absolutely fascinating article on a topic i need to understand better. I hope you can provide more such articles in the future as this initiative expands. it has such profound implications. Thank you
I don’t think a detailed knowledge of the rise and fall of dominant currencies is necessary to sense the inexorable decline of the USD.
How could it be otherwise? A financialized west with “wealth” or “assets” controlled by the élite of the élites is both the logical mechanistic endpoint of the “FIRE” sector — but also the apotheosis of the Talmudic teachings.
Unfortunately for this vision, the real world intrudes. To paraphrase Zoltan Pozsar, we can print USD — but not everything is a mouseclick away from existence. Even though the elites may control networks of organic cottage gardens, private trawlers roaming the seas for wild seafood, and teams of celebrity chefs to prepare sybaritic novelties — is this sufficient? Even Bezos could not restrain his own narcissism and aspired to celebrate his private life in public in the “grandest salon of Europe” (Piazza San Marco, Venice).
But a critical detail which emerges is that our latter day Rome is also dependent on public and private security forces. They depend, in turn, on armaments. From the same people who discovered explosives — we now have armament systems and munitions based on advanced material science. The West wants the killing machines but prefers to daintily sidestep the science and engineering. What happens to their dark dreams of domination if they can’t buy permanent magnets?
A situation which recalls the obsession of Frederick the Great with “true” porcelain. However, the difference is: he could buy whatever he wanted from China, and set his inventors free to discover the secret of its manufacture. Unlike Frederick with his extraordinary sense of beauty, however, the leaders of the west today are the product of steady devolution. They celebrate virtue, while embracing the Seven Deadly Sins in private.
For a concise history of the Jewish/Talmudic project from Ancient Rome through to 1913 and our living present , Stephen Mitford Goodson’s book “The Rise of Central Banking” is an imperative read.
Certainly understand the revolutionary implications, but don't quite understand why this new stable coin would be pegged to the dollar. Yes it is a common medium of exchange, but as the article stated, the dollar lost 15% last year. Pegging it to a basket of assets or the yuan would seem to make more sense, unless this is just first step.
There are a lot of excess USD sloshing around and a stablecoin tied to the USD, and issued by a China affiliate (HK) would be attractive against the JPM coin. The mechanism hasn’t been made public, but the idea that the HK/USD stablecoin would could be linked to settlements between central banks (ie mBridge-like) bypassing western commercial banks is alluring (avoiding the possibility of another TerraUSD).
But the author states clearly “the possibilities for a PBOC-backed stablecoin are endless, but the killer app will peg them to a basket of currencies and commodities (like RMB + dollars + euro + yen + gold + wheat + iron ore), making its value transparent, incorruptible and stable – the perfect replacement for corruptible, unstable, politicized US dollars.
In other words, a perfect reserve currency for the 140 central banks in the BRI.”
Yep. caught that, but not sure what "killer app" he's referring to. Must be something anticipated. Would require a different currency or a floating stable-coin detached from particular currencies. Don't know of a current stable coin that's not convertible one for one into a particular currency. Further up in the article it says..."the PBOC used its Hong Kong-based e-currency trading platform, mBridge, to issue a stablecoin under Hong Kong’s strict Stablecoin Ordinance (it requires 100% reserves and third-party custody) and tied it to uncontroversial US dollars." That seems to say it's convertible into dollars. If the value of the dollar continues to nosedive, so does the stable coin. I see experimentation going on. China is smart to get it out of private hands, virtually guaranteeing it will never collapse. And China has started to mess around with both its stock market and bond market lately. Which kind of baffled me since it really isn't short of capital. One of the dollar's strengths is its wide open investment opportunities for savings and reserves. I think China, which has never cared about its stockmarket or international bond market, is experimenting with options to compete with the dollar by providing new savings/investment instruments. It wants to provide alternatives to weaken the dollar's grip on the world's savings. All those questionable reserve dollars can't just go into gold. And China may be testing the waters to offer a different channel for the river to flow into.
You’re conflating a number of capital market issues here. Transactions are different from stores of value. The HK stablecoin is the former. Tether claims to be the latter but an offshore entity with no regulation at all is not an investable assets in my portfolio strategy.
You might want to look at Inside China Business from earlier this year — Kevin Walmsley stated that a China dollar stablecoin (with an HK mechanism) could potentially exceed the scale of Tether (transaction value, not asset value). So this is an issue which has long been considered by China.
If you review market history, you can see that China has always jawboned its public equity markets (normally through interest rates). You’re misinterpreting what the purpose of a public stock market is — it’s to provide a source of funding for companies and an investable asset to the public. The Chinese government gets nothing ‘financial’ from it (re “they don’t need capital”). The HK stablecoin is not an investable asset (“if the USD falls, so does the stablecoin”).
absolutely fascinating article on a topic i need to understand better. I hope you can provide more such articles in the future as this initiative expands. it has such profound implications. Thank you
Glad you enjoyed it. More to come!
I don’t think a detailed knowledge of the rise and fall of dominant currencies is necessary to sense the inexorable decline of the USD.
How could it be otherwise? A financialized west with “wealth” or “assets” controlled by the élite of the élites is both the logical mechanistic endpoint of the “FIRE” sector — but also the apotheosis of the Talmudic teachings.
Unfortunately for this vision, the real world intrudes. To paraphrase Zoltan Pozsar, we can print USD — but not everything is a mouseclick away from existence. Even though the elites may control networks of organic cottage gardens, private trawlers roaming the seas for wild seafood, and teams of celebrity chefs to prepare sybaritic novelties — is this sufficient? Even Bezos could not restrain his own narcissism and aspired to celebrate his private life in public in the “grandest salon of Europe” (Piazza San Marco, Venice).
But a critical detail which emerges is that our latter day Rome is also dependent on public and private security forces. They depend, in turn, on armaments. From the same people who discovered explosives — we now have armament systems and munitions based on advanced material science. The West wants the killing machines but prefers to daintily sidestep the science and engineering. What happens to their dark dreams of domination if they can’t buy permanent magnets?
A situation which recalls the obsession of Frederick the Great with “true” porcelain. However, the difference is: he could buy whatever he wanted from China, and set his inventors free to discover the secret of its manufacture. Unlike Frederick with his extraordinary sense of beauty, however, the leaders of the west today are the product of steady devolution. They celebrate virtue, while embracing the Seven Deadly Sins in private.
For a concise history of the Jewish/Talmudic project from Ancient Rome through to 1913 and our living present , Stephen Mitford Goodson’s book “The Rise of Central Banking” is an imperative read.
Certainly understand the revolutionary implications, but don't quite understand why this new stable coin would be pegged to the dollar. Yes it is a common medium of exchange, but as the article stated, the dollar lost 15% last year. Pegging it to a basket of assets or the yuan would seem to make more sense, unless this is just first step.
There are a lot of excess USD sloshing around and a stablecoin tied to the USD, and issued by a China affiliate (HK) would be attractive against the JPM coin. The mechanism hasn’t been made public, but the idea that the HK/USD stablecoin would could be linked to settlements between central banks (ie mBridge-like) bypassing western commercial banks is alluring (avoiding the possibility of another TerraUSD).
But the author states clearly “the possibilities for a PBOC-backed stablecoin are endless, but the killer app will peg them to a basket of currencies and commodities (like RMB + dollars + euro + yen + gold + wheat + iron ore), making its value transparent, incorruptible and stable – the perfect replacement for corruptible, unstable, politicized US dollars.
In other words, a perfect reserve currency for the 140 central banks in the BRI.”
Yep. caught that, but not sure what "killer app" he's referring to. Must be something anticipated. Would require a different currency or a floating stable-coin detached from particular currencies. Don't know of a current stable coin that's not convertible one for one into a particular currency. Further up in the article it says..."the PBOC used its Hong Kong-based e-currency trading platform, mBridge, to issue a stablecoin under Hong Kong’s strict Stablecoin Ordinance (it requires 100% reserves and third-party custody) and tied it to uncontroversial US dollars." That seems to say it's convertible into dollars. If the value of the dollar continues to nosedive, so does the stable coin. I see experimentation going on. China is smart to get it out of private hands, virtually guaranteeing it will never collapse. And China has started to mess around with both its stock market and bond market lately. Which kind of baffled me since it really isn't short of capital. One of the dollar's strengths is its wide open investment opportunities for savings and reserves. I think China, which has never cared about its stockmarket or international bond market, is experimenting with options to compete with the dollar by providing new savings/investment instruments. It wants to provide alternatives to weaken the dollar's grip on the world's savings. All those questionable reserve dollars can't just go into gold. And China may be testing the waters to offer a different channel for the river to flow into.
You’re conflating a number of capital market issues here. Transactions are different from stores of value. The HK stablecoin is the former. Tether claims to be the latter but an offshore entity with no regulation at all is not an investable assets in my portfolio strategy.
You might want to look at Inside China Business from earlier this year — Kevin Walmsley stated that a China dollar stablecoin (with an HK mechanism) could potentially exceed the scale of Tether (transaction value, not asset value). So this is an issue which has long been considered by China.
If you review market history, you can see that China has always jawboned its public equity markets (normally through interest rates). You’re misinterpreting what the purpose of a public stock market is — it’s to provide a source of funding for companies and an investable asset to the public. The Chinese government gets nothing ‘financial’ from it (re “they don’t need capital”). The HK stablecoin is not an investable asset (“if the USD falls, so does the stablecoin”).