Discussion in Oman to NOT Peg Riyal to Devaluing US Dollar

Columnists in Oman kicked off open discussion about vulnerability of dependence on US Dollar in Times of Oman over the weekend.

Should Sultanate of Oman drop riyal peg to US dollar?

United States floundering finances and internal political bickering is forcing the once mighty nation to lose its grip on the treasury.

Many critics say that sticking to the dollar peg is as good as devaluing the rial since the US currency is losing its strength consistently against major currencies of the world. Oman and its neighbours are big buyers of the dollar dominated assets and the need to diversify its portfolio away from the US currency is very pressing.

The US government's shut down this month should be another wake up call for Oman to consider ending its reliance of the dollar. How could Oman continue to keep its faith in the dollar when the US government has no control over its own currency?

Arguments made in above quotes about serious dangers of sticking with status quo are so eloquent, that no further commentary really needs to be added to strengthen them. Simply by providing a wrapper functionality in this short blogpost is sufficient to drive home the point.

Saudi Arabia sets out to DEMOLISH Petrodollar status!

From "if only lives of billions of innocents were not so hopelessly dependent on insane criminality of globalist banksters, it would be freakishly hilarious" department:

There goes Saudi Arabia threatening to unseat Petrodollar!

Without directly quoting from this disgustingly depressive article about violent propaganda, geopolitical aspirations of Saudi royal family in the entire Middle East for resource-grab of all crude oil reserves, meddling around in Bahrain, Kuwait, Egypt and many more nations, Saudi arms race with Iran and many more unstated points too numerous to mention - Basic macroeconomic implications of this mess are as follows:

• Apart from missiles, bombs and drones, the biggest American export is its "under-threat by own debt crisis and increasingly impatient Chinese controlled" fiat US Dollar currency. By definition, it is backed by absolutely nothing, except threats of warfare with missiles, bombs and drones, imbalanced/rigged trade treaties and globalized surveillance spying using newer and newer high-tech business intelligence algorithms.
• [Seriously, ponder more and more on above point. Are these really the signs of philosophical enlightenment and prosperity, values of freedom and liberty, and justification for moral high ground? This propagandized situation is no different from how British parliament used propaganda to justify imposing Opium war on China, or forced indigo farming apartheid in Bihar/Bengal, India.]
• With diminishing manufacturing and service outputs, debt-ridden and increasingly propagandized/brainwashed population addicted to garbage consumer goods they don't need like wasted druggies are addicted to crack cocaine, what kept the fiat US Dollar propped up as "reserve currency" for such a long time? It basically had its "Petrodollar" status, with Saudi royal family being the biggest partners in crime propping it up. This means, it was guaranteed that all global trade of petroleum would have to occur in US Dollar.
• Now consider the weakened state of US Dollar completely unrelated to all of Saudi Arabia-Iran/Syria/Lebanon cold war drums. As blogged before, various Asia Pacific economic powerhouses are putting their houses in order, setting up trade deals independent of US Dollar.
• Saudi Arabia having become addicted to using "Petrodollar guarantee" as a blackmailing tool have been taking for granted use of American military resources to carry out dirty deeds and achieve their geopolitical ambitions. In other words, what would Saudi royals care if some 18 year old boy from Kentucky in US Army died fighting in some dubious war in Iraq, as long as it helped them achieve goal of Middle East geopolitical domination and escalating arms race with Iran? For the Petrodollar guarantor-American arms importer Saudis, those American kids dying or getting critically maimed/wounded have been worthless collateral noise, as long as their goals were being achieved.
• Under such precarious conditions, if Saudis get push-back on use of American kids dying fighting against Iran or Syria - neither of whom have directly threatened or attacked USA - only course of action from them can be to blackmail US into dumping Petrodollar status. Knowing the increased vulnerability to US Dollar from China slowing down purchases of US Treasuries, this would be some serious blackmail indeed.
• The moment Saudi Arabia starts - in spite and revenge - using a currency other than US Dollar for trading petroleum with nations other than US, all hell breaks loose all over American streets. Such scenario can guarantee American banks declaring bank holidays, ATM machines ceasing to function, utility electric/water grids going into frozen state, and all kinds of gloom and doom scenarios too numerous to mention here.

As said at the top: On top of Chinese US Treasury chill, this stuff would absolutely be comical and most freakishly hilarious - if only lives of billions of innocents all over the planet were not so hopelessly dependent on the madness.

Why Should China Keep Buying US Treasuries to QE Infinity (and beyond)?!

In Sanskrit, there is a saying:

विनाशकाले विपरीत बुद्धी.

Literally translated, it means: When faced with insurmountable odds and doom, human beings as a rule start unintentionally behaving in an illogical/irrational manner.

In the domain of macroeconomics, history books are littered with Mongol, Roman, Ottoman, Byzantine, British and various other mega-empires crumbling to dust as an application of this rule - either shooting themselves with self-inflicted warfare and/or combinations of other reasons.

[Slight digression. Advance apology to those unable to read Devanagari script: But I'm not going to bother transliterating the Sanskrit idiom above into Latin alphabet. Given my long multilingual and semi-formal/informal linguistics background, I've never personally been a fan of alphabet transliterations, since it's almost always impossible to retain identical effect while moving across random alphabet sets. If anyone has a burning desire to attempt transliteration, be my guest and attempt it with Google or various other online tools. Anyway, enough of this linguistic detour.]

Having set the stage with that wise saying naturally leads the flow into following headline:

QE Infinity? No end in sight for money printing

[...] Federal Reserve easing will go full-throttle until at least March. But even that thinking may be too aggressive.

[...] $85 billion a month of so-called money printing would continue as long as the Fed and Chairman Ben Bernanke deemed necessary.

In a recent CNBC interview, Chicago Fed President Charles Evans said there was plenty of room left for more easing and plenty of reason to do it considering the still-uneven pace of economic recovery.

Until now, I've been extremely diligent to keep this blog's language family friendly clean, and devoid of offensive words. But quite seriously, after reading that Keynesian pseudo-economic diarrhea, is it even possible to stick to family friendly vocabulary? Seriously?!?!? Is this the garbage logic these one-trick pony pseudo-economists can come up with for cutting down more and more trees for worthless paper and keep using it to print worthless toilet paper "money"?

Actually, I take that part about "worthless" paper back. At times like these, it becomes imperative to quote that great thinker Ludwig von Mises:

Government is the only institution that can take a valuable commodity like paper and make it worthless by applying ink.

Or in our situation, substitute the word "Government" with "Central Bank".

It might be easy to be a blog critic without holding controlling reins of enormous monetary policy. However, (to borrow American Football vocabulary) this isn't exactly armchair quarterbacking of events past being talked about. This is discussion of near future - and coming full-circle to that Sanskrit idiom - impending doom and gloom.

Even for an exercise of empty academic interest, one actually begins wondering about so-called logic within this illogic. I don't care where in the universe one travels, to distant solar systems within our own galaxy, distant galaxies or other empty voids unknown. But to the best of my knowledge and critical thinking, basic laws of mathematics and physics still apply across the entire universe. In the empty academic exercise, one actually begins to wonder if the pseudo-economists are intentionally setting things up for a guaranteed mathematical collapse. Or is that kooky conspiracy craziness? Nah, let's not even go there. It's been ages since terms like crazy kooky conspiracy were used in the domains of mathematics and physics. And the fundamental macroeconomics being discussed here is not exactly rocket science.

Only semi-rational analogy I can think of for this situation is, it's like a knot that keeps tightening further, the more you attempt to loosen it. Federal Reserve have gone so far down a precarious road that any attempts to take a U-turn seem even more precarious than continuing further down the dangerous road. This situation is absolutely as mind-blowing and surreal as it sounds reading these words.

This leads to a nice segue into next headline about "bury head in the sand ostriches" behavior of today's stock market conditions, in light of above pseudo-macroeconomic diarrhea.

Investors ignoring risk of China Treasury selling AND slowdown in China Treasury buying

Investors are failing to factor in the very real risk of China scaling back on its U.S. government debt holdings, economist Stephen Roach told CNBC.

"Everyone thinks interest rates are going to stay low in the U.S. because the Fed is in the control room... but the Chinese own about 11 percent of the Treasury market right now, and as they start to reduce their purchases of dollar-based assets... [this] will mean higher interest rates," he told CNBC Asia's Squawk Box.

I didn't think, I needed to listen to someone with an official "economist" title for such basic common sense. This point is a bit of a rehash of a recent post in this blog. But how can you ignore such very important and rational point in this context?

Every passing day, my opinion keeps becoming firmer and firmer that: Macroeconomics, monetary and fiscal policies may be the only disciplines which are easier to teach to kindergarten aged children than adults.

Asia Pacific Bypassing US Dollar at an Alarming Rate!

Flurry of activity in monetary world bypassing US Dollar "reserve currency" is happening at such an alarming rate - especially in the Asia Pacific region - it's becoming a challenge staying on top of this all!

South Korea has gone on a tear, putting together native currency swap deals with multiple countries - United Arab Emirates, Indonesia, Malaysia - at a very rapid rate.

South Korea, Malaysia sign US$4.7 billion currency swap deal

SEOUL: South Korea and Malaysia on Sunday signed a currency swap agreement worth $4.7 billion, Seoul's central bank said, in a move to encourage bilateral trade and help curb currency swings.

The latest agreement allows the two Asian nations to purchase and repurchase each other's currency of up to 5 trillion won ($4.7 billion), or 15 billion ringgit, the central Bank of Korea said in a statement.

The latest agreement is the third currency swap deal South Korea has signed this month in a move to guard against financial turmoil and encourage trade with other emerging markets.

Asia's fourth-largest economy earlier this month struck currency swap deals worth $10 billion and $5.4 billion with Indonesia and the United Arab Emirates, respectively.

Granted, the upper caps of these deals don't seem too big amounts on global trade scales; more like pimples on an elephant's butt. But the point is that framework for bypassing unstability of US Dollar are being put in place. If future trade amounts among those nations pick up, there goes the US Dollar by the wayside.

With even bigger impact than South Korea, economic powerhouse China has gone on its own binge entering into native currency swap deals with multiple nations - Singapore, Australia, Japan, and even Britain!

China, Singapore to allow direct trading between currencies

SINGAPORE: China and Singapore have agreed to allow direct trading between each other's currency, Singapore's central bank said on Tuesday.

The move, along with other agreements on financial cooperation, is expected to bolster Singapore's status as a leading offshore trading centre for the Chinese yuan, officially called the renminbi (RMB).

"China and Singapore will introduce direct currency trading between the Chinese yuan and Singapore dollar," the Monetary Authority of Singapore (MAS) said in a statement, adding that details will be announced separately.

"The new initiatives will further promote the international use of the renminbi through Singapore," the MAS said.

Its managing director Ravi Menon added: "Financial ties between the two countries have deepened considerably and Singapore is well placed to promote greater use of the RMB in international trade and investment in the years to come."

China's rise as the world's second biggest economy has seen the yuan take on a bigger role in international financial markets.

Britain last week said that direct trading between the yuan and the British pound will be allowed.

China also has similar direct trading arrangements for the yuan with the US dollar, the Japanese yen and the Australian dollar.

Granted, Chinese Renminbi is pegged to the US Dollar right now - to the ire of everyone in whatever little is left of American manufacturing sector. So mathematically under those constraints, it makes little difference if reverse trade with China is in US Dollar or Renminbi. But similar to the point with South Korea above, the main issue is that massive frameworks bypassing US Dollar in the future are being put in place at an alarming rate. One small tremor in uncertainities about US Dollar and voila, it can trigger chain reaction of massive earthquakes. The first prerequisite to such earthquakes could be un-pegging of Renminbi from US Dollar, which is quite conceivable while charting uncertain waters.

These are of course logical and rational moves on part of these nations to secure themselves. Considering idiotic debt-ridden baggage associated with every single US Dollar, what else do you expect them to do? Enslave all of their populations to whims of short-sighted greedy bankers in far away lands? Suddenly, the "reserve currency" has started looking like no "reserve" currency at all.

Does the emperor have any clothes?

China Putting Hard Brakes on US Treasuries, Shying away from US Dollar?

Amidst the "fake default" circus of last week, three alarming nuggets of information were released which bear repeating. They all are drums beating in China to start moving away from US Treasuries/US Dollar, and diversify into non-US Dollar alternates.

China Commerce Minister adviser warns may likely quit buying US Treasuries

Commerce Minister adviser to Chinese government, Mei Xinyu said that if America does default on its loan obligations, China will likely quit buying U.S. Treasury bonds.

Of course as blogged before, there was no question of any real debt obligation default. There were prospects of industrial complexes contract defaults. But that's besides the point. What's significant in above statement is someone from official Chinese government going on record, issuing warning of quitting to buy US Treasuries.

Such hypotheticals aren't enough, there is more. There are already concrete diversification moves underway in China, away from the US Dollar! Hardly a surprise, sounds like a very logical move.

China foreign exchange reserve diversifying into real estate investments in Europe

There have been media reports this week that China's State Administration of Foreign Exchange, the body that handles the country's $3.66 trillion of foreign exchange reserve, is looking to diversify into real estate investments in Europe.

And while the last nugget doesn't involve pronouncement from any official Chinese government body, it is serious angst within social media in China about illogical over-dependence on debt-ridden US Dollar.

China wonders: Why do we own so much U.S. debt?

Zhaoge1982 asks, "What's wrong with China? You buy [America's] debt, they refuse to pay and what else can you do?

Wanwan7 writes, "China shouldn't have purchased so much U.S. debt. You think you are in control, but you are actually the real victim.

JPMorgan Chase in Record Corruption Settlement, No Criminal Prosecution yet!

When it rains, it pours! After last week's post highlighting alarming capital control measures by JPMorgan Chase, here comes yet another "bombshell" announcement regarding them over the weekend:

JPMorgan Chase in Record $13 Billion U.S. Settlement for High Level Corruption

JPMorgan Chase & Co.’s record $13 billion deal to end U.S. probes of its mortgage-bond sales would free the nation’s largest bank from mounting civil disputes with the government while leaving a criminal inquiry unresolved.

Is the timing of these 2 seemingly unrelated events co-incidental? Or is there some convoluted twisted sub-plot underneath the surface? Meaning, did the Feds impose capital control requirements on JPMorgan Chase as part of this settlement? Things that make you say, hmm.

One bank analyst Nancy Bush whining about JPMorgan not getting “waiver from criminal prosecution" in that article smacks nothing short of highway robbery. There has yet to be a single concrete criminal prosecution of a high level bankster over events of 5 years ago. There has yet to be a single high level bankster thrown into hard-labor prison. The banks themselves are being subjected to record settlement - which actually taking fractional-reserve (see paragraph below) and anticipated interest rate hikes into account is not a huge deal at all. Yet, individual criminal high level bankster executives are walking free or lazing around on yachts. Only smoke-and-mirrors "potential criminal liability" sometime in the future is being dangled to American taxpayers. Sometime in the future, are you kidding me? It's coming up to end of 2013 already, when is that "potential in the future" day going to dawn? Rhetorical question that, no need for an answer.

Talking about fractional-reserve dilution point mentioned above: Shed no tears over the "record $13 billion fine" for one of the biggest recepients (in trillions!) of fractional-reserve scam. With combination of fiat monetary policy and fractional reserve banking, these are mere virtual digits created out of thin air. The real issue is concrete criminal prosecution of criminal executives engaged in these worst corrupt frauds known to mankind. Without any movements on that front, these "bombshell" announcements amount to nothing but diluted tears in a tea cup.

JPMorgan Chase Heralds Soviet Cyprus Style Capital Controls!

So the airwaves were all recently filled with cacophony of state run Pravda media propaganda coverage of fake US government "shutdown", un-comical theater about debt-ceiling consequences, and lies that there was a debt contract default on the horizon. What were on the horizon were contract defaults for military industrial complex, financial industrial complex, agricultural industrial complex, pharmaceutical industrial complex, medical industrial complex, media industrial complex and myriad other complexes that hijacked this nation's governance and imposed slavery on the nation. Surely, defaults on such contracts would have been a dream come true for the population! But you can only dream, right?

All this cacophony and propaganda lies were conveniently engineered by the single party dictatorship system ruling the country, with 2 Democrat and Republican wings of the same party pretending to squabble with each other. But this 1 party dictatorship with 2 wings is answerable only to its masters - various industrial complexes enumerated above. The 2 different Democrat-Republican wings of single party dictatorship have identical goal of enslavement of American populace - psychologically or otherwise. It's just that their approaches on how to go about enforcing such enslavement have minor logistical differences.

Lost among all these farcical distractions was a far more momentous headline. It goes without saying, no state run propaganda media would bother reporting about matters of such importance. It is that Soviet Cyprus Union style capital controls and cash withdrawl limits are already upon us!

Don't believe it? Think it's some reactionary kooky stuff? Take a look at following image upload of JPMorgan Chase letters sent to business banking customers last week. Proof is in the pudding, no more words are necessary to express indignation about upcoming engineered social upheavals.

Not directly related to this capital control news, but to the government "shutdown"-debt ceiling-debt contract default charade theater:

Xinhua, which itself happens to be state run propaganda media arm of Chinese government ran a curiously scathing editorial last Sunday, which caught the eye. Especially, I found the following snippet towards the end of this editorial quote-worthy.

China Xinhua state media runs editorial asking for New International Reserve Currency

What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.