Making Room In The SDR Basket

How do the pieces fit into your future.

It hasn’t even been a week since releasing my previous post regarding how SDR’s will be the future reserve. While the US Dollar will certainly play an active roll by being one of the largest eggs in the basket, it no longer will it be only egg in the basket. Eventually it will perish its sole ownership making room for several other currencies. Not even a week goes by and already China and Russia have made significant progress on distribution of funds. I’ve linked this important article below.

I feel it’s imperative that all of our readers understand what’s at stake here. Start to understand the future implications of what’s taking place right before your eyes. Once distribution has taken it’s course and is dialed in no longer requiring S.W.I.F.T. for international transactions there remains one last step before denting the Dollar like never before. Actually it will be more along the lines of a train wreck as apposed to a dent. Confidence the last piece of the puzzle is confidence. After all it’s the only thing left that supports the Dollar and is really all that’s required for any means of trade.

I can’t see the value anymore. Where did it go.

Begin to understand all markets revolve around confidence, not how high or low an interest rate is. If you’re still stuck on that philosophy sorry but you’ve been hoodwinked. I’ll prove my point following. Many of my readers are old enough to remember the mid to late 80’s. The interest rate peaked above an astounding 18% OUCH ! Unheard of in today’s world unless dealing with short term loan sharks.

So why did home sales, small businesses, auto sales continue to flourish… CONFIDENCE! If you had the confidence that opening a small business will net you 40, 50, 60% over the not to distant future you’ll borrow all day long at 18% and not blink an eye. If you had the confidence that you job was still going to be there you’d take the plunge on a new home or car. Well presently confidence is at an all time low and thus no one will gamble on what the future holds. It has everything to do with confidence not how high or low an interest rate is.

Moving up to our current time frame where renting money is as cheap as it gets. You can borrow all day long at rates hovering around 3%. Why is no one borrowing, why aren’t the cars and homes (other than investors) selling? By now I think you’ve guessed where I’m heading with this. There’s a lack of confidence in being able to turn a profit. No confidence people won’t borrow at almost any rate and neither will they gamble on expanding or starting small businesses which of course USED to be the backbone of western nations. USED to be is the correct term. So when the distribution start up flaws are cured I feel a Physical Gold Backed Yuan might be more than enough for the public to gain enough confidence. Where does that leave the US Dollar? It leaves the once only game in town in a basket with other very attractive eggs. It will be just another egg in the basket and by comparing it to some the others it won’t even rank as Grade “A” quality. Consider reallocating of some of these overvalued dollars while they are holding their artificial high. In a few years time I have all the confidence in the world you’ll be glad that you did. Until next time.

China and Russia Currency Swap

 

 

 

of currencies

will eventually perish from being the only game in town.

Share

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: