AuthorTopic: BRICS Announce $100 Billion Reserve To Bypass Fed, Developed World Central Banks  (Read 1899 times)

Offline knarf

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As we suggested last night, the anti-dollar alliance among the BRICS has successfully created a so-called "mini-IMF" since the BRICS are clearly furious with the IMF as it stands currently: this is what the world's developing nations just said on this topic "We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness."


As Putin explains, this is part of "a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies." Initial capital for the BRICS Bank will be $50 Billion - paid in equal share among the 5 members (with a contingent reserve up to $100 Billion) and will see India as the first President. The BRICS Bank will be based in Shanghai and chaired by Russia. Simply put, as Sovereign Man's Simon Black warns, "when you see this happen, you’ll know it’s game over for the dollar.... I give it 2-3 years."

BRICS MINISTERS SIGN DEVELOPMENT BANK AGREEMENT
INITIAL SUBSCRIBED CAPITAL OF BRICS BANK IS $50 BLN: STATEMENT
A quick take on existing monetary policy.

MONETARY POLICY MUST BE CAREFULLY CALIBRATED: BRICS STATEMENT
The punchline, however, is that using bilateral swaps, the BRICS are effectively disintermediating themselves from a Fed and other "developed world" central-bank dominated world and will provide their own funding.

We are pleased to announce the signing of the Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$ 100 billion. This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements.... The Agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures.
Incidentally, the role of the dollar in such a world is, well, nil.

For those who have forgotten who the BRICS are, aside from a droll acronym by a former Goldman banker, here is a reminder of the countries that make up 3 billion in population.



Key excerpts from the Full statement:

We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness. The IMF reform process is based on high-level commitments, which already strengthened the Fund's resources and must also lead to the modernization of its governance structure so as to better reflect the increasing weight of EMDCs in the world economy. The Fund must remain a quota-based institution. We call on the membership of the IMF to find ways to implement the 14th General Review of Quotas without further delay. We reiterate our call on the IMF to develop options to move ahead with its reform process, with a view to ensuring increased voice and representation of EMDCs, in case the 2010 reforms are not entered into force by the end of the year. We also call on the membership of the IMF to reach a final agreement on a new quota formula together with the 15th General Review of Quotas so as not to further jeopardize the postponed deadline of January 2015.
 
BRICS, as well as other EMDCs, continue to face significant financing constraints to address infrastructure gaps and sustainable development needs. With this in mind, we are pleased to announce the signing of the Agreement establishing the New Development Bank (NDB), with the purpose of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies. We appreciate the work undertaken by our Finance Ministers. Based on sound banking principles, the NDB will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional financial institutions for global development, thus contributing to our collective commitments for achieving the goal of strong, sustainable and balanced growth.
 
The Bank shall have an initial authorized capital of US$ 100 billion. The initial subscribed capital shall be of US$ 50 billion, equally shared among founding members. The first chair of the Board of Governors shall be from Russia. The first chair of the Board of Directors shall be from Brazil. The first President of the Bank shall be from India. The headquarters of the Bank shall be located in Shanghai. The New Development Bank Africa Regional Center shall be established in South Africa concurrently with the headquarters. We direct our Finance Ministers to work out the modalities for its operationalization.
 
We are pleased to announce the signing of the Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$ 100 billion. This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements. We appreciate the work undertaken by our Finance Ministers and Central Bank Governors. The Agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures.

Goodbye visions of an SDR-world currency. As for the USD...


found at: http://www.zerohedge.com/news/2014-07-15/brics-announce-100-billion-reserve-bypass-fed-developed-world-central-banks
Everything, I mean EVERYTHING, is a BIG FUCKING MESS!!

Offline RE

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We discussed this a while back.

If the bank is Capitalized with $100B, how is this divorcing from the Dollar?  They just made a big Slush Fund of Dollars!

If they were divorcing from the Dollar, the Bank should be capitalized with Roubles or Reals or Renminby, and they should loan those out to developing countries to use as money.

Except as of yet down in South America, Drug Dealers won't take a suitcase full of Roubles for a suitcase full of Coke.

The Dollar isn't dead until these folks stop working with and banking in Dollars.  They can't create Dollars, Da Fed has a monopoly on that franchise.  Da Fed has Infinite Dollars, the BRICS Bank only $100B of them.  Which Bank is bigger?

RE

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Offline knarf

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Yea, I wondered that very same thing. But, if they start calling their currency the BRIC or something else and find sufficient resource/s backing for it, isn't it possible that more and more countries will ditch the dollar, and go with a money exchange that is not controlled by the US empire?
Everything, I mean EVERYTHING, is a BIG FUCKING MESS!!

Offline RE

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Yea, I wondered that very same thing. But, if they start calling their currency the BRIC or something else and find sufficient resource/s backing for it, isn't it possible that more and more countries will ditch the dollar, and go with a money exchange that is not controlled by the US empire?

This is the fundamental problem with trying to get a new and idependent currency regime going.  You have to establish belief in your system as being fair, good protections on the legal level, a banking system to move the digibits around, etc.  You need lots of assets valued in your currency.  Most of all, you need people to actually USE your currency.

Roubles aren't used outside of Mother Russia, Renminby aren't used outside of China, Real aren't used outside of Brazil.  If they make a combined BRIC and start loaning the BRIC to Amerikans, will it buy Gas at the convenience store?  Not as of yet it would not.

The Dollar circulates widely around the globe, and is accepted just about everywhere, even above the local currency.  Changing that will take a crash of the Dollar where it won't buy anything anywhere.  This still looks to be a ways away.

RE
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Offline g

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The Dollar circulates widely around the globe, and is accepted just about everywhere, even above the local currency. 
RE

So does Gold, except for the fact it is very much scarcer. Silver to a lesser extent.

Gold has held this status for thousands of years as well, the dollar not so long a time at all, and it has seen it's best days for sure.

It is the way of All Fiat Currency, a brief period of acceptance historically, and then it's rightful place as toilet paper in the bathroom closet.


Offline RE

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The Dollar circulates widely around the globe, and is accepted just about everywhere, even above the local currency. 
RE

So does Gold, except for the fact it is very much scarcer. Silver to a lesser extent.

Gold has held this status for thousands of years as well, the dollar not so long a time at all, and it has seen it's best days for sure.

It is the way of All Fiat Currency, a brief period of acceptance historically, and then it's rightful place as toilet paper in the bathroom closet.

Gold hardly circulates at all.

Most of the Personal Gold is held in the form of Jewelry, Wedding Rings and so forth.

Nobody in any country at the moment goes into a Convenience Store and hands over a Gold Coin for a Gallon of Gas.

It is not used as currency regularly anywhere I am aware of.

RE
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Offline g

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The Dollar circulates widely around the globe, and is accepted just about everywhere, even above the local currency. 
RE

So does Gold, except for the fact it is very much scarcer. Silver to a lesser extent.

Gold has held this status for thousands of years as well, the dollar not so long a time at all, and it has seen it's best days for sure.

It is the way of All Fiat Currency, a brief period of acceptance historically, and then it's rightful place as toilet paper in the bathroom closet.

Gold hardly circulates at all.

Most of the Personal Gold is held in the form of Jewelry, Wedding Rings and so forth.

Nobody in any country at the moment goes into a Convenience Store and hands over a Gold Coin for a Gallon of Gas.

It is not used as currency regularly anywhere I am aware of.

RE

True, my point is that you can bring an amount of Gold most anywhere in the world and convert it into the local scrip without too much effort. It is universally accepted as the world's true money.

The fact that it is quoted throughout the day in every corner of the Globe both in dollars and local scrip attests to this fact.

Offline RE

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The Dollar circulates widely around the globe, and is accepted just about everywhere, even above the local currency. 
RE

So does Gold, except for the fact it is very much scarcer. Silver to a lesser extent.

Gold has held this status for thousands of years as well, the dollar not so long a time at all, and it has seen it's best days for sure.

It is the way of All Fiat Currency, a brief period of acceptance historically, and then it's rightful place as toilet paper in the bathroom closet.

Gold hardly circulates at all.

Most of the Personal Gold is held in the form of Jewelry, Wedding Rings and so forth.

Nobody in any country at the moment goes into a Convenience Store and hands over a Gold Coin for a Gallon of Gas.

It is not used as currency regularly anywhere I am aware of.

RE

True, my point is that you can bring an amount of Gold most anywhere in the world and convert it into the local scrip without too much effort. It is universally accepted as the world's true money.

The fact that it is quoted throughout the day in every corner of the Globe both in dollars and local scrip attests to this fact.

Here you talk about fungibility, not currency.

Many things are fungble in the current meme, you could go anywhere and trade a Roll of Toilet Paper (real Charmin here) for something else. Or Ammo, or Diapers.  Etc.

Fungibility does not in itself a currency make.

The question is how fungible Gold is in a crash scenario?  My estimation is less fungible than Diapers, but you could disagree with that estimation.

RE
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Offline g

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Many things are fungble in the current meme, you could go anywhere and trade a Roll of Toilet Paper (real Charmin here) for something else. Or Ammo, or Diapers.  Etc.

No, you are talking about barter, not money. A person who doesn't need an item or has plenty of it on hand is not going to exchange it for something else of value. That is the problem with barter. He will most likely accept gold because he can buy most anything with it.

Gold is money, it is not a item for barter, such as I will give you ten ears of corn for two cans of beans. You are confusing barter items with money.

Offline RE

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Many things are fungble in the current meme, you could go anywhere and trade a Roll of Toilet Paper (real Charmin here) for something else. Or Ammo, or Diapers.  Etc.

No, you are talking about barter, not money. A person who doesn't need an item or has plenty of it on hand is not going to exchange it for something else of value. That is the problem with barter. He will most likely accept gold because he can buy most anything with it.

Gold is money, it is not a item for barter, such as I will give you ten ears of corn for two cans of beans. You are confusing barter items with money.

There is about no place where you can use Gold as money.  They won't accept it at Walmart or Safeway.

In order to use it as money, you first have to go to the Pawn shop which generally also buys and sells Gold.  There the dealer will quote you a price some figure below spot.  He then hands you FRNs, which you can spend as money at Walmart and Safeway.

Similarly, you go to the same guy with your bicycle or gun, and he quotes you some price for it.  You can't trade the bike or gun directly for other merchandise at Walmart, you first have to convert it to FRNs, same as the gold.

Gold hasn't been used as currency for a LONG time.  It's basically a commodity.

RE

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