Tag Archives: IMF

Economy, International, Politics

China’s Currency Approved as World Reserve Currency

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HONG KONG, December 2, 2015– This week, the Chinese Yuan, the basic unit of the Renminbi (RMB), was assigned the elite status of becoming one of the world’s reserve currencies. The decision to assign the Yuan reserve status, made by the International Monetary Fund (IMF), highlights China’s increasing economic clout.

The Renminbi’s new status, however, does create uncertainty for China’s governing doctrine. In order to meet the IMF’s requirements to become a reserve currency, China is forced to loosen its communist control over the currency. This change has created market volatility throughout China in an already slowing economy.

The U.S. Dollar, Japanese Yen, British Pound and Euro remain reserve currencies. However, the addition of China into the reserve basket came at the expense of the Pound and Euro. Effective October 1, 2016, the Renminbi is determined to be a freely usable currency and will be included in the Special Drawing Right (SDR) basket.

“The Executive Board’s decision to include the RMB in the SDR basket is an important milestone in the integration of the Chinese economy into the global financial system. It is also in recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems,” IMF managing director Christine Lagarde said in a statement in Washington. “The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy.”

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International, US

Western Sovereign Debt Exceeds 200 Year High

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Harvard/IMF White Paper: Western Sovereign Debt exceeds 200 year high; Warns of “Savings Tax” & mass write-offs

European reports came out on January 2nd that a new IMF white paper includes some strong words about the financial status of the West. http://www.imf.org/external/pubs/ft/wp/2013/wp13266.pdf

The IMF working paper states that debt burdens in developed nations have become extreme by any historical measure and will require a wave of austerity.  The austerity will consist of either negotiated 1930’s style write-offs, or the toolkit available to the IMF that includes blanket taxes and bail-in of retirement accounts.

As I wrote in my October 24th article “IMF Floats Idea to Levy 10% Tax on European Assets”

there are implications for the US financial system as well.  The US is now five years into a historical Quantitative Easing program, as we reported here: http://truthinmedia.com/fmr-head-of-fed-reserve-qe-program-confesses-the-program-is-nothing-more-than-wall-street-welfare/

“The sheer magnitude of the problem suggests that restructuring will be needed, for example, in the periphery of Europe, far beyond anything discussed in public to this point,” said the paper, by Harvard professors Carmen Reinhart and Kenneth Rogoff

debt

International

Retirement Savings Grab Could Be Couched In “Racial Equality”/”Savings Inequality” Jargon?

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As we reported here at Ben Swann in mid-October, pension confiscations have occurred in Poland and Russia. Cyprus experienced bank deposit confiscations. We also discussed the possibility of bail-in’s here in the U.S. of retirement
accounts. Our article from October reviewed the IMF’s October 13th report. The report recommended European nations perform a one-time 10% tax of citizen’s assets.

In that same IMF report entitled “Fiscal Monitor–Taxing Times,” the IMF also recommends the U.S. and other wealthy nations increase their top tax bracket to 71%. The current top U.S. personal income tax bracket is 39.6% for annual income exceeding $400,001 per single filer. Very few news outlets covered the IMF report, few discussed the recommendations of a one-time 10% levy or 71% top bracket rate back in October.

On December 3rd, an Op/Ed in the Wall Street Journal expressed concern of the 71% proposed top bracket, and indicated the writer is taking implementation seriously. The author speculates that there will be wealthy citizens giving up their U.S. citizenship
to avoid the 71% top bracket, as we have witnessed in France.

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Chart from Bankrate: http://www.bankrate.com/finance/taxes/tax-brackets.aspx

Taxing citizens is one way for a government to raise revenue. Another way is to force retirement assets into purchasing
government debt. Our previous article discussed that has already happened in Poland and Russia. The previous article also linked to debates of retirement bail-in’s occurring in the U.S. as well. Few media outlets will touch the issue.

A new wrinkle seems to be emerging however in the U.S. retirement bail-in discussion. Dr. Jerome Corsi, a Harvard Ph.D.
in Political Science reported three days ago that he believes the bail-in’s are coming, and they are being couched in
“racial equality”/”savings inequality” jargon. He thinks that because of a newly released study from the “National Institute on Retirement Security.” http://www.wnd.com/2013/12/retirement-plans-attacked-for-savings-inequality/

A think-tank called “National Institute on Retirement Security” just released a report detailing racial inequality in retirement savings, with a grand solution of forcing assets into U.S. Treasuries to solve the problem. Little is known about the agenda, if any, of the “National Institute on Retirement Security,” but a brief search indicates it is a non-profit that was launched in 2007. As for where they receive their funding, that is not known. However the conclusion of their report offers the government a rationale to force retirement assets into purchasing U.S. Treasuries. That would certainly be one way for the government to raise revenue.
http://www.nirsonline.org/index.php?option=com_content&task=view&id=30&Itemid=66

We will continue following this story and report developments. One issue to consider is China and Japan are two of the top purchasers of U.S. debt, and they are squabbling currently in a dispute over the Senkaku Islands. On December 12th, Dod Buzz reported that Hudson Institute senior fellow Seth Cropsey stated in a U.S. House Armed Services hearing, ” Chinese leaders are ambitious and they are moving towards great power status. The U.S. is not taking this possibility as seriously as it should.” He recommended the U.S. needs to develop a detailed war plan.
http://www.dodbuzz.com/2013/12/12/call-made-to-congress-for-china-war-plan/

International, Politics

IMF Floats Idea To Levy 10% Tax on Europeans Assets

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THE WORLD IN HOCK?

The IMF’s Oct. 13 report, “Fiscal Monitor -Taxing Times”, discusses how to solve Europe’s sovereign debt problem.

What they recommend is shocking to some, and ringing alarm bells around the finance world.

Sovereign nations are facing shortages of tax revenues, and public finance is in shambles.  Multi-national corporations have offshored their assets to avoid paying taxes.   The IMF report addresses ideas of how to tax the dodgers that are hurting public finance.

POLAND

Back on Wednesday, September 4th, Reuters reportered that Poland was going to move 50% ($47.6 Billion) of privately held pension funds into the State’s custody and books because Poland had maxed out it’s legal ratios to borrow.

New York Times ran a piece on October 11 that confirms Reuters September 4th story.  Indications are that all systems are go on the Poland pension pilfering.

Bloomberg reported on Oct. 10 that a Polish asset manager with $20 Billion under advisement, Marcin Zoltek, says investment suitability will become a problem for these Polish pension dollars.  So pensioners may lose their assets in a bad market due to unsuitable investment choices made by the government.

Forbes reports that the move to seize $47.6 Billion (about half) of all Polish people’s private retirement funds has been roundly criticized by US watchers and the markets in general.

CYPRUS

This follows the March 26th Cyprus bail-in, which amounted to confiscation of bank deposits with more than $100,000 EUR in the account.

A July 28 agreement between Cyprus and it’s international lenders including IMF & European Central Bank,  put 47.5% of deposits exceeding $100,000 EUR into equity shares of the bank.

RUSSIA

Reports came out in Reuters and New York Times on Thurday, October 3rd that Prime Minister Medvedev announced a pension system overhaul.  The overhaul will involve holding $7.6 Billion in private pension assets into state coffers for a one year holding period, while officials run an investigation into the private pension system.  Some say the government is broke and they will use the assets to improve their debt ratios.

IMF LAYS GROUNDWORK TO TAKE 10% OF EUROPEANS SAVINGS

Well, the IMF is noticing it’s European member nations are broke.  But their Oct. 13th report has some solutions: take 10% from everyone in the EU, one time! All households with positive net wealth—everyone with retirement savings or home equity—would have their assets plundered under the IMF’s formulation.

From the IMF report:

imf

This may restore public finance to pre-2007 debt levels.

ONE LAST NOTE

And just in case banks in the US faltered again, the FDIC and Bank of England already have bail-in plans for depositors.  Much like Cyprus, money over a certain amount would be confiscated, and converted to bank shares.

Our public revenue will always be safe, because we issue the world’s currency.  When the time comes that a new world currency goes in circulation, America will possibly face the same austerity measures.

What’s a girl to do?  Keep her money in a shoe?  Of course, credit unions are an alternative.