Will the Bear come here ?

[moka]

The only real way out of this for the Fed is to go to a new monetary system. If you look back over the last 100 years they have gotten out of tough situations by slowly removing the gold backing on the dollar. Today there is no gold backing on the USD.

So my guess is that they will switch. But only when there is no other option. This Recession will be scary.

Hope I'm wrong.

Jim Rickards in his book Road to Ruin says SDRs(Special Drawing Rights) created by the IMF in 1969 will be the new monetary system when the next financial crisis comes. SDRs are not issued in the conduct of normal monetary policy. They are not issued to bail out individual firms or even countries. SDRs exist primarily to provide liquidity from thin air when there is a liquidity crisis or lost confidence in other money forms. SDRs are a world money fire brigade to douse financial infernos. The most recent issuance was in August 2009; the last issuance before that was in 1981.
In the coming collapse, the financial system will be frozen because central banks are unable to reliquefy the system as in the past. The G20 will convene an emergency meeting, as happened in November 2008, and direct the IMF to reliquefy the system with SDRs. If successful, banks and brokers will gradually reopen. Customers will be allowed to access cash. Transactions in cash and securities will still be denominated in dollars, euros and yen. The SDR, not the dollar, will be the reference point, or numeraire for world trade and finance. This transition has been under way for decades. A curious aspect of the SDR’s rise as world money is that individuals can’t have any. SDR’s are issued by the IMF to its multilateral organizations including the United Nations and World Bank. The dollar will be devalued against SDRs. World money means the dollar is worth what the G20 and IMF decide.

https://www.youtube.com/watch?v=lJNW2IwBJg8
Jim Rickards - Road to Ruin - Animated Book Summary

[moka]

https://blogs.imf.org/2017/06/02/the...idea-new-life/
The SDR: Giving An Old Idea New Life

The IMF's Special Drawing Right, or SDR, was created more than 50 years ago and used only by IMF member countries to supplement their official reserves. The SDR’s value is based on a basket of five major currencies—the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound. In this podcast, Mohamed El-Erian, Chief Economic Advisor at the financial services firm Allianz, and a former deputy director at the IMF, says an expanded use of the SDR in global markets could help to strengthen the world economy.

https://www.imf.org/external/POS_Mee...?SeminarId=222
50 Years After: The SDR’s Role in the International Monetary System

[moka]

An October 2018 interview with Nassim Nicholas Taleb but still relevant. He says the US national debt is like a Madoff scheme or Ponzi scheme. You have to borrow more and more to pay interest. We have to borrow to pay creditors. Normal solution to get rid of debt is inflation, but inflation traditionally has been uncontrollable. In 2008 we transferred the debt from individuals to the state and lowered interest rates. Who is going to pay the price of higher rates? Those who benefited from free money - higher leveraged corporations, and higher end real estate first, then rest of real estate, then stock market, cannot maintain high valuation in stock market in the presence of high interest rates. I showed the risks of the fragility of the system in 2008. Same fragility now as 2008. The thing that would save us miraculously is real growth, or some kind of inflation – smooth inflation. Unless we have these two we are doomed.

https://www.youtube.com/watch?v=62rfLjnPxKE
Taleb Says World Is More Fragile Today Than in 2007

[moka]

https://www.reuters.com/article/us-k...-idUSKCN1QA2W1
Kraft Heinz discloses SEC probe, $15 billion write-down; shares dive 20 percent. The gloomy results and forecast from the company, which is one of billionaire Warren Buffett’s largest investments, reflect changes in consumer trends away from processed foods to healthier alternatives.

[moka]

https://www.stuff.co.nz/business/wor...t-of-recession
Debt-clogged world close to tipping point of recession.

It does not require a catalyst to set off global recession. Claudio Borio, from the Bank for International Settlements, said asset markets can "fall under their weight" from exhaustion and then take the economy down with them. This is what happened in the dotcom bust of 2001 and the Great Recession of 2008.