Remembering Triffin's Dilemma...I think things will get a little worse before they get better (and that may take a long, long, time)

Source: tigerdroppings.com

Fed Governor Kevin WarshTo G20 : Dollar Defense By Inflation
(Posted on 9/28/09 at 6:28 a.m.)

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Interesting CNBC video interview with interpretations of what Kevin Warsh's message to the G20 was about... Below are some excerpts from the Jim Rickards interview: First link at bottom of this post is to Rickards video, second link is to Warsh's comments in the rare Fed Governor WSJ op/ed. The timing of Warsh's comments almost certainly mean they were for the benefit of the G20 participants.

'Fed governor Kevin Warsh's opinions in WSJ were aimed at the G20 participants'

'Fed might target asset prices (gold) in addition to using the usual metrics to decide when to raise interest rates...This would be in defense of the dollar'

'If gold goes to $1,500 it's not because dentists are filling a lot of teeth...the Fed is not going to let the dollar implode...the Fed is preempting the collapse of the dollar'

'The dollar must be defended because it is the lynch pin of national security' (a fact that I have pointed out often; ie, no economic strength = no military strength)

'In order to defend the dollar, the Fed should have began raising interest rates 6 months ago' (of course this would have collapsed the economy, stifled any hope of a Keynesian recovery, and collapsed the too big to fail businesses, so it was not done)

'The Fed needs the dollar to go down by about half over the next 14 years' (inflate at ~ 4% per year)

'There is no combination of growth and taxes that will pay for the $60 Trillion in US contingent liabilities...but the US can pay half thus the dollar will be cut in half by inflation in the next 14-17 years' (that is what the Fed does best...inflate away the dollar)

'The concept of the Fed maintaining price stability is nonsense...If you had a nickle and three pennies in your hand that is the current value of the dollar compared to 1913 when the Fed was created.'

'Fed inflation is a dynamically unstable process but it is done to prop up the value of the banks.'

'The Fed would love to inflate gradually but if the market sees what is going on we could have a very rapid collapse in the dollar which would be reflected in gold prices.' (NOTE: I have no desire for the dollar to collapse, for gold to rise dramatically against the dollar, for personal profit taking by selling gold for inflated dollars...and I have made these points clearly in past posts. The dollar is simply a hedge against inflation, a way to preserve wealth, individual's personal savings that the Fed cannot inflate away without extreme intervention in commodities markets...which the Fed and all central banks do on a routine basis.)

'The IMF is being anointed as a global central bank and is now issuing debt (SDRs) on a large scale for the first time in history. The issuance of SDRs by the IMF is simply printing more money backed by nothing.' (sound familiar?)

'This has to do with Triffin's Dilemma (from 1960) which postulates that "in order to stimulate world trade some hard currency country must run persistent large deficits, but if that country runs persistent large deficits eventually that country goes broke" (more about Triffin's dilemma at this Wiki link LINK )

'In order for the US to get it's own economy/dollar in order the problem is being handed over to the IMF. The global economy will be fueled by SDRs issued by the IMF. This will allow the dollar to be taken off into a corner and depreciated to solve the US debt problems.'

'The IMF issuance of SDRs will solve the US dollar problem but the US will no longer have the privilage of being the world reserve currency and this fact will have national security implications. The dollar will be just another currency among many fiat currencies.'

'What Fed Governor Warsh is saying is to the G20 is 'we are not going to let this happen'. If gold goes to $1,500 - 2,000 per oz (because people become frightened of a dollar collapse) we are going to raise interest rates ~ 50 - 75 basis points to defend the dollar.'

'I reccommend to my clients that they hold 10% of their assets in gold but the problem with holding gold is that you are fighting every central bank in the world. Central banks hate gold because it limits their ability to print money...but the markets are the markets and even the central banks are not bigger that the markets.' (Mr Market always wins)

'Warsh is trying to preempt an unstable decline of the dollar. What the Fed wants is a stable, steady decline.'

I have my own opinions about what Rickards and Warsh are saying and they are not necessarily the same position of either man. I have posted this for the benefit of readers that want to know what MIGHT be ongoing in behind the scenes manuvering between various world governments/central bankers. Rickards made an attempt to read between the lines of Warsh's op/ed WSJ piece and he might be partially right, totally right or totally wrong. IOWs, use your own judgement...thimk! ...and, this is not a Q&A with Rivers...I will not be defending this post or the opinions of Rickards...and I will not be speculating on the comments or goals of Warsh and the Fed.

LINK

'The Fed's Job Is Only Half Over' Kevin Warsh, Fed Reserve Governor... LINK

See also Money, Banking, Economic Collapse...so ya think ya know it all! This should help!