- Retired Green Beret Warns: "World Governments Are Preparing For Disaster And War"
As written in previous articles, it is my firm conviction that we will be involved in a World War that will be initiated by an Electromagnetic Pulse (EMP) weapon detonated over the continental United States.
That being said, this piece summarizes recent events that reinforce such a conclusion, a conviction that is shared by world leaders, senior military personnel, and prominent analysts, as well as being a general consensus of opinion worldwide. As of this writing, the German government has instructed its citizens to prepare for a forthcoming disaster by stockpiling at least 10 days-worth of food and 5 days of water. In Berlin, they are considering bringing back mandatory conscription (a draft) in view of the influx of Muslim aliens entering Europe.
This concern is mirrored by Hungary and the Czech Republic who, in light of an influx of more than a million Muslims entering Europe are calling for an army in Europe representing the EU to be able to deal with this crisis affecting their borders.
“We must give priority to security, so let’s start setting up a joint European army.”
-Hungarian Prime Minister Viktor Orban
Such words are not being spoken only in Europe. In the United States, Obama recently gave a speech in June as an ominous, veiled warning of things to come for Americans to be “prepared for a disaster.” He also stressed that all Americans are responsible for disaster preparation by “having an evacuation plan,” as well as “having a fully-stocked disaster supply kit.” SHTFplan.com just released a report that revealed the DHS has ordered approximately $20 million of radiation detection equipment.
As most readers are aware, North Korea successfully test-launched an SLBM (Submarine-Launched Ballistic Missile) on August 24th that traveled approximately 300 miles. Identified by the DOD as a KN-11 missile, the test launch confirms that it is feasible to strike the United States from a submarine launch off the West Coast, as the Chinese probably tested with the missile plume detected off of the California coastline in 2009. With miniaturization of nuclear warhead capability, believed by Dr. Peter Vincent Pry to have already been obtained, the North Koreans do have the ability to launch an EMP strike against the United States.
The North Korean statements as reported by KCNA news agency pertaining to their test are as follows:
“A test-fire of strategic submarine-launched ballistic missile was successfully conducted under the guidance of [North Korean leader Kim Jong Un, and he] appreciated the test-fire as the greatest success and victory…. The SLBM [Submarine-launched ballistic missile] test-fire was successfully carried out without any adverse impact on neighboring countries.”
The news agency quoted Kim Jong Un as saying the following:
“The US vicious nuclear threat and blackmail against the DPRK only resulted in bolstering up its nuclear attack capability hour by hour and the US mainland and the operational theatre in the Pacific are now within the striking range of the KPA, no matter how hard the US tries to deny it.”
The actions of the North Koreans have been preceded by the deployment of the THAD anti-missile system in South Korea and the Sea of Japan, as well as the recent redeployment of nuclear-armed B-52 bomber aircraft by the U.S. to the island of Guam. In addition, a total of 75,000 U.S. and South Korean troops have been engaged in military exercises in South Korea that have infuriated the North Koreans. The exercises began shortly before the North Korean missile test.
A Sputnik News report says that Russian TU-22M3 long-range Backfire bomber aircraft will now be armed with the new Russian Kh-32 cruise missile. The capabilities of this missile are astounding: it can fly at speeds of up to 600 mph to an altitude of almost 25 miles, and when it reaches the proximity of its target, fly downward at a speed of almost 3,000 mph with a total range of almost 600 miles.
We already know that the Russians have been constructing bunkers for their citizens numbering in the thousands since at least 2012 in and around Moscow and throughout Russia. In addition to this, on August 27th All News Pipeline’s Stefan Stanford reported that some disturbing actions may be occurring at Russia’s “Doomsday Bunker” located beneath Yamantau Mountain in Russia. Here is a brief excerpt:
We also recently read from an unconfirmed source that the Russians may be heading to these bunkers right now. If that report is correct, and we pray it’s not, we’re warned that this means war is very close.
There is a corresponding video posted with the article that deserves viewing. Stanford also added the following:
“As we hear in the final video below, there’s been a report that a ‘Hillary Clinton WW3’ is unavoidable and top Russian leaders are high-tailing it to their bunkers at Yamantau Mountain. We stress here that ANP cannot confirm this story at this time. If we do receive confirmation, we will update this story immediately. If it’s true, the American people should know – as we all know, we certainly won’t find this out from our mainstream media nor government.”
This report deserves continuous monitoring, especially in light of last week’s military maneuvers and movements conducted by Russia’s infantry and airborne forces, as well as their naval assets and air force in and around the borders of the Baltic nations, primarily Latvia, Lithuania, and Estonia, as well as Ukraine and Poland. Recent reliefs of command (and/or purges) of several senior members of the Kremlin and the Russian military suggest (as can be read in detail in other articles) that Prime Minister Vladimir Putin may be clearing out any of his advisors that may oppose future military operations in Europe.
To increase tensions further, it has been reported that on Wednesday, August 24th, Turkish military forces have invaded Syria. The offensive has been comprised of Turkish armored units, special forces teams, and aircraft supported by “coalition” aircraft of the U.S. The purported objective was to dislodge ISIS from proximity to the Turkish border and to stem advances made by Kurdish militia. The actions were strongly condemned by the Foreign Ministry of Syria who also stated that Syria’s borders and national sovereignty have been violated.
This proposes a major dilemma that escalates by the day, as the Turks are backed by NATO and the U.S., and the Syrians are backed by Russia. Sputnik News also reported another disturbing piece of information regarding this situation:
“Lt. Gen. Stephen Townsend, recently-appointed US Commander of American Forces in Iraq and Syria has told reporters that the coalition forces have officially informed Moscow and Damascus of possible countermeasures should the US forces ‘feel threatened’ by Syrian forces.”
This is alarming, as the U.S. has been playing an indirect cat-and-mouse game with Russia since the Russian bombing campaign to aid Assad’s government commenced and closed, with a subsequent withdrawal of most of the Russian units. Most. There is still a sizable contingent of Russian forces based in Syria in support of the Damascus government and the ability to deploy forces rapidly into the area by Russia at a moment’s notice exists without question.
So there we have it. The overall situation: the world’s economies are cascading, there is civil unrest throughout Europe, civil unrest is developing in the United States, the U.S. government and the nations’ governments are preparing for disaster and war, and powder-kegs exist in Syria, Ukraine, and with North Korea that can be touched off at any time. As everyone watches these developing scenarios, keep in mind that time is of the essence for preparing yourselves and your families. Possibly…and probably…we don’t have much time between now and the U.S. election, an event that may or may not occur in light of a world on the edge of a precipice, and World War III.
- Two Of The World's 20 Most Violent Cities Are In America
Out of the world's 50 most violent cities, 41 are in Latin America including 21 in Brazil. As Statista's Nial McCarthy write, The Mexico Citizens Council for Public Security releases its findings on the homicide rate in cities with populations over 300,000 every year.
The infographic below shows the world's top 20 cities, with Caracas, in the socialist utopia Venezuela, in first place with 119.87 homicides per 100,000 residents in 2015.
San Pedro Sula, Honduras (111.03 homicides per 100,000) came second with San Salvador, El Salvador (108.54 homicides per 100,000) rounding off the top three. The majority of the violence in Latin America can be attributed to drug trafficking, gang warfare and political instability.
You will find more statistics at StatistaBut 'Exceptional America' is not left out out – St.Louis and Baltimore are right up there (and New Orleans and Detroit close behind) as their homicide rates rival some of the worst in Brazil, Mexico, and Venezuela.
- Are You A Mind-Controlled CIA Stooge?
Authored by Paul Craig Roberts,
Do you smirk when you hear someone question the official stories of Orlando, San Bernardino, Paris or Nice? Do you feel superior to 2,500 architects and engineers, to firefighters, commercial and military pilots, physicists and chemists, and former high government officials who have raised doubts about 9/11? If so, you reflect the profile of a mind-controlled CIA stooge.
The term “conspiracy theory” was invented and put into public discourse by the CIA in 1964 in order to discredit the many skeptics who challenged the Warren Commission’s conclusion that President John F. Kennedy was assassinated by a lone gunman named Lee Harvey Oswald, who himself was assassinated while in police custody before he could be questioned. The CIA used its friends in the media to launch a campaign to make suspicion of the Warren Commission report a target of ridicule and hostility. This campaign was “one of the most successful propaganda initiatives of all time.”
So writes political science professor Lance deHaven-Smith, who in his peer-reviewed book, Conspiracy Theory in America, published by the University of Texas Press, tells the story of how the CIA succeeded in creating in the public mind reflexive, automatic, stigmatization of those who challenge government explanations. This is an extremely important and readable book, one of those rare books with the power to break you out of The Matrix.
Professor deHaven-Smith is able to write this book because the original CIA Dispatch #1035-960, which sets out the CIA plot, was obtained through a Freedom of Information Act request. Apparently, the bureaucracy did not regard a document this old as being of any importance. The document is marked “Destroy when no longer needed,” but somehow wasn’t. CIA Dispatch #1035-960 is reproduced in the book.
The success that the CIA has had in stigmatizing skepticism of government explanations has made it difficult to investigate State Crimes Against Democracy (SCAD) such as 9/11. With the public mind programmed to ridicule “conspiracy kooks,” even in the case of suspicious events such as 9/11 the government can destroy evidence, ignore prescribed procedures, delay an investigation, and then form a political committee to put its imprimatur on the official story. Professor deHaven-Smith notes that in such events as Kennedy’s assassination and 9/11 official police and prosecutorial investigations are never employed. The event is handed off to a political commission.
Professor deHaven-Smith’s book supports what I have told my readers: the government controls the story from the beginning by having the official explanation ready the moment a SCAD occurs. This makes any other explanation a “conspiracy theory.” This is the way Professor deHaven-Smith puts it:
“A SCAD approach to memes assumes further that the CIA and other possibly participating agencies are formulating memes well in advance of operations, and therefore SCAD memes appear and are popularized very quickly before any competing concepts are on the scene.”
The CIA’s success in controlling public perception of what our Founding Fathers would have regarded as suspicious events involving the government enables those in power positions within government to orchestrate events that serve hidden agendas. The events of September 11 created the new paradigm of endless war in behalf of a Washington-dominated world. The CIA’s success in controlling public perceptions has made it impossible to investigate elite political crimes. Consequently, it is now possible for treason to be official US government policy.
Professor deHaven-Smith’s book will tell you the story of the assassination of President Kennedy by elements of the US military, CIA, and Secret Service. Just as the Warren Commission covered up the State Crime Against Democracy, Professor deHaven-Smith shows why we should doubt the official 9/11 story. And anything else that the government tells us.
Read this book. It is short. It is affordable. It is reality preparation. It will innoculate you against being a dumbshit, insouciant, brainwashed American. I am surprised that the CIA has not purchased the entire print run and burned the books. Perhaps the CIA feels secure from its success in brainwashing the public and does not believe that American democracy and accountable government can be restored.
- Obama's Jobs 'Recovery' Explained (In 1 Cartoon)
A job’s a job, right?
h/t @myLife_40NoneK
- How Silicon Valley Follows The Money
Authored by Pepe Escobar via Strategic-Culture.org,
There’s way more in common between Wall Street and Silicon Valley than meets the untrained eye
Wall Street and Silicon Valley are two of the key strategic hubs of hyperpower global domination. The others are the industrial-military-surveillance-security complex – of which Hollywood and corporate media are the soft power extensions – and the petrodollar racket/tributary system.
Silicon Valley has been relentlessly constructed and idolized as a benign myth; technology breaking the ultimate frontiers and reaching Utopia At Last. Not really. A joyride of a book – Chaos Monkeys: Inside the Silicon Valley Money Machine, by Antonio Garcia Martinez – argues it’s all about, what else, money. As in cold, hard cash, stock options and, just like in Wall Street, bonuses.
Martinez tells it like an American Dream insider. He’s a son of Cuban exiles, born in Southern California, with an almost PhD in Physics at Stanford, and a detour across Goldman Sachs that taught him how the casino system works. Then, back in California, he built a start-up with two friends whose embryonic product was a code-grounded method to target and boost electronic advertising. Secret revealed; electronic ads happen to be the real Holy Grail of the much lauded IT Revolution.
Academic Michael Brenner defined Chaos Monkeys as Divine Comedy as anthropology. Not quite. We’re not in the presence of Virgil guiding Dante here, more like a Benzedrine-boosted neo-Kerouac let loose on the (techno) road.
Right on page 25 Martinez captures Silicon Valley’s business logic, something that I learned myself three decades ago when I was crisscrossing the Valley – with a later stint on MIT – doing a special report on the Brave New Digital World ahead. At the time, I heard from the late great Marvin Minsky that the future would be a cross between artificial intelligence (AI) and genetic engineering. We are almost there. Martinez notes that in the future, it’s all about «computers talking to one another, with humans involved only in the writing of the logic itself».
Wall Street, of course, saw it before anyone else. Then came transportation (Uber), the hotel business (Airbnb), food delivery (Instacart), a massive array of services. We are smack on the road towards humans merely filling the gaps in a sanitized, non-stop computer workflow.
The world all that fabulous concentration of engineers, code writers, product managers, venture capitalists, key word filters, metadata and algorithms Silicon Valley is shaping is for all practical purposes a Consumer Holy Grail. We are all «free», but essentially free as extremely, precisely defined targets with a ton of features and preferences supplied to the digital workflow every time we click for a post, a comment, a search. Then, in a few minutes of digital life, we will be hit by a pop-up offer to buy something, anything.
Martinez also concisely explains the basics of search engine marketing. Marketers curate keyword lists «like a bonsai tree»; «If the revenue generated by postclick sales outpaces cost, up go the bid and the budget». This in a nutshell is how «Google makes more than some European countries produce in a year».
Monetize those bits, baby
What is a chaos monkey, really? That’s a software tool created and open-sourced by Netflix. One uses it to test a website’s resiliency against that proverbial nightmare; a server failure.
That leads Martinez to conceptualize tech entrepreneurs as society’s chaos monkeys wreaking havoc on traditional industries; «One industry after another is simply knocked out via venture-backed entrepreneurial daring and hastily shipped software. Silicon Valley is a zoo where the chaos monkeys are kept, and their numbers only grow in time. With the explosion of venture capital, there is no shortage of bananas to feed them. The question for society is whether it can survive these entrepreneurial chaos monkeys intact, and at what human cost».
The Silicon Valley zoo is predictably populated by hordes of talent –Ants? Bees? – all invariably fixated on monetizing their data brokerage skills, for their companies and especially for themselves. An extra cast of characters revolves around the geeks – from venture capitalists to an army of lawyers and the odd «angel investor» doubling as spiritual guide.
For the geek hordes, the base salary may not be exceptional, but there is prestige, perks and in a few cases stock options involved. Hotel California this ain’t; you can’t check out any time you like, because then you will lose all those perks and the lifestyle associated with them. You can always leave (or get fired) – and in this case you will always miss what you will never have elsewhere. Very few – essentially founders and CEOs – touch serious «f**k you money» and enter the billion-dollar league.
Startup life is usually hell; «backroom deals negotiated via phone calls to leave no legal trace, behind-the-back betrayals of investors or cofounders, seductive duping of credulous employees so they work for essentially nothing». It’s an extremely closed system, as I saw it for myself. In San Francisco, an extension of the Valley, everything is concentrated between First and Eight Streets, and between King and Market, in the SoMa (South of Market) district. That’s where you find, among others, Twitter, Airbnb and Uber, once startups, now enjoying Masters of the Universe status.
The ecosystem is also an apotheosis of juvenilia – in thesis the best and the brightest from the US’s elite schools all striving purposely towards an open, transparent, hyper-connected Brave New World, a never-before-tested original human experience. Well, the goals are not that lofty. A telling episode is that when Facebook faced a mortal challenge from Google in the social network front, it was pure war, Rome against Carthage-style. The standard psychological profile across the Valley would reveal an empathy-deprived Narcissus Drowned. Mature adults are extremely hard to find.
It’s quite telling that Martinez spends the last stretch of the book deconstructing his experience as a Facebook product manager, developing what would be the ineffable ad targeting mechanism. Silicon Valley after all is about how to monetize technology.
Facebook is actually going one step beyond, exploring the monetization of users’ news feeds and expanding a dominant role in the news business itself. A June study by Oxford University determined that 44% of internet users already get their news through Facebook. There are no less than 1.7 billion Facebook users around the world – and counting. Its algorithms will progressively rule content published on news sites. Computers talking to computers – with humans just filling the gaps.
- Putin Says Trump/Clinton Using "Shock Tactics"; Describes DNC Hacking As "Public Service" But Denies Involvement
Vladimir Putin sat for a 2-hour discussion with Bloomberg to discuss the U.S. presidential election and accusations that Russia was behind the recent hacking of the Democratic National Committee. Clinton has repeatedly attempted to link Putin to the Trump campaign after he previously described Trump as a “very colorful and talented man” who wanted to move Russia-U.S. ties to a “deeper level.” That said, Putin refused to take sides in the U.S. election accusing both candidates of using "shock tactics" while adding that playing "the anti-Russian card" was "short-sighted."
“I would like to work with a person who can make responsible decisions and implement any agreements that we reach. Their last name doesn’t matter.”
“It’s necessary for that person to enjoy the trust of the American people. That’s why we never intervened, don’t intervene and try not to intervene in domestic political processes."
“They’re both using shock tactics, just each in their own way. I don’t think they are setting the best example.”
Exclusive: Vladimir Putin on U.S. election race and "shock" tactics by Trump and Clinton https://t.co/wrcF2wSrMr pic.twitter.com/bmne70DUDu
— Bloomberg (@business) September 2, 2016
Despite repeated denials from Russia, Clinton told Fox News back in July that she "knows that Russian intelligence services hacked in to the DNC" and went on to link Trump to the event. Per Bloomberg:
"We know that Russian intelligence services hacked into the DNC and we know that they arranged for a lot of those emails to be released and we know that Donald Trump has shown a very troubling willingness to back up Putin, to support Putin," Clinton said in an interview with "Fox News Sunday" on July 30.
Putin said the hacking of thousands of Democratic National Committee emails and documents was a service to the public but questioned why it "even matters who hacked this data." That said, Putin also pointed out that even if he did do it the breaches would "be impossible to trace." While not explicitly taking sides, Putin seemingly took a dig at the Democratic Party and what he saw as an obvious party bias in favor of Clinton during the Democratic Primary…poor Bernie.
“Listen, does it even matter who hacked this data? The important thing is the content that was given to the public.’’
“There’s no need to distract the public’s attention from the essence of the problem by raising some minor issues connected with the search for who did it. But I want to tell you again, I don’t know anything about it, and on a state level Russia has never done this.”
“You know how many hackers there are today? They act so delicately and precisely that they can leave their mark — or even the mark of others — at the necessary time and place, camouflaging their activities as that of other hackers from other territories or countries. It’s an extremely difficult thing to check, if it’s even possible to check. At any rate, we definitely don’t do this at a state level.”
Exclusive: DNC hack was a public service but Russia didn't do it, Vladimir Putin says https://t.co/iIaUeLax2w pic.twitter.com/qUjBH4E6mU
— Bloomberg (@business) September 2, 2016
Unfortunately for Putin, whichever candidate ultimately wins the White House it will be their first term which means they won't have the "flexibility" that Obama had during his second term when he no longer had to worry about being accountable to voters.
- "Apocalyptic Scenes" As Fleeing ISIS Fighters Set Iraqi Town's Oil Wells On Fire
Back in 1991, when the Iraq army was retreating from Kuwait in the Persian Gulf War, it unleashed a literal “scorched earth” tactic as it set fire to some 600 oil wells, leading to iconic photos such as this one.
Twenty-five years later, in an ironic twist, it was ISIS fighters who returned the favor, and while fleeing an Iraqi toawn, they did their best to raze it to the ground by flooding the streets with oil and setting it on fire.
Pressured by the latest advance of coalition forces approaching the Islamic State stronghold of Mosul in the north of the country, the jihadists were forced to retreat from Qayyara by Iraqi soldiers. As they fled, they took a page from the Iraq’s own army as they ISIS bombed pipelines and set fire to nearby oil wells, creating an endless cloud of black smoke that blocked out the sun, leaving the town shrouded in darkness in an eerie redux of scenes from 1991.
Smoke billowing into the sky during a Reuters visit on Monday blotted out the sun in central districts hours before nightfall, producing an “apocalyptic scene” in this desert settlement which lacks electricity amid 49 degree Celsius (120°F) temperatures.
While Baghdad wants to retake Mosul before the end of the year, which it says will effectively end the militants’ presence in Iraq more than two years after they seized a third of its territory, some officials from countries in the U.S.-led coalition supporting the Iraqi forces have said that timeline may be too ambitious. However, the loss of Qayyara will certainly deal a blow to Islamic State, which had extracted oil from some 60 wells and sold it to help finance its activities.
A boy stands near oil spill from wells, set ablaze by Islamic State militants before
fleeing the oil-producing region of Qayyara, in Qayyara, IraqIslamic State used to ship at least 50 tanker truckloads a day from Qayyara and nearby Najma oilfields to neighboring Syria, from where much of it was exported to Turkey. A sign remains on the main road announcing prices of crude in places like the Syrian city of Aleppo, 550 km (340 miles) west of Qayyara. Rudimentary refineries once used to refine oil for local consumption have been abandoned on the side of the road leading east out of the town.
Residents look at oil spill from wells, set ablaze by Islamic State militants before
fleeing the oil-producing region of Qayyara, in Qayyara, Iraq,In the meantime, anyone taking a casual stroll through Qayyara will have a first hand account of what hell feels like. The smell of petrol now overwhelms the area, wind carrying the smoke from well fires into the town center. More than a few minutes in the area leaves one’s throat burning, and children walking the streets have quickly developed coughs.
Abdel Aziz Saleh, a 25-year-old Qayyara resident, said he wants Baghdad to put out the fires as soon as possible. “They are suffocating us,” he said. “The birds, the animals are black, the people are black. Gas rains down on us at night. Now the gas has reached the residential areas.”
Smoke billows from oil wells, set ablaze by ISIS militantsAlas, the Iraqi government has for now forsaken the people of this northern town. While Iraq said it has put out fires at four oil wells in the Qayyara region, but Reuters could not locate any such efforts at the wells closest to residential areas.
Iraqi security forces stand with weapon drawn as fire and smoke rise from oil wellsAround a dozen separate plumes of smoke were still distinguishable across the horizon as night fell, when a convoy of firetrucks approached the town.
Fires rise from oil wells, set ablaze by Islamic State militants
It was not immediately clear how long it will take to extinguish the flames. When Iraq’s military torched hundreds of Kuwaiti oil wells in 1991 ahead of advancing U.S.-led forces, most fires burned for around two months but some wells were not capped for almost a year. To be sure, Baghdad is in no rush to restore order: the oil ministry said it does not expect to resume production from the Qayyara region before Mosul’s recapture. The two main fields, Qayyara and Najma, used to produce 30,000 barrels per day of heavy crude before the takeover by Islamic State.
Despite the apocalyptic conditions, Qayyara remains full of inhabitants. Whereas civilians in most other areas recaptured from Islamic State fled ahead of or during government offensives the majority of Qayyara’s roughly 20,000 residents have stayed put. A counter-terrorism officer said that was partly due to the speed with which the army recaptured Qayyara, surprising the Islamic State fighters before they were able to dig in. Qayyara is also located near a military airfield, so many residents in the area have relatives in the army.
Fire rises from oil wells, set ablaze by Islamic State militantsThe good news for the locals is that commanders are confident electricity can be restored soon in Qayyara and said booby trapped streets and buildings are less of a concern than they were in the western cities of Ramadi and Falluja. “We surrounded them quickly, so they didn’t have time to lay many IEDs (improvised explosive devices),” said the officer from the elite counter-terrorism service (CTS), which spearheaded the Qayyara operation along with the army’s 9th armored division. “There were a lot on the main street they thought we would use to enter but instead we came in from the desert.”
The approach to the city shows signs of the fighting that followed, with many buildings collapsed by aerial bombardment. The U.S.-led coalition said it had launched more than 500 air strikes in support of Iraqi forces, nearly as many as in last year’s battle for the much larger city of Ramadi. However, it is what ISIS did as it was fleeing that was memorable.
Meanwhile, the capture of this strategic town virtually asures that the battle for Mosul will soon be won: Qayyara and its nearby airbase, where the bulk of a 560-strong U.S. troop reinforcement will be based, will form the main staging base for the anticipated offensive on Mosul, 60 km (35 miles) to the north.
- China's Monetary Ascension Is Paved With Gold
Submitted by Stefan Gleason via MoneyMetals.com,
The world monetary order is changing. Slowly but steadily, global trade and currency markets are becoming less dollar-centric. Formerly marginal currencies such as the Chinese yuan now stand to become serious competitors to U.S. dollar dominance.
Could gold also begin to emerge as a leading currency in world trade? Over time, it certainly could. But the more immediate implications for gold’s monetary role center on its increasing accumulation by central banks such as China’s.
On October 1st, the Chinese yuan is slated to enter the International Monetary Fund’s Special Drawing Right (SDR) basket of top-tier currencies. It will share SDR status with the U.S. dollar, euro, British pound, and Japanese yen.
Before the yuan officially becomes an SDR currency, the World Bank intends sell $2.8 billion in SDR bonds in Chinese markets. The rollout of SDR bonds in China began August 31st. According to Reuters, China’s promotion of SDR bonds “is part of a wider push in China to… boost demand for Chinese yuan and diminish reliance on the U.S. dollar in global reserves.”
King Dollar won’t be dethroned overnight. But the place of prominence the U.S. dollar – more accurately called the Federal Reserve Note – enjoys as the world's reserve currency will indeed diminish over time.
Yuan’s Inclusion in the SDR Currency Basket: Merely a Part of China’s De-Dollarization Strategy
China and Russia have mutual geostrategic interests in helping to promote de-dollarization. Toward that end, the two powers are engaging in bilateral trade deals that bypass the dollar. Annual bilateral trade between China and Russia has surged from $16 billion in 2003 to nearly $100 billion today. When China hosts the G20 summit in September, it will make Russian President Vladimir Putin its premier guest of honor.
U.S. officials are none too pleased. They fear Putin aims to expand his global reach by forging stronger ties with China.
According to the South China Post, “Some Western analysts have viewed the recent, rapid enhancement of such collaboration as the beginning of a partnership set on destabilizing the U.S.-led world order and diminishing Washington’s capacity to influence strategic outcomes.”
Some in the Hillary Clinton campaign even fear that Russia will interfere in the upcoming U.S. election to try to block Hillary’s path to the White House. Russian hackers have been implicated in a number of recent “leaks” that damaged the reputations of U.S. banks and the Obama administration. Wikileaks founder Julian Assange has hinted at further releases. Hillary’s allies openly speculate that these Wikileaks hacks are being sourced from Russia.
But the Russians and the Chinese aren’t counting on cyber warfare to dethrone King Dollar. In addition to bilateral trade deals and strategic plays for regional economic dominance, the two powers are bulking up on gold. Over the past several years, Russia and China have each been adding massively to their gold holdings.
World’s Central Banks Becoming Net Gold Buyers
Since 2009, China’s officially reported gold holdings have jumped by 60%. The enlarged gold stockpiles held by the People’s Bank of China helped China win ascension into the IMF’s elite SDR currency basket.
It’s part of a larger trend of world central banks becoming net gold buyers. They were net sellers throughout much of the 1990s and early 2000s. That helped keep gold prices suppressed. But since 2010, central banks have been net buyers of gold – to the tune of more than 500 tons per year.
Russia alone added 172 tons of gold in 2014 and 208 tons in 2015. By swapping some of its U.S. Treasury securities for bullion bars, the Russian central bank has become the world’s seventh largest gold holder. Yet gold makes up just 16.2% of Russia’s monetary reserves, which is a lower proportion held by its Eurozone neighbors.
Russia likely isn’t done accumulating. As the world’s third largest gold producer, Russia can readily supply itself with more.
A similar scenario figures to play out in China, perhaps even more dramatically so. China’s “official” gold hoard of 1,823 tons as of August 2016 gives it the world’s sixth biggest gold reserve. Yet relative to the size of China’s economy and currency supply, its gold stash doesn’t amount to much – just 2.3% of total monetary reserves.
Unofficially, China likely has additional gold reserves that it doesn’t report. But even if China’s real gold stash is double or triple what it actually reports, as some analysts suggest, that still leaves the country of 1.3 billion people with far less gold backing than Russia, the United States, Europe, and some of its Asian rivals. China has a lot more gold accumulating to do in the years ahead.
Chinese leaders aim to be regionally dominant. In order to secure that position they are moving to own and control greater shares of the gold market. The recently opened Shanghai Gold Exchange gives China a direct mechanism for controlling the physical gold market in Asia.
It’s a way for China to take at least some control away from Western governments and banks that have traditionally dominated the gold trade out of London and New York.
When the Chinese yuan becomes an SDR currency this fall, that could be the inflection point for a new multi-polar currency regime that sees the Federal Reserve Note decline in stature as central banks scramble to stock up on the ultimate money: gold.
- Policyholders File Class Action Lawsuits As Sinking Bond Yields Force Insurers To Hike Rates
The latest victims of misinformed global central banking policies are retirees holding “universal life” policies…once again the “prudent” folks who saved for their retirement are exactly the ones being brutally punished for their efforts.
As the Wall Street Journal points out, insurers are facing a rapidly rising number of class action lawsuits around the country after their attempts to raise premiums on universal life policies in response to lackluster returns on their bond portfolios. As we’ve discussed on several occasions, low bond yields on sovereign debt are taking their toll on insurers whose asset returns have suffered. The problem faced by insurers is related to old policies underwritten before the “great recession” and before central banks around the world decided to embark upon their “grand experiment.” While insurance policies written today can be adjusted for the current market environment, policies written prior to the “great recession” often carried “guaranteed” interest payments as high as 4% – 5%. And, with central banking policies around the globe pushing sovereign bond rates to historic lows (see “With Over $13 Trillion In Negative-Yielding Debt, This Is The Pain A 1% Spike In Rates Would Inflict“) it is no wonder that insurers are taking a hit. Per the As the Wall Street Journal:
At issue are “universal life” policies. In short, the policies combine a death benefit with a tax-advantaged savings account that has a minimum interest rate. Such policies accounted for more than a quarter of all individual life-insurance sales in some years past. Millions of Americans own them.
Insurers’ problem is that many older policies guarantee annual interest rates of 4% to 5%. In the mid-1980s, when universal life policies surged in popularity, the average investment portfolio yield for life insurers was nearly 10%, according to ratings firm A.M. Best Co.
Today, that yield is just under 5%, thanks to a general decline in rates over the decades, followed by the more recent sharp leg down.
In selling universal life, insurers typically aim to earn 1 to 2 percentage points more on the premiums they invest than they pay out in interest to policyholders, said Deloitte Consulting LLP principal Matthew Clark. Most insurers aren’t earning this spread today, and “with continued low rates some could face a situation where they are paying out more to policyholders than their investments earn,” he said.
As our readers know, pensions and insurance companies are stuck in a central bank-induced negative feedback loop that just keeps pushing rates lower and lower. In an effort to “juice” returns, insurance companies have been forced to invest in longer-dated maturities but with rates collapsing across the curve many insurance companies have nothing left to do but raise rates. As Scott Robinson, of Moody’s Investors Service, pointed out “Companies are under a lot of pressure to boost returns in this low-interest-rate environment, and [raising prices] is one lever they have.”
Among those seeking legal action, is Raymond Foos who recently received a notice from Transamerica informing him of price increases that he estimates will cost an additional $300,000 per year.
Among upset policyholders is Raymond Foos, an 87-year-old retired manufacturing chief executive who purchased an $11 million policy in 2003 to benefit his children. This spring, Transamerica informed him of an increase that he said will cost him nearly $300,000 a year, on top of the $2.25 million he paid as a lump sum to buy the policy and which he thought would cover costs through his and his wife’s death.
Mr. Foos, who said he is exploring legal action, regrets not asking enough questions about risks when he bought the policy.
He said Transamerica should “bite the bullet.” Drawing from his years of running a business, he said, “when you have a sale that you lose money on, you don’t go to the customer and say, ‘Give me some more money.’ You generally figure out how to live with your problem and go on….You tighten your belt.”
For the insurer’s part, rate increases are explicitly defined within insurance policies. While rarely well received by policyholders, Transamerica assured the Wall Street Journal that rate increase on policies, like those held by Foos, put new rates “at or below the maximum rates allowable.”
Sadly, central banking policies have already taken a huge toll on “savers.” Unfortunately, artificially low rates will have to revert back to some “normalized” level at some point in the future. When that happens, it will only exacerbate the problem for pensions and insurers who will have to then deal with the huge losses resulting from sinking bond prices.
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