Once again, we see the "road-paving" process as we race towards the Tribulation. There will be a world financial system and a world currency, and as George Soros is fond of saying, the U.S. dollar must collapse first.
The World Bank's former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
"The dominance of the greenback is the root cause of global financial and economic crises," Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. "The solution to this is to replace the national currency with a global currency."
Lin, now a professor at Peking University and a leading adviser to the Chinese government, said expanding the basket of major reserve currencies — the dollar, the euro, the Japanese yen and pound sterling — will not address the consequences of a financial crisis. Internationalizing the Chinese currency is not the answer, either, he said.
Lin urged the international community, especially the US and European Union, to play a leading role in currency and infrastructure initiatives. To boost the global economy, he proposed the launch of a "global infrastructure initiative" to remove development bottlenecks in poor and developing countries, a measure he said would also offer opportunities for advanced economies.
"China can only play a supporting role in realizing the plans," Lin said. "The urgent thing is for the US and Europe to endorse these plans. And I think the G20 is an ideal platform to discuss the ideas," he said, referring to the group of finance ministers and central bank governors from 20 major economies.
The concept of a global "super currency" tied to a basket of currencies has been periodically discussed by world leaders as well as endorsed by 2001 Nobel Memorial Prize-winner Joseph Stiglitz. A super currency could also be tied to a single currency, but the interconnectedness of world financial markets and concerns about the volatility that can occur as a result of the system being tied to one currency have made this idea less popular.
Eswar Prasad, a trade-policy professor at Cornell University who also is a senior fellow at the Brookings Institution, said he disagrees that a super currency would protect the global financial system against breakdowns such as the 2008 downturn which plunged the world economy into its most dangerous crisis since the Great Depression of the 1930s.
Arguments in favor of a global currency resurfaced during October's US budget impasse, which forced the government to shut down.
"It is perhaps a good time for the befuddled world to start considering building a de-Americanized world," a Xinhua News Agency commentary said on Oct 14. The piece argued that creating a new international reserve currency to replace reliance on the greenback, would prevent government gridlock in Washington from affecting the rest of the world.
In March 2009, China's central bank governor, Zhou Xiaochuan, called for the creation of a new "super-sovereign reserve currency" to replace the dollar. In a paper published on the People's Bank of China's website, Zhou said an international reserve currency "disconnected from individual nations" and "able to remain stable in the long run" would benefit the global financial system more than current reliance on the dollar.
Chen Wenling, chief economist at the China Center for International Economic Exchanges, a government think-tank, said, "A supranational currency may be a new direction for development of the global financial system. It also requires different countries to cooperate in coordinating macroeconomic policies."
"We need to be extremely vigilant," said the IMF's Christine Lagarde in Davos. "The deflation risk is what would occur if there was a shock to those economies now at low inflation rates, way below target. I don't think anyone can dispute that in the eurozone, inflation is way below target."
It is not hard to imagine what that shock might be. It is already before us as Turkey, India and South Africa all slam on the brakes, forced to defend their currencies as global liquidity drains away.
The World Bank warns in its latest report - Capital Flows and Risks in Developing Countries - that the withdrawal of stimulus by the US Federal Reserve could throw a "curve ball" at the international system.
The report said they may need capital controls to navigate the storm - or technically to overcome the "Impossible Trinity" of monetary autonomy, a stable exchange rate and free flows of funds. William Browder from Hermitage says that is exactly where the crisis is leading, and it will be sobering for investors to learn that their money is locked up - already the case in Cyprus, and starting in Egypt. The chain-reaction becomes self-fulfilling. "People will start asking themselves which country is next," he said.
One country after another is now having to tighten into weakness. The longer this goes on, and the wider it spreads, the greater the risk that it will metamorphose into a global deflationary shock.
The implications are obvious. China may at some stage try to steer down the yuan to hold on to market share, whatever they say in the US Congress, partly to stop Japan stealing a march with its 30pc devaluation under Abenomics. Albert Edwards from Societe Generale say this may prove the ultimate deflationary shock, dwarfing the 1998 Asia crisis.
Those who think deflation is harmless should listen to the Bank of Japan's Haruhiko Kuroda, who has lived through 15 years of falling prices. Corporate profits dried up. Investment in technology atrophied. Innovation fizzled out. "It created a very negative mindset in Japan," he said.
Any such outcome in Europe would send Club Med debt trajectories through the roof. It would doom all hope of halting Europe's economic decline or reducing mass unemployment before the democracies of the afflicted countries go into seizure. So why are they letting it happen?
Intelligence and Strategic Affairs Minister Yuval Steinitz said that Palestinian Authority President Mahmoud Abbas espoused more “anti-Semitic and anti-Israeli venom” than any other world leader.
Speaking at the Institute for National Security Studies on Wednesday, Steinitz said that “while Abu Mazen (Abbas) doesn’t fund terrorism, he who was a Holocaust denier in his youth now denies the very existence of the Jewish people and their right to a state.”
He was likely referring to Abbas’s 1982 doctoral dissertation, which was titled “The Other Side: the Secret Relationship Between Nazism and Zionism.”
“We must not deceive ourselves,” said Steinitz, who is considered a confidant of Prime Minister Benjamin Netanyahu. “There is no peace process. There is a diplomatic process… it has some chances, it has significance, but to my great sadness we’re not seeing even the faintest signs that the other side, and the Palestinian leadership, has true intentions of peace.”
He declared that under Abbas’s stewardship the level of anti-Israeli and anti-Semitic incitement in the PA had “reached record highs.”
Jewish Home party MK insinuated on Thursday morning that US Secretary of State John Kerry was at least partially motivated by anti-Semitism in his efforts to forge a peace agreement between Israelis and Palestinians.
“The prime minister (Benjamin Netanyahu) is maneuvering under the obsessive and unprofessional pressures that might also bear an undertone of
“He has an anti-Israel foundation in that he does not come to compromise, but instead comes with unequivocal answers about shrinking the Land of Israel and establishing a Palestinian state,” Yogev added. “The members of my faction also think that he is not a fair broker and he is not fit to mediate here because his positions are predetermined.”
Iran now has all the technical infrastructure to produce nuclear weapons should it make the political decision to do, Director of National Intelligence James Clapper wrote in a report to a Senate intelligence committee published Wednesday. However, he added, it could not break out to the bomb without being detected.
In the “US Intelligence Worldwide Threat Assessment,” delivered to the Senate Select Committee on Intelligence, Clapper reported that Tehran has made significant advances recently in its nuclear program to the point where it could produce and deliver nuclear bombs should it be so inclined.
“Tehran has made technical progress in a number of areas — including uranium enrichment, nuclear reactors, and ballistic missiles — from which it could draw if it decided to build missile-deliverable nuclear weapons,” Clapper wrote. “These technical advancements strengthen our assessment that Iran has the scientific, technical, and industrial capacity to eventually produce nuclear weapons. This makes the central issue its political will to do so.”
North Korea's increasingly shrill opposition to the annual joint drills named Foal Eagle looks very similar to the kind of vitriol that preceded the start of the same exercises last year and led to a steep rise in tensions on the Korean Peninsula. That round of escalation culminated in threats of a nuclear strike on Washington and the flattening of Seoul before the maneuvers ended and both sides went back to their corners.
It appears the first stages of this year's battle have already begun - though some experts say they don't think it will be as high-pitched as last year's.
In the latest of North Korea's increasingly frequent salvos against the exercises, it said through its state-run media that the United States is building up its military forces in Asia so it can invade the country - formally called the Democratic People's Republic of Korea, or DPRK - and take control of the whole region.