[New post] Global Central Bank Rift Grows: Gold vs US Dollar
User ID posted: " https://www.youtube.com/watch?v=uQ4TekQSNgc Global Central Bank Rift Grows: Gold vs US dollar by Miles Harris Of course Central Banks work together towards fulfilling their role of ever greater control but their remains a high degree of competition b"
Of course Central Banks work together towards fulfilling their role of ever greater control but their remains a high degree of competition between their endeavours and it is clear now that Central Bank policy differs widely around the world due to the vested interests involved.
The Washington consensus really appears to be giving way towards a new global consensus that places a key value upon a nations own self determination as opposed to that determined by outside interests. This is keenly reflected by the differing attitudes towards gold among global central banks. With the likes of the ECB marking gold to market they have a clear interest in ensuring a healthy gold price is maintained. This is juxtaposed by the likes of Canada, with no gold reserves, and the Fed with a fixed gold price of $42.22 per oz.
_____________________________________________________________ Miles Harris offers global macro insights and champions the importance of sound money in a world gone crazy. Subscribe to my channel on macro & metals: http://tiny.cc/16m5mz _____________________________________________________________ DISCLAIMER: Any advice given on my channel and videos is for information purposes only, and does not act as financial advice. Your financial decisions are your full responsibility, and if you are in any doubt, please contact a financial professional before undertaking any investment with your money or change to your financial activities.
See Full Video Transcript Below
Today we consider the growing rift that appears apparent between global central banks so let's dive on in now this channel provides global macro insights and champions the importance of sound money in the world gone crazy so please do consider subscribing now the Washington consensus refers to a set of broadly what is meant to be free market economic ideas supported by prominent economists and international organizations such as the IMF the world bank the EU and the us the Washington consensus was important for determining policy towards economic development in Latin America Southeast Asia and other countries around the world the key principles of this consensus are laid out in these 10 points which we can see here now this consensus was absolutely fundamental in terms of promoting free trade and the de-industrialization of advanced economies thereby accelerating inequality through stagnant real wages in advanced nations it also required those emerging market countries which had been beset by financial crises to undertake free market reforms as a condition of IMF and world bank bailout money incidentally such financial crises have occurred with remarkable regularity in the developing world since the rapid financialization of the 1980s and 90s was undertaken as we can see in this chart and this was largely inevitable as a result of rapid capital account liberalization that is allowing the free movement of financial flows into and out of the country which was often coupled with overvalued fixed exchange rate regimes such a setup meant that developing nations really had little chance in managing their exchange rate risk against Wall Street firms who were offering those same countries dollar-based loans thus when speculators caused a crash in the exchange rate regimes developing nations were exposed to enormously inflated foreign currency denominated debts now nowhere was this perhaps more apparent than among the Asian tiger economies of Thailand, South Korea, Indonesia and Malaysia in the Asian Financial Crisis of 1997 while western finance houses argued that these countries needed to access foreign currency loans due to low savings rates this hardly matters when you have the ability to create your own currency through your central bank and your domestic banking system thus these countries had no actual need for foreign currency denominated loans in the first place fortunately the IMF was at hand to impose its stringent regime of austerity and privatization reforms which just so happened to benefit western multinational corporations once the crisis had hit the result was that western firms could buy up assets at huge discounts meanwhile China's gradual approach to integrating within the global financial system was viewed by many as a more appropriate means to provide for the nation and avoid the prospect of western financial house abuse and many such as Malaysia's Mahatma Muhammad appreciated this quickly as he stated in 1997 that for them wealth must come from impoverishing others from taking what others have in order to enrich themselves their weapon is their wealth against the poverty of others now really this sounds a huge amount like what is taking place right now with the Great Reset but what's more is that since these comments were made the concern regarding the Washington consensus and its impact in the developing world in particular has driven many nations to reach out towards China and follow its lead with this background together with China's continued prioritization of export-focused growth it is no surprise that western influence globally has shrunk substantially and this is well depicted in this economist graphic which illustrates countries that share the most trade with America in blue and China in red the contrast with 2000 against 2020 is truly stark and the success of the Chinese model has now become known as the Beijing consensus which has very little in common with Washington's model instead of prescribing rigid recommendations for the problems of distant nations the Beijing consensus is far more pragmatic and flexible in its approach thus it's no surprise that it's quickly gained appeal in the developing world as it emphasizes the need for developing countries to actively seek independence from outside pressures it is therefore no surprise that since the 2008 Financial Crisis and the introduction of quantitative easing that many countries have followed China's lead in buying gold interestingly very few advanced nations have sought to increase their gold reserves and those with the closest ties the us dollars such as Canada and the UK have actually divested much or even all of their gold this graphic from the Visual Capitalist highlights the gold trends over the course of the last 20 years nicely given gold is often seen as the anti-dollar perhaps this isn't surprising given the need to conceal real money in an era of monetary climate change and so now we're at a point where European nations still hold a lot of gold and in July 2019 the ECB declared that the signatories confirm that gold remains an important element of global monetary reserves as it continues to provide asset diversification benefits and none of them currently have plans to sell significant amounts of gold it's no surprise right now of course meanwhile small countries are turning into big buyers as we can see in this excellent table where not one of these countries rank in the top 50 by nominal GDP however the central bank reserves have greatly grown in value thanks to their gold accumulation over the course of the past 20 years moreover countries like Uzbekistan are focusing on making gold production and circulation a key part of their economies additionally Turkey has increased its gold reserves by 354 per cent since 2017 but this trend goes much further as this excellent graphic from Willem Middelkop highlights which illustrates the de-dollarization and asset diversification among the emerging nations central banks this has prompted Gold Anti-Trust Committees Chris Powell to comment that there is a new division among the major central banks there is now an EU, China, Russia faction that is fighting the US, UK faction certainly they have good reason to resent US dollar imperialism and the weaponization of the dollar the dollar is now the primary mechanism of US imperialism it is no wonder therefore that at a time of enormous money supply growth the global trend among central banks is towards ever greater gold reserves and the lessons here for individuals I think are really quite clear that gold remains a key focal point of the international monetary order as Jim Rickards often says it is the global currency therefore we should make sure that we continue to actually accumulate some gold and of course hold that within a diversified portfolio irrespective of frustrations regarding the lack of progress in the gold price in recent times now I hope this video was useful in considering what's taking place globally between the central banks because clearly there is a big division between those western countries allied to the us dollar who are not accumulating more gold and those other nations that are actually taking on more gold reserves and continue to hold a lot of gold I thought this was very very interesting and it's worth bearing in mind here thanks ever so much for joining me and I look forward to seeing you next time bye bye
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