titled Renminbi is Already A Defacto Reserve Currency.

"During our meetings, we also discussed the delays in implementing the IMF’s 2010 quota and governance reform. I share the authorities’ view that every effort should continue to be undertaken to ensure that these reforms can be made effective as soon as possible."

This was previously reviewed in the post Renminbi and the Alternative IMF Reforms.

The trend of information which we have been following for the last 15 months is now being validating almost daily as the official announcements and events play out as expected.

It is rudimentary to suggest that the country with the largest economy on Earth can not keep its currency pegged to that of another.  The price discovery which will take place in the opening days of the pegs end will see appreciations of the RMB.  Some of the benefits of this upward valuation will be realized as foreign funds are encouraged to enter China, there will be lower Chinese company operating costs, in the form of cheaper imports, and the Chinese will be able to purchase foreign assets cheaper.

The appreciation of the yuan will also slow economic growth within China, which is also something mentioned above by Lagarde in her speech.  This was also reviewed in the post The Redback Revolution.

To determine the timing of this event(s) we need to consider what other factors and systemic implementations align with the months of May and October.

First, there is the China International Payment System, or CIPS, which was originally scheduled to be operational in 2014, but was delayed due to technical difficulties.  (This technical difficulty may have something to do with the missing Malaysian plane last year, which had 20 employees from the computer processor manufacture Freescale Semiconductor.  A spokesman for the company said the employees, who were traveling to China, were very important employees of the company who worked on processor technology.  There is little additional information available, but the timing of the planes disappearance with the original start date of CIPS, is highly questionable.  See post The Algorithmic Central Bankers for additional information.)

It is now stated that the CIPS system is ready to go, and is only going through final testing with 20 banking institutions, 13 of which are Chinese, and the remainder as foreign subsidiary banks.  The new operational start date is in October,  but it could be fully operational at any time.

This October time frame corresponds with the next fiscal crisis in America where the debt ceiling is reached and the Treasury runs out of money to fund the government.  This could create an excellent pretext for the Chinese to end the peg.  When a similar situation happened in October of 2013, the Chinese were very outspoken on the volatility in the USD.

It has been suggested that China may announce its actual gold reserves this spring, either April or May.  This corresponds with the May time frame of the initial formal IMF discussion on the SDR basket changes.  Lets explore this some more.

Chris Hamilton wrote a piece last week which was published on the SRSroccoReport site.  In it he discussed the increase in China gold reserves, where those reserves came from, and how they were paid.

"Who would have this massive amount of gold in inventory (and willingly sell it at significantly lower prices) and why would the price of gold collapse on this clear imbalance in demand over supply? Most sources of potential inventory are audited on a regular basis and this draw-down would be quite noticeable. Of course, the greatest source of gold holdings are collectively held by the Federal Reserve and the US Federal government…and this is not openly audited."

"Put it all together…China, the largest buyer of US Treasury’s ceases buying Treasury’s…and US Treasury yields collapse?!? The Chinese (and others) buy record amounts of gold and create an imbalance of demand over available supply…and prices collapse?!?  These are clearly not the actions of a market attempting to find a balance between price, supply, and demand."

The transfer of massive amounts of gold to China is something which has been well covered by many analysts, Chris Hamilton being one of them, and Koos Jansen being another.  Let's explore a very real possibility for the source of this gold transfer.

China has a sovereign debt which hasn't been honored, and will need to be before the RMB can be considered for the SDR composition. This debt, estimated at more than $1 trillion today, was issued in the first half of the 20th Century in the form of bonds, and was supported by the vast amount of gold holdings which the Japanese took from the country during its brutal invasion in the lead up to World War 2.

From the New English Review piece titled Will China Pay the $1 Trillion it Owes Americans:

"The Chinese government doesn't like to talk about it and the U.S. government doesn't want to raise it. But decades ago, Beijing defaulted on debt owed to Americans, as well as investors and governments around the world. In one case, it was paid. In the rest it was not. More than 20,000 American investors own this debt. The U.S. government may also own Chinese war debt, unpaid since World War II."

The one case in which the bonds were honored was in the changeover of Hong Kong from British control to Chinese control.  British bond holders were paid out and the rest were ignored.  From this we can determine that China is using this sovereign debt as a strategic tool in its bargaining with the existing international framework.

With that being said, the increase in gold holdings which Chris Hamilton has referenced above is reflective of the gold which had been stolen from China by the Japanese, which the bonds had been issued on,  and is now returning back to China.  This was obviously a requirement before China would honor the bonds.

The closure of this bond deal, and the announcement of the official Chinese gold holdings, will correspond with the end of the RMB and USD peg.  China, as previously stated, will likely partially support the yuan with these official gold holdings.

If this indeed takes place in April or May, it will correspond with the first formal SDR meeting at the IMF.

The October time frame aligns with the operational start dates of both the BRICS Development Bank and the Asian Infrastructure Investment Bank.

So far, we have most key indicators pointing towards the October time frame, which corresponds with the final review and decision on the SDR composition.

But before making any final conclusions, we will need to take a closer look at the Chiang Mai Initiative Multilateralization and how China's trade partners will react to an end of the RMB/USD peg.

The CMIM is an agreement between ASEAN members to help provide assistance to countries experiencing balance of payments and short term liquidity difficulties.  The agreement came into effect on July 17, 2014, around the same time the CIPS systems was to come online.

Under CMIM, a member country can draw up to 30% of its allocated quota amount under the agreement, without being subject to IMF conditions. The remaining amount, 70%, is required to be connected with an IMF program.  The CMIM acts as a supplemental regional safety net to the IMF.  As such, the CMIM cannot function without the IMF.

The Chiang Mai Initiative is one segment of the ASEAN Economic Community blueprint.  For those who don't know, AEC is a game changer.  It's mandates are nothing less than:

  • Harmonization in payment and settlement system (CIPS)
  • An Asian monetary union (with countries maintaining their domestic currencies)
  • Single market for financial products
  • Uniform exchange rates between ASEAN members

All phases of integration are scheduled to be completed and operational by Jan 1, 2016, the same date that the new SDR composition, with the RMB, will take effect.

International audit and financial advisory company Deloitte has published a document titled The ABC of AEC - To 2015 and Beyond.  This document attempts to explain and direct the reader through the maze of AEC integration, and why its important.  The document opens with this:

Across Southeast Asia, all the chatter around the ASEAN Economic Community (AEC) is focused on a single date: 31 December 2015. But the reality is that not everyone understands what that date means. What is it and why wait until then to do it? What will the impact be? Will we wake up to a different world on 1 January 2016?

The obvious connection between the CMIM, and it's IMF structure and mechanics, with the AEC, and its operational start date of Jan 1, 2015, along with the new SDR composition, is clear evidence for the reality of the macro multilateral framework which we have researched and presented here on this site.

The phased integration of AEC and the relationship between the IMF and CMIM make the 2010 IMF Quota and Governance Reforms all the more important.  The AEC, and by default the CMIM, cannot function without the fair representation of China and other emerging economies on the Executive Board of the IMF.  Not to mention that the quota amounts from both the IMF and CMIM will have to align at the 30%/70% ratio defined above.

But it doesn't end there.

With the regional exchange rate coordination, or uniform exchange rate between ASEAN members, we are likely to see most countries peg their domestic currencies to the Chinese yuan, as it will be the regional reserve currency which is in the SDR composition.  This will position the AEC to avoid the inherent challenges in a regional currency like the euro, which it has publicly stated it does not want.

The uniform exchange rate structure will ensure that no opposing, or dual exchange rates are used within the monetary union.  It is highly unlikely this means all currencies will be at parity, but member countries could use the Shanghai Gold Exchange as a means of supporting the uniform structure, with predetermined rates set for each member country, based on similar weights as what will be used in the SDR composition.

This is the mechanism by which we are likely to see a revaluation of regional domestic currencies, such as the Vietnamese dong.  We have reviewed the probability and intent of the State Bank of Vietnam to at some point end the dongs peg with the USD and peg to their largest trading partner, which is China.  This was discussed in the post Dongs Revaluation is Imminent.

We can see now that the mechanism which will be used for this revaluation is built within the structure and phase integration of the AEC implementation, which in turn is determined by the larger process of the RMB being given reserve status and included in the SDR composition.  And the SDR is the reserve unit of account used by the IMF.  The same IMF which supersedes the mandates and organizational flow of the CMIM, Chiang Mai Initiative.

In the post Dong and the Pan-Asian FX Trading Center we reviewed how the dong and yuan were already directly convertible in a test market only. This fits within the parameters of the AEC blueprint as well.

Returning the time frame for the RMB to end the peg to the USD, we are still faced with the two possible dates of May and Oct, with the final results being in full effect on January 1, 2016.

It could really happen at any time in between May and Oct, but I will put forth one possibility which has begun to settle well on me, considering the careful action of China at every step of internationalizing the yuan.

It is possible that we could see China announce their full gold holdings in April or May, in time for the first formal meeting on the SDR, and perhaps even partially peg the RMB to gold, while at the same time widening the USD peg instead of removing it.  This would allow the Chinese to feel their way through any possible market adjustments or fluctuations in the price of gold, and volatility with the dollar.

This would serve to apply more depreciation pressure on the USD in the lead up months to the US budget crisis and SDR confirmation meeting in October.  At that time, China could fully sever the peg with the USD and allow the yuan to float freely and realize the price discovery appreciations which would have built up in the currency like a stored kinetic energy.

The other ASEAN members would follow and lead into the final implementation of the AEC blueprint by the end of the year, which is meant to correspond with the new SDR on January 1, 2016.

And lets not forget that the AIIB and BRICS Development Bank will also be fully operational at that time as well.

 When faced with time frames of either May or Oct for the depeg to occur, it is my contention that it will happen piecemeal, with a widening of the peg range in May, followed by a full ending of the peg in Oct.  The official gold holdings and any partial support this may offer to  the yuan could happen on either time frame, though I'm leaning towards sooner rather than later.   What is certain is that we are going to wake up on the morning of January 1, 2016 living in a different world than the one we are living in today.  This could very well be the last year of American hegemony.  - JC

Subscribe to POM for detailed analysis on macroeconomic trends.


All 3 month and 1 year subscriptions receive access to the epublication series The Economic Transition Papers.

88 Comments on “When Will China End the Dollar Peg”

  1. Maybe Keynes was right. If this is all pulled off and the world carries on as normal (minus a few bumps along the way), perhaps we could 'outgrow' the debt by means of technology such as alternative energies and automative technologies and AI/robotics. By 'we' I mean only the top 0.01% (because they're the only people that matter on this planet, remember). Another 10 years of us plebs building them cool stuff and that gives them enough time to build their elysium.

  2. China will not end the USD's price peg to precious metals. It's a head-fake, unless China actually wants war.The peg is what saves the USA on the basis of real-time gold-as-money being monetized and utilized going forward.

    Why do you suppose China has all this easy access to gold bullion purchasing ? When bullion has a monetary application, its value, like that of any currency, is in the movement, not just in the having. The USD is the measurement turnstile .

      1. The peg ended. Management of precious metals never did. The U.S. only allowed its citizens to own gold again in 1975, when the U.S. gold futures exchange opened...that way they could manage the price with levered paper futures.

        This management ended in 2013 when China broke the gold derivative markets. The "new China price of gold" has not been announced yet. We will likely all notice when it is.

        1. Any gold price other than USD pricing is nothing but a derivative of the USD pricing. You have to gain market traction and credibility for the market to accept a new measure. The yuan does not have it. Having said this, there is a difference between a reserve currency and a pricing denomination, technically. They just happen to have gone hand-in-hand on the historical level. Could the yuan gain reserve status while the USD still has the pricing mechanism into PM's ? Maybe.

          The US cannot lose the pricing mechanism. It's the future of the USD on a transactional level.

          1. Not when the amount of USD in the foreign reserve accounts around the world is reduced. I respectfully disagree with your line of thinking. The real world trend strongly suggests that the thesis presented on this site is the correct one, as hard as it may be for some to accept.

  3. Thank you for this J.C, you keep surprising us with new information, I've never come across the Chinese debt to U.S on the web and am sure many of fellow POMers haven't as well.This post summarizes the whole situation perfectly by bringing different pieces together- AIIB, CIPS, U.S debt limit, IMF talks etc. Next step will be to watch Land&Maritime Silk Road initiative led by China and how much of the SDR allocation will be used for it. I hope you get well soon, the pressure(not in a bad sense) to write posts and satisfy the cravings of so many passionate followers of the multilateral must be exhausting at times.

  4. Wow JC! I can see why you have a headache. Thank you for sacrificing yourself to help pull this complexity together for us and for sharing your wonderful and carefully created perception.

    Seems very probable.

  5. Very thorough and excellent work. I for one look forward to the end of US hegemony, though I suspect that there will be many inside the US government who will fight and rage against the tide of history.

    In order to truly transition to a more harmonious and cooperative system, the US military hegemony will need to be broken as well as economic. I realize that the two go hand in hand, but I fear that unless European leaders make some bold moves (ending NATO) this will not be accomplished without a regional or global war.

    The US military-industrial complex will not go gently into the good night.

    1. Chris, maybe that's where the blame, shame and guilt tribunals will come in. Or perhaps other grassroots guilt CSI campaigns like those circling within the alternative media already.

      A society that feels guilty, won't go to war.

      1. Thanks for that response. The problem as I see it is that the people no longer have a say in whether we go to war. The military has been largely privatized and wars are fought by proxy, as in Ukraine.

        The two countries with the most ability to neutralize the situation are obviously Russia and China. J.C. I'd be eager to hear your take on how the Canadian media are portraying Putin vs. the US media. Here the demonizing and jingoistic propaganda is reaching a fever pitch. We are definitely being conditioned for a war, IMO.

        1. It's similar here in Canada. The media portrays Putin as an "evildoer". I am concerned about war in Eastern Europe, but I think they will bring it to the brink, before pulling back. Perhaps it will be the rallying call by the rest of the world to prevent more war, and isolate the US and its veto in the global institutions, such as the UN and IMF. It's hard to imagine such changes taking place because most of us alive today have not lived in a world which hasn't been dominated by America. But considering the scope of events which have taken place already, I would not be surprised. Keep the western population relatively ignorant until the script is flipped. Fits with the utter lack of intelligent and meaningful media presentations.

      2. I believe when they have totally achieved their goal there will be some suppposed full disclosure and Nato will be the scape goat as is the Rothchilds and Bilderbergs etc. They have served their purpose and are no longer required. New corporations will emerge. We, the people will believe corruption has been gutted and cleaned up, only to find we are yet in another illusion.

  6. JC,

    My first post although somewhat off topic. I would like to start off by thanking you for the time and energy you have put into this blog. Your commentary and analysis is refreshing in comparison with other alternative media sites. I estimate that I have read at least half of all available blog posts and comments on your site over the past week however one area I have not found much discussion on is the domestic US bond market after SDRM occurs. Currently the FED is able to export inflation across the globe however I see this radically changing once USD loses reserve currency status. You mention 30%-50% inflation in a few comments I have found however I think you are referring to this as a one-time adjustment/revaluation in USD exchange rates. I have found no mention of annual inflation rates due to the loss of reserve currency status and structural trade deficit.

    Do you believe that foreign holdings of US Treasury debt will be swapped with SDR bonds as part of the SDRM? I assume this will reduce the US National debt by roughly 6 Trillion? However I see serious cost-push inflation due to currency debasement as the structural trade deficit will not be resolved overnight. This will force US interest rates to increase dramatically to keep the USD from collapsing. The increase in interest rates will manifest in a government funding crisis as the interest on government debt will soar. I see this culminating in a major US political crisis by the end of this decade. I would love to hear your thoughts on this subject.



    1. Ryan, first I'd like to thank you for the compliments. You're on the right track. A large percentage of the existing US Treasury debt will be exchanged for SDR bonds. But there will still be a portion of foreign reserves held in Treasuries. Nations will still seek diversification, as they have done under the USD system. Though the majority will indeed be in SDR. Interest rates will probably climb higher than most expect. The Fed announcement later this year may scare many. But the global mandate on inflation numbers, as a part of the multilateral macroprudential framework, will seek to keep inflation within a manageable band across the spectrum. The US may see some sudden and dramatic swings here, depending on how far they push the geopolitical issues, but I reckon it'll settle down before long.

      1. Your response is greatly appreciated. Aside from the inherent truth and integrity of your writings, they also provide some level of hope and optimism for the future. This obviously sets you apart from the preponderance of fear based information on the internet. I have two small children and not a day goes by that I do not think about their future on this planet. I hope and pray that our transition to the MFS is as benign and virtuous as you anticipate. Looking forward to your future writings and commentary. Take care!

    1. Susan .... now that's what I call an intelligent question ! "How" is the whole trick. It has to be market driven, IMO because of the real-time factors. Abrupt change (top-down from hierarchy) would only prove to be devastating to the legacy system. So many people would suffer without say in the matter. It can be lossely compared to the challenge that FDR would have had in 1933 when gold (and the USD) were re-evaluated. That process was by fiat. Very unfair, imo.

      This is the same view we can take with the monetization of bullion, now that the weight value floats in real-time. Any official monetization (by fiat or proclamation) would be far too abrupt and would likely cause the debt based system to fail rather quickly and rather harshly.

      The process for either of the above must be organic and market driven by way of grass roots efforts. This is actually the biggest reason that "this time is different" because the real-time environment prohibits the elite from making the changes that we need. The elite have managed to "paint themselves into an apex". We are the governors of change and our own freedoms now. They set the stage but are powerless to complete the job. All they do now is buy time and "carry the stick" as a motivator.

      Gold and silver are now real-time currencies... debt-free and with completely scalable liquidity , based on the trade value. it's up to a bottom-up process to bring them into circulation.

      We must be as a wise as serpents, yet as gentle as doves.

      1. Michael, that actually wasn't the intent of Susan's comment. And your continuous statements of the USD being pegged to gold, which it clearly isn't, only limits the influence of anything your attempting to communicate. Such obvious errors, including much of this current comment, being that gold and silver are real time currencies, make it frustrating to approve. I like to give everyone the opportunity to express themselves, but when its so off the mark its challenging. That is not to say that I don't agree with your statement that top down management is skewed, but try to base more of your statements on facts and the actual reality. Such as the USD is not pegged to gold.

        1. JC , my reference to the price peg is the price peg, not a valuation peg. Said another way, bullion is priced in USD's. It goes right back to the formation of BW and is still a leftover to this day.

          1. I would argue that the denomination in the yuan is till a derivative of the USD valuation. There may be a deal there but the USA cannot be totally cut out. They (and the west) created the architecture going back to the beginning of Bretton Woods and the good will value in the marketplace. We still have the USA to thank for the creation of the pricing peg (denomination in USD's) and the pulling of the FIXED peg (valuation of $35/oz), which are two "leftovers" that we have with us today..... both ideally suited to the re-monetization of bullion with weight as the unit of account.

            Debt free store of value has married with instant global &
            scalable liquidity .... in real-time. All are invited to "the great wedding".

          2. Futuret, I appreciate you providing links which you feel are important and wish to share with others. But please take the time to write a little something about the link, why it's important to you, and why you think others need to know about it. That way it will encourage open conversation and add to the overall dynamic of the group. It wouldn't be a bad idea to also explain how you see it fitting with the theme and subject of the broader conversation. Thanks.



          5. Sounds like a nice place. I shall work to have my presence become such a thing. As should we all. I think most humans would want the same as you and I my friend. We encourage others by becoming the things we wish to see and the change we week. Be that kingdom now.

    1. When I read articles on this sort of behaviour I get very concerned for humanity. Catherine Austin Fitts is someone who I admire and I think really helps to put things into perspective. I believe this orchestrated financial situation is only but 1 layer. I believe there are many. When one follows the Black budget, to the breakaway civilisation, to the space program. It starts to evolve into a very dark and ugly picture. The one thing I have come to understand is how I am being provoked. That is the key. We are being provoked into fear, into anger whether it is via financial, religion or injustices to humanity. They use what we believe against us. Our sense of morality, our sense of decency, fairness and justice and our religious/spiritual beliefs so in the end we feel helpless and powerless. That is how they succeed. I believe it is so important that we don't react and we all have our own individual outlet for our emotions, that way we are not allowing them to consume us and that keeps us healthy, focused and more able to deal in a positive way with our every day lives and with those who we share in it.

  7. JC, You've taught me a great deal. I'm so appreciative of your thoughts and your work. I would like to know, do you think that the U.S. will be allowed to join the AIIB?

    Our government seems intent on destroying its worker bees, especially with the recent revisions to the Dodd Frank Act, which returned the responsibility of (Govt.) debt repayment, back to the US Citizens (taking it away from the responsibility of the Fed - and the banks. - per my understanding).

    I just don't see how American's are going to weather the impending storm.

    Thank you.

    1. Thank you Teri. In answer to your question, yes, I do think the US will be allowed to join the AIIB, as it will create solidarity and symbiosis in the multilateral. But it may not happen right away, and when it does, it will be on the terms of the rest of the world, not Americas terms. Don't worry too much, I think Americans will be okay. Fortunately the rest of the world cares more about Americans than Americans cared about them. This world, with all its debt and harshness, will pass us by, but the human heart and soul is where true freedom and liberty circulate. They wait for us to recognize them once again.

      1. Thank you, JC.

        My distant Grandfather was a signatory of the Declaration of Independence and I take pride in some of the principle's held dear in this regard. I care very much about my country, but I, however, consider myself first a citizen of the earth and not only the U.S.

        I hold a small, but somewhat influential position in an investment group with a noticeable web presence, and I think you might be surprised at how many Americans are appalled by our Government's actions abroad, and at home, and many absolutely do not support our Government regarding many of its "allocations" across the globe. However, it seems our petitions fall on deaf ears.

        Throughout my time in this web-based group, I have seen Americans eyes open up to what is going on around the world, and I see Isolationism dwindling. This state of mind is perhaps a condition of the hard economic times. Regardless. it seems, even if to a small degree, we're beginning to awaken.

        I thank you for taking (a little) pity on we Americans, for truly, it does seem often times that our media goes out of its way to avoid reporting on subjects of which we should be made aware; and for which are reported abroad.

        We're gettin' there.

        Thanks again,

        1. It's interesting that you reference the Declaration of Independence because people of that time period lived by the heart, with the mind tempered by said heart. Today we live with a heart tempered by the mind. Two different worlds.

  8. Hi JC, I follow your blog since a year everyday. I did not comment before because english is not my first language. I admit that i had to read your Primnomics about 30 times to get it (hope there is more coming about it). Now everything unfolds really fast, and you were always on track. I just got one thing to say: Bravo! I hope you won't stop because since a month, the comments post in this blog attracts a lot more of new people and it seems to be a lot more work to filter it compare to before. Has always, i am impatient for your next post.

  9. I have been reading about some of the history of the BIS and I am having difficulty distinguishing between it and the IMF. They seem to be virtually the same type of institution sharing members and goals. The IMF seems to be more of a political body where the BIS fancies itself as apolitical. Is simply thinking of these two institutions that way too far off the mark? The IMF as a governing body and the BIS its bank?

      1. The IMF was never more a western institution than the UN was, or is. It only appeared that way. Which is why the US influence in all global institutions will be reduced, but not eliminated. All IMF like institutions will be sublets of the IMF, even if they are not announced as such, like the CMIM in this post. With the SDR as the global reserve asset, and unit of account, it can be no other way.

  10. JC,

    Let's try a different approach.

    We understand the possibilities w AIIB n world bank. Change is occurring at a more rapid rate.

    Australia recently came on board w AIIB along w most countries.

    U.S. appears to stand alone for awhile.

    War continues to be something most cannot see in the true dynamic of subversion.

    Those who have not fought will never know, til experiencing it.

    Man is numb to the adversity of war n the pain, unless they are there 1st hand.

    Food for thought as we dwell on the financial side of life...

    Best My Friends,


    P.S. Try watching 'FURY'. Nothing has changed over time, but how easily man can kill for so-called freedom.

    One must wonder...

    1. Sorry but that's incorrect. Australia hasn't come on Board with the AIIB as yet. I live in Australia and have been watching for precisely that, as I think it will eventually happen. The latest is, Abbott is still thinking about it. That was reported only a few days ago. "CEC of Australia" is where I go to be kept updated.

  11. Hi JC,

    Do you think that all the stalling with the rate increase by Yellen with concern for 25 basis points increase in May or if delayed 50 basis points increase in October is b/c indirectly they see the handwriting on the wall and are watching in awe as the inevitability of the multilateral system is coming to the fore while there is ongoing distractions from it on US media with a whole bunch of different conflicts and distressing circumstances? Did it not say somewhere in revelations that their hearts will fail them for fear of what is to come and people will wail at how such a great nation will come to this end ? Your site has clarified a very hidden large systematic change in the century that I have not been able to find anywhere else.
    Cheers and godspeed. Will say the processors in your head are working much more impressively than what I am used to seeing in the general and thanks for the understanding. It is like getting initiated into true economics.

  12. All about the intensity, adversity n mans ability to overcome when in harms way. How far will one man go?

    Man continues to be subjected to the wayward path...

    Best My Friend

    P.S. As Putin plays so well, castle king side...:)

  13. I agree, JC. I'm a Light-Worker and economic studies is new to me. It has taken me a few years of studying economics to get to a point where I can understand SOME basic principles and begin on a path of knowing which "indicators" to watch. Your article's provide some ease of understanding, again, for which I'm most grateful. It's always best to come from the heart, because, you know what they say about money; "you can't take it with you."


  14. JC,

    Thank you for your work. I spent plenty of time over the last couple years sifting through information trying to determine what is legitimate. I will monitor your work and I appreciate what you do. It's an enormous poker game being played in my view so information flows all over the place and some of it is a bluff and some is not.

    If one owned historical bonds (already authenticated twice) and dong what would you advise one to do? Just sit tight and wait? Sick and tired of the million head fakes and false starts.


      1. Ok.

        Myanmar could be an outstanding area for agricultural investment though my understanding is that there are numerous risk wild cards currently present which I avoid. When the dong finds its real value what's your take on the impact on surrounding nations and how long it might take to impact a place like Myanmar?

  15. While glancing through "the ABC of ACE", the structure occurs to be promoting economic and policy cooperation among the members to enhance their collective GDP and median income in order to become more of a consumer driven economy. However, JC, you showed how ACE is a subsidiary of the IMF; these countries are essentially losing their sovereignty by answering to the collective of ASEAN.

    It reminds me of the GCC initiatives outlined in a paper I found from Delloitte (great resources btw) where sustainability, economic cooperation, environmental conservation, and infrastructure development are being implemented regionally. They are also in the process of consolidating their political and economic cooperative ties, thus losing sovereignty to larger multinationals.


    My thinking is, besides the obvious Agenda 21 mandates being implemented internationally under various masks, there will be regions focusing on singular economic outputs... ie. Middle East for oil and minerals, America for industrial technology, South America for food products etc. to export globally OR will each region sustain themselves in order to decrease global transportation costs and become their own macro economies? I ask because with China and India increasing the size of their middle class, there will be more countries importing goods, thus increasing the need for more effective systems of transportation. Basically, what region will focus on what output?

    Thanks for all you provide us!

      1. The one thing that I continue to seek out is real legitimate information on how much gold exists. I know there is "data" published but I always look at who is providing that data. There is the possibility that there is much more physical gold in existence than what is generally accepted currently by market participants.

        Even if gold has a role in the new system post-reset I'm not convinced it means the price is zooming higher anytime soon. If the restructuring of the system reveals that a lot more gold exists then if anything that places severe downward pressure on the price of gold. I'm much more interested in physical silver and I will analyze the charts and price action of both main PMs to determine if/when I grab physical silver (though i do already have physical silver from several years ago). Frankly, Bitcoin has substantially more intrinsic value and upside than both in my view.

        I'm a TA guy as well. Charts are telling me it's entirely possible the next legitimate bottom is in the $950 range and between 950-1050.



      1. What a neat tool, thanks Dane!

        When I fly, HSBS had posters in the airport terminals about what the future will be like in short blurbs. Some about data, some about economy. More programming to prepare our minds for a huge shift (although some of it is creepy). This is in Canada.

    1. Thanks Dane, interesting article, althought like their test subjects, the researches failed to grasp how the brain creates the illusion of happiness through acquiring stuff.

      The truth is that not-wanting induces hapiness. Buying something causes the wanting to cease temporarily. This is what creates the feeling of satisfaction: not wanting anything! But the brain makes the wrong conclusion and interprets the act of acquisition/consumption as the source of happiness; a gross misinterpretation and the cause of all addictions:

      The act of wanting creates the feeling of lacking that which you want.
      The relaxation of wanting creates peacefulness. So I'd suggest we all take the short route to happiness and relax the contraction of wanting and imagining what we lack.

      Too bad the misinterpretations within the brain don't show up on fMRI 🙂

      1. Thanks dripfood. Yes I can vouch for what you say. But can add that not wanting also opened the door for me to also shed desire which also included the desire for other positive aspects of building my human character. Such as building and maintaining my virtues. So I had to back up and realize the difference even there. Lol.

        Life is so grand.

      2. Great point, Dane!

        There is indeed a difference between ego induced wanting, born from internal feelings of lack (deficiencies) on the one hand and spirit induced desires born from natural spiritual evolution.

        The first are akin to eating sugar, the other to eating vegetables.

        I guess it takes some maturation to enjoy vegtables, right?

      3. "I guess it takes some maturation to enjoy vegetables, right?"

        Yes sir, it surely does dripfood. And once mature enough to see it we begin to realize were kind of alone out there. But in the far distance you can see another bright light shining which gives a calm, comforting sense of hope and fellowship:)

      4. Hey Roger, its a grey area but what if the desire is to develop ones soul which then provides happiness? Would this then change happiness from being a desire to being a result or reward for good works?

      5. I think you're right,.Roger,.since happiness is a natural characteristic of just being.
        And Dane you seem to be right as well, though 'development' is kind of a misleading word. It's more like discovering your essence and stop identifying with thoughts, feelings and other consequences of the marerial body and world. When these identifications stops, the capacity to play with identity increases dramtically.The happiness of your natural state is then able to shine through whatever form your embodiment takes or plays with.

        The good news is that nothing needs to 'developed'. It's more like finding the courage to undress than finding the right garnments.

  16. Hey JC,

    Just a quick thank you for the information provided. I think what sets your analysis apart from others is that your blog is forward thinking and exploratory whereas almost everything else i read is just a reactionist statement of current affairs expressed through whichever prejudice the reporter happens to harbour,

    All the best,

  17. JC,

    I love all your work and how informed you are, but I've been meaning to ask you something. I would love to get your full opinion on Bitcoin and other cryptocurrencies (ripple, ethereum, etc) in general if you have researched it adequately.

    It's quite a rabbit hole subject and most economists don't realize that the underlying technology behind bitcoin is a genuine computer science breakthrough and not some funny money ponzi scheme. If you familiar with the topic it might even be worth it own's blog post.

    As for my thoughts on it eprosnally, while I don't know if bitcoin the currency will be around in 10 years, I do believe that the technology (blockchain technology, which is the decentralized ledger) will be.

    There's probably a decent chance you haven't researched in depth yet and might think negatively about it because of all the headlines last year about the price decline. I'd encourage you and anyone else to check out these 3 links as good starting points:




  18. JC, I have only recently found your blog and I would like to thank you for sharing your insights in the public domain. It is very refreshing to read critical thinking that covers the wider spectrum of what’s taking place in our world as opposed to all the Zombie Apocalypse collapse nonsense.

    I must also say that I agree wholeheartedly with a number of your posts that suggest that things are not as complex as they appear. Personally, I see patterns in my daily corporate life that give substance to your theories. My favourite is multi-lateral cooperation. Many corporate employees simply cannot see the wood for the trees with this one. Exec’s talk .Leaders within pension funds who own corporations make decisions and cut deals. It’s no different geopolitically. The sooner this can be appreciate, the better prepared you can be for what is coming.

    P.S. the event calendar in front of us for moving to SDR has lighted a few bulbs in my mind regarding something I’ve struggled to rationalise for a while. Back in 2013, sizable futures contracts were put on to buy gold at $3000 per ounce by December 2015. When these contracts were bought, there was no news whatsoever to support such a position. I doubt very much this was a punt!

    Do you have any thoughts on this? I have included a link below.


      1. Ah yes, the poor Gold bug. No doubt sweating razor blades at the thought of the price reaching $3000…

        All I’m saying is that I couldn’t connect any dots at the time to explain why someone would by more than 7000 futures contracts against the price trend and pick that particular expiry date. Perhaps JC’s analysis and logic has given us the answer. Perhaps in a world where the RMB is partially backed by Gold prior to it being given a significant share of the SDR basket, someone, somewhere believed a $900million position in the market was a good idea. I guess we'll see 9 months from now.

Leave a Reply