On Aug. 30, statistician and economic analyst Dr. Jim Willie was a guest on the Wall St. for Main St. internet program. During his 87 minute interview, the founder and editor of the Hat Trick Newsletter reported on the status of the global financial system following last week’s turmoil in the equity, bond, and energy markets and announced that we were in the 9th inning now of a breakdown that will lead to the next global collapse.
Citing China’s moves in the currency markets, as well as geo-political events such as the unexplained explosion in their port at Tianjin, the final pieces are being put in place to wrench power from the U.S. over the global reserve currency, and to bring about a financial event where the dollar does not simply crash, but vanishes from the playing field as the Yuan seeks its place as the de facto reserve in global trade.
Jim Willie: We’re in the 9th inning here. This is breakdown in progress. And it’s amazing that so few can even notice that the system is collapsing. We had our little pre-indicators… like the Treasury Bond fractures, and then the rejection of the Chinese currency from the IMF SDR basket.
Jason Burack: If the U.S. continues to delay the RMB being allowed into the SDR, do you think China will retaliate in additional ways than these recent devaluations?
JW: They are never going to be in the SDR, because it would require the major currencies to suffer a grand liquidity hit. It’s never going to happen. The real question now is, what’s going to happen now that we have a currency war in progress? The United States didn’t just sit back and say ok now that their currency was devalued… no, Tianjin was exploded. I think we’re going to see Langley fingerprints in there.
The real impact is going to come I believe when the Chinese wrestle control of the gold market, which will come by the means of delivery of actual gold, with respects to their futures contracts on gold, and in actual contracts in RMB and not the dollar.
I am looking forward to the next big event being the Yuan currency being required by Eastern exporters for payment. – Interview with Wall St. for Main St.
Ironically, the establishment of global gold prices in Yuan may not as far away as many think. On Friday, China made a change to their publicized gold holdings and for the first time began quantifying them in regards to price versus tonnage. This move creates a mark to market accounting which is usually indicative of projecting transparency for a particular sector that a market intends to use as a financial determinant. And since China has already announced they intend to sell gold in Yuan at a price they will determine before the end of the year, it will end the West’s control over pricing of the monetary metal, and create a liquidity crisis due to leveraged contracts that are now at 92:1 paper to physical in the U.S. based Comex market.
We are far into a global currency war that began as long ago as 2009, but has accelerated within exporting nations since 2012. And as the old axiom goes, once currency wars begin, they are followed next by trade wars, and finally, shooting wars. And since China began the devaluation of the RMB just two weeks ago, the amount of physical chaos in the world has rapidly increased, and the breakdown in the global economy and financial system indeed could be in the last inning before it is game over with a global financial collapse.