The general consensus of the Soros-led gathering at Bretton Woods this weekend is that the dollar must be replaced as the world’s reserve currency.
That’s an amazing statement. Few would have believed it possible in our lifetimes even as little as two years ago. In fact, this was one of the most controversial conclusions from my report, Economic Warfare; Risks and Responses published in June 2009:
“The concern is that the response to the recent collapse by itself will strain available economic resources for some time with large budget deficits and high inflation risks. The situation would be made significantly worse in the event of further economic attack. It is in this vein that a potential Phase Three must be considered.
Based on the assumed nature of Phase One and Phase Two, a Phase Three attack would likely involve dumping of U.S. Treasuries and a trashing of the dollar, removing it from reserve currency status. This is clearly foreseeable as a risk and even could float under the cover of a natural outcome in much the same way that Phases One and Two potentially have been hidden.
The implications are extremely serious. If the dollar were not the reserve currency, there would be a mass dumping of Treasury instruments by foreign holders. Treasury interest rates would skyrocket, further worsening the annual deficits due to sharply higher interest payments on expanding debts. The Treasury would have to raise taxes dramatically,further dampening growth or the Federal Reserve would be forced to monetize the debt, worsening inflation concerns. Pushed to the limit, could the U.S. dollar would follow the path of the German currency in Weimar Germany following defeat in World War I.”
When this report was written, the dollar was extremely strong. Some of the best economic analysts in the world believed it would retain reserve currency status for decades at a minimum. On April 10, 2011, The London Telegraph published a WikiLeak originally written June 19, 2009. It’s conclusion:
C O N F I D E N T I A L SECTION 01 OF 03 LONDON 001451 NOFORN SIPDIS E.O. 12958: DECL: 06/19/2019 TAGS: EFIN, ECON, UK SUBJECT: LONDON-BASED EXPERTS AGREE THE U.S. DOLLAR WILL MAINTAIN ITS RESERVE STATUS REF: LONDON 1399
This leaked cable (which can be seen at the Telegraph), based on the combined thinking of top economists, currency traders, and other financial experts gave eight reasons why a (natural) demise of the dollar as reserve currency would not happen for decades. This represents the inside thinking of the best international experts on the subject. We believe, absent economic war or financial terrorism, that they were right. Of course, as we have documented repeatedly, there are other forces at work.
We also have clear statements from the Chinese Communist Party leadership in excerpts from the February 2011 publication of Qiushi (according to India Times reports):
“Of course, to fight the US, we have to come up with key weapons. What is the most powerful weapon China has today?…One is to sell US dollar reserves, and the second is not to buy US dollars for a certain period of time,” which will weaken the currency and cause deep economic crisis for Washington. . .This approach, it said, is market-driven and it will not be able to easily blame China.”
So, we have the best experts as recently as June 2009 stating that the dollar will not lose its reserve currency status. Then, we have clear statements from the Chinese Communist Party suggesting that they agree with the PLA military doctrine as defined in the book Unrestricted Warfare. That book, first published in 1999, makes the following statement:
“We believe that before long, “financial warfare” will undoubtedly be an entry in the various types of dictionaries of official military jargon. Moreover, when people revise the history books on twentieth-century warfare in the early 21st century, the section on financial warfare will command the reader’s utmost attention. The main protagonist in this section of the history book will not be a statesman or a military strategist; rather, it will be George Soros.”
“Financial war has become a “hyperstrategic” weapon… This is because financial war is easily manipulated and allows for concealed actions, and is also highly destructive…The Americans have not been able to get their act together in this area. This is because proposing a new concept of weapons does not rely on the springboard of new (military) technology; it just demands lucid and decisive thinking. However, this is not a strong point of the Americans who are slaves to technology in their thinking… As we see it, a single man-made stock market crash, a single computer virus invasion, or a single rumor or scandal that results in a fluctuation in the enemy country’s exchange rates…can all be included in the ranks of new-concept weapons.”
Now, consider the following quote from an April 10, 2011 Bloomberg report regarding the conference this past weekend:
“The world economy needs a new global reserve currency to help prevent trade imbalances that are reflected in the national debt of the U.S., said Nobel-prize winning economist Joseph Stiglitz.
A “global system” is needed to replace the dollar as a reserve currency and help avoid a weakening of U.S. credit quality, said Stiglitz, a professor at Columbia University in New York. The dollar fell to an almost 15-month low against the euro last week, and the U.S. trade deficit widened more than forecast in January to the highest level in seven months.”
What are the conclusions?
- My report on Economic Warfare stated that the next phase of an ongoing attack on the U.S. economy would be an effort to remove the dollar as reserve currency and to then trash the dollar and create an excuse to dump Treasury bonds. It clearly stated that such an effort would be concealed behind market forces as a “natural outcome.”
- Absent financial warfare, as recently as June 2009, many of the best global experts said the dollar would not lose its reserve currency status anytime soon. This suggests that the outcome was not a natural inevitability.
- In 1999, the Chinese PLA began an effort to identify “new concept weapons,” one of which was directly any effort to alter a currency’s status. They further stated that such a weapon would be stealth in nature, not easily blamed on China.
- The Chinese PLA stated that George Soros would be “the main protagonist” in financial warfare for the 21st century.
- The Chinese Communist Party acknowledged a willingness to trash the dollar as an economic weapon that would appear market-driven and thus not blamed on China.
- A Soros-sponsored conference this past weekend has seemingly universally concluded that the dollar is doomed as reserve currency and is actively seeking replacements.
- Soros himself has stated that as the dollar declines, that China must rise. This is part of an effort to define a New World Economic Order.
Everything stated above is factual and well-documented. Yet, despite these facts, there are few who recognize the truth. Keep in mind that just a few short years ago, most considered uprisings in the Middle East as we have seen to be unthinkable. Things are changing rapidly and the dollar’s status as reserve currency is clearly at risk. There are very serious implications, many of which were covered in my report.
All posts Copyright (c) 2011 Kevin Freeman, All Rights Reserved