Sunday, March 22, 2009

How big a deal is the loss of the dollar's reserve status?

by Eric deCarbonnel

In the last week we have learned that:

1) Fed is planning 15-fold increase in us monetary base

2) U.N. panel says world should ditch dollar
3) Zimbabwe has ditched the US dollar in favor of the rand
4) China and Russia rethinking the dollar's status as world’s reserve
currency

With the US monetary base expanding at a breathtaking pace and

nations around the world worrying about the value of their US
holdings, the dollar looks virtually guaranteed to lose its status as the
international reserve currency. This begs the question: how big a
deal is the loss of the dollar’s reserve status?

To answer this question, lets first calculate just how large are the
dollar holdings of foreign governments. From the CIA’s world
Factbook, below is a ranking of countries by reserves of foreign
exchange.

(amounts in billions)

Foreign
Ran Exchange
k Country Reserves
1 China $1,534
2 Japan $954
3 Russia $476
4 India $275
5 Taiwan $275
6 Korea, South $262
7 Brazil $180
8 Singapore $163
9 Hong Kong $153
 10 Germany $136
11 France $116
12 Algeria $111
13 Malaysia $101
14 Italy $94
15 Thailand $87
16 Mexico $87
17 Libya $80
18 United Arab Emirates $77
19 Turkey $77
20 Switzerland $75
21 United States $71
22 Iran $69
23 Poland $66
24 Norway $61
25 United Kingdom $57
26 Indonesia $57
27 Nigeria $51
28 Argentina $46
29 Canada $41
30 Romania $40
Etc…
Total = $6,898

According to Wikipedia, at the end of 2007, 63.90% of the identified

official foreign exchange reserves were held in United States dollars.
Therefore, total dollar reserves at the beginning of 2008 were
about $4,408 billion (63.90% of $6,898 billion). However that is not
the end of the story, as we still need to account for stabilization funds
or Sovereign Wealth Funds. Wikipedia explains:

Excess reserves

Foreign exchange reserves are important indicators of ability

to repay foreign debt and for currency defense, and are used
to determine credit ratings of nations, however, other
government funds that are counted as liquid assets that can be
 applied to liabilities in times of crisis include stabilization
funds, otherwise known as sovereign wealth funds. If those
were included, Norway and Persian Gulf States would rank
higher on these lists, and UAE's $1.3 trillion Abu Dhabi
Investment Authority would be second after China. Singapore
also has significant government funds including Temasek
Holdings and GIC. India is also planning to create its own
investment firm from its foreign exchange reserves.

For more, the Market Oracle explains sovereign wealth funds.

Sovereign Wealth Funds

June 30th, 2007

Central banks have traditionally kept their

reserves in relatively low-yielding, highly
liquid government securities, agency debt,
money-market instruments and bank deposits.
The most current official IMF figure for official
worldwide foreign currency reserves is
US$5.89 trillion [Worldwide foreign currency
reserves increased by about 1 trillion over 2007]. At
US$1.35 trillion, China holds the world's largest pool
of official reserves, followed by Japan with US$911
billion and Russia with US$403 billion.

In addition to these reserves, market

estimates for the total value of Sovereign
Wealth Funds (SWF) run as high as US$2.5
trillion. This compares to US1.6 trillion for
hedge funds. These are state-owned and
operated funds, comprising of financial assets
such as stocks, bonds, or property not included
in the IMF figures. The use of these funds
enables large reserve holders to invest in
higher yielding instruments.
With around 40 percent of stabilization funds invested in the US, the
dollar holdings of sovereign wealth funds are around $1,000 billion
(40% of $2,500 billion). After combining the numbers from foreign
exchange reserves and stabilization funds, the dollar holdings of
foreign governments are about $5,385 billion. Meanwhile, as you
might have noticed from the CIA’s ranking above, the United States
holdings of foreign currencies is around $71 billion.

Implications of the loss of the dollar’s reserve status

As the dollar loses its reserves status, at least half of the world’s
$5,385 billion dollar reserves will be sold off and replaced with other
currencies (yuan, euro, khaleeji, gold, rand, etc…). The US, with its
$71 foreign reserves, will not be able to do anything to counteract this
mass exodus from the dollar. With outflows of this magnitude, the
dollar’s value will collapse to a fraction of where it is now.

The process of foreign nations extracting themselves from the dollar

is not going to be pretty. The likely impacts are:

1) The dollar’s value will plunge as investors see the writing on the
wall and jump ship.
2) US credit markets will collapse. As the dollar fall, a mass exodus
from credit market will begin. Investors sitting on toxic securities will
sell at firesale prices to escape the currency depreciation.

3) The fed’s balance sheet will explode beyond all reason. In

response to the mass exodus from credit markets, the fed will buy
trillions worth debt in a desperate attempt to hold interest rates down.
Unfortunately, the more debt the fed buys, the more quickly the dollar
will fall, and the more panicked the credit selloff will become.

4) US interest rates will soar, despite (or because of) the fed's
efforts.

5) Countries around the world will be hurt badly by the dollar’s

decline. These countries include:

A) Nations which are heavily dependent on US exports: Japan,

Mexico, etc…
B) Nations with large dollar reserves: Japan, China, Gulf oil states,
etc…
C) Nations which receive large amount of US foreign aid: Israel,
Egypt, etc…
D) Nations which rely on remittances from citizens working in the US:
Mexico, India, etc...
E) Nations which use dollars as their official currency: Liberia,
Panama, etc…
F) Nations which have large amounts of dollars in circulation: Central
and South America (especially Argentina), Eastern Europe, etc…

6) Some nations will see benefits from the dollar’s decline. These
countries include:

A) Nations with large gold reserves: EU zone, Switzerland, etc…

B) Nations which owe dollar denominated debt will see that debt
wiped out: Iceland, African nations, etc…
C) Nations who stable currencies: EU zone, Switzerland, China, etc…

7) World politics will be greatly altered. There will be considerable

anger at the US from nations hurt by dollar’s fall. The US will lose
influence to Asia (mainly China).
8) US retailers will get crushed. As the dollar falls, the cost of
imports for retailers will increase, but the American consumer will be
unable to afford to these higher prices. Competition between
desperate retailers will force them the sell inventory at below cost,
creating massive losses. Retailers most heavily dependent on
imports (ie: Wal-Mart) will be the first to go under. Eventually as more
and more retailers go bankrupt, the few survivors will be able to raise
prices enough to cover costs, and the sector will stabilize at a fraction
of its current size.

9) American lifestyles will change radically. The end of cheap oil,

low interest rates, and deficit spending will mean a lower quality of life
and higher taxes.

10) The price of gold and other precious metals will explode.

11) US will experience hyperinflation.

Posted by Eric deCarbonnel at 12:52 PM Delicious email Print this post

Labels: Currency_Collapse Key_Entries Wall_Street_Meltdown

Click Here To Scroll Through My Recent Post List
32 Comments:
Anonymous said...

Tiny Switzerland outranks the US!

Facinating charts.

March 22, 2009 2:02 PM

Anonymous said...

Thanks for another great article. I find your writing most interestning.
Highly appreciated.

So for the question. The high interest rate will come after the
hyperinflation, dont see how you could a hyperinflation with high
interest?

March 22, 2009 2:13 PM

Dave Narby said...

Certainly things are bad.

However, you miss a very important point.

The US has by far the largest reserves of GOLD.

http://en.wikipedia.org/wiki/Official_gold_reserves

So while things are bad out there and getting worse, in real money
terms, we have more of it than most... By a lot!

So I expect things to implode, but the US to come out the best of a

bad lot.

What won't survive will be the global financial system. It's toast.

...I wonder what the new one will look like?

March 22, 2009 2:27 PM

Yohay said...

Very interesting and thorough piece.

Do you have any estimation about the timing of this collapse?

March 22, 2009 2:43 PM

Anonymous said...

The imminent demise of the $US has been predicted for years, yet it
arises from the charred remains of the international monetary system
again and again. Of course, it loses purchasing power as it rises and
falls, but nonetheless, remains competitive with other currencies.

The last time around, beginning, I think, on Sept. 15 2008, a stunning

rise in the USDX was engineered by the Fed. Here's the big question:
Has the Fed run out of options to prevent a dollar collapse? Is
monetization its last card, or are there more up the Fed's sleeve left to
play? This is an important question, since a dollar collapse of 1/2 its
value in 6 months would be a disaster for anyone not holding precious
 metals. How about it, Eric. What, if anything, is left in the Fed's
arsenal?

March 22, 2009 2:48 PM

Anonymous said...

@dave

If the gold reserves of the US are still present you might be partially
right. In previous posts doubt was expressed - based on the gold
lending practice of the fed. Since no external audits of the remaining
gold are available no one knows for sure.

March 22, 2009 2:51 PM

Anonymous said...

1) China is the largest producer of gold now, not South Africa so this
discussion of the Rand becoming a reserve currency is bunk.

2) Switzerland as been printing money at a rapid rate. They are just as

screwed as the US. Their economy is almost entirely dependent on
finance. Guess the shape of the Swiss banks sitting on bad loans to
Eastern Europe and high leverage ratios. That said, I agree that China
and the EU should do relatively well.

March 22, 2009 3:09 PM

Anonymous said...

In the list of consequences, you fail to mention any beneficial

consequences Eric.

It seems like with the high inflation, consumer debt will be wiped out.

Also, any company that focuses on exports should see an explosion in

business with rapidly declining prices, right?

March 22, 2009 3:11 PM

Anonymous said...
 I'd say that should a new reserve currency emerge there will be a fixed
exchange set to the dollar, perhaps enforced by world governments
punishable by you know what.

March 22, 2009 3:15 PM

Anonymous said...

Eric, always a nice collection of data. Thanks for that.

The weakness of your articles is the missing of any time frame.

March 22, 2009 3:23 PM

Anonymous said...

Let's not criticize Eric for not giving time frames. There are too many
variables involved, and the old "black swan" events that pop up all too
frequently. If he made timed predictions, know-nothing critics would
be all over him if they didn't come true.

March 22, 2009 5:20 PM

Anonymous said...

Dear Dave,

LOL... You got to be joking! If there is still that much gold left in Fort
Knox or whatever vault that it's being stored on U.S. soil then why is
there no mention of it by the U.S. Gov.? It's high time they need a
wild card now and it looks like it's nothing to do with their gold
reserves for a now let alone a long time... The only thing they do now
is push Geithner and Helicopter Ben's plan of expanding the balance
sheet and quantitative easing... They could easily open the vaults and
show the world to its foreign creditors that, "Here!! This is the gold!!"
This can shut them up as well as the World Bank, IMF and those who
sleep with them...

March 22, 2009 5:26 PM

Anonymous said...

Do take note information from Wikipedia may be credible to a large

extent but remember like any other source from the internet it is not
Immutable, information like the gold reserves can be out dated ...
 March 22, 2009 5:30 PM
Anonymous said...

you all will be begging for a new world currency by the time "they"
get done with us. I suspect the euro will become the new world
currency only because of the power of the City of London, and the
elitist that have been planning control of the currency (and the world)
for many years.

Central banks in collusion have brought about another financial

fiasco. When will people realize that we don't need CBs, or the federal
reserve. The ignorance on this issue is amazing. How can we talk
about recovery or implementing "fixes" when our currency is
controlled by madmen.

March 22, 2009 7:33 PM

Matt said...

As far as a time frame, on PBS a former Chief Economist of the IMF

recently indicated that it could happen around 2011. Also, on
Bloomberg TV on Saturday (3/21) Bill Gross, head of PIMCO (the
largest fixed income fund in the world) indicated that he believes
there will be very high inflation in the U.S. between 2011 and 2013.
Therefore, this BRIEF period of deflation could last another year or
two at the most before we see rampant inflation.

March 22, 2009 7:38 PM

Robert said...

There has been talk recently of transitioning reserves from USDs to

SDRs.. presumably most of the old US dollars would end up being
held by the IMF where they would be nicely locked away and not
increasing the money supply.

Since the SDR is currently made up of USD, EUR, GBP, JPY it seems
like any move of this sort would be mostly bad for the euro since it
would sortof allow the USD and GBP to steal value from the EUR.

March 22, 2009 8:13 PM

Anonymous said...
 Hey Robert,

I really liked your post. I also heard about the SDR idea. I noticed that
the Financial Times recent series on "The Future of Capitalism" has
the same set of symbols next to each article (i.e., the symbols of the
Yen, Euro, Pound, and U.S. dollar). If you or anyone else have any
additional info. on SDRs I would be very interested.

Thanks,
Matt

March 22, 2009 8:23 PM

Jennie said...

I understand why the value of gold will soar. But gold is valued in
U.S. dollars, so what will happen to the value of gold in other
currencies when the U.S. dollar plunges against those currencies?

March 22, 2009 9:28 PM

Numonic said...

How is it that we expect the world to not learn from past mistakes?

We are here talking about going from one Fractional Reserve System
and paper currency to another as if the destruction of one Fractional
Reserve System and paper currency hasn't taught us the lesson of
storing our wealth in paper held in someone elses hands. Wouldn't
you think people would learn from storing their wealth in someone
elses hands or letting someone else watch their money for them?
Sometimes I don't blame people for being ignorant to what's really
going on and why it's happening. The media keeps feeding us false
information on why what is happening is happening. But even with all
this false information, I can't believe after people see their or any
other government print the currency to oblivion that they would have
any trust at all in storing their wealth in paper or in the hands of
another person(bank).

Are you trying to tell me that after the US dollar is printed to oblivion
that Americans will look to the next strongest "paper" currency to
store their wealth? That after their government let them down by
debasing the currency that they'll trust that the same won't happen
with another country's paper currency? Is this how short sighted
people are?

It still baffles me that any paper currency survived after events like
that in the Weimer Republic Germany or any other previous event of
hyperinflation. Why is it people never learned from past events of
hyperinflation? And the problem was not overprinting the money, the
base of the problem was debt, letting someone else hold and watch
your money for you. Trying to save the Fractional Reserve Banking
system. That's why we have hyperinflation. Default is not a good look
for banks. Default causes distrust in letting someone else hold and
watch your money for you so when ever you trust someone else with
your money and that money is paper expect them to print that paper in
excess in attempts to stop default. Printing destroys the system along
with the currency but defaults destroy the system much quicker. That's
why they'd much rather print than default. It all leads to the end of the
system but printing keeps the system alive longer than defaulting
does. It's all to save the system. The Fractional Reserve System. It
doesn't matter what form the money's in, as long as they can control
the supply. That's the whole idea behind Fractional Reserve Banking.

Are people really going to go from one government's broken promise

to not debase the currency to another government's promise to not
debase the currency?

Am I the only one that feels that we are about to witness a dramatic
change in the global monetary system and that paper money will no
longer be used by any nation? That people across the world will stop
trusting these govt. promises? Is that too idealistic for people to
believe. Because I do believe money in the hands of the people
instead of the bankers will be better for the world. When people
become their own bank, it shows people are keeping an eye on their
store of wealth and when people do that they prosper. Is this too
idealistic for people to believe?

It's so frustrating that everytime someone mentions keeping their

money under their mattress on the media it's done with a smirk or
laugh. Ridiculing the idea of keeping your eye on your store of wealth
and making sure your money is safe. They laugh if you suggest
keeping your money in your own safe even when it's talking about
gold/silver. As if all money should be in a third party's keeping. As if
there's more risk of loosing your money in watching the money
yourself than there is in letting someone else watch it for you. As if
you're a nut for keeping your money in your own safe. Maybe that's
because that idea goes against the Fractional Reserve Banking system
and the banks run the media and do not want that kind of mentality
accepted.

I just can't believe that people are going to move from one failed
Fractional Reserve System to another Fractional Reserve System as if
the same problem will not occur.

I believe gold and silver are returning as a medium of exchange.

There is no way the Fractional Reserve System or paper currency of
any nation will survive what is happening. If it does, I will have lost
all hope in humanity. If it does, it's a fact people will never learn.

I just can't imagine myself putting my money in a bank, watching that

bank default and then blaming the fact that I lost my money on who I
trusted my money with instead of the fact that I trusted my money
with anyone except myself.

Or storing my wealth in paper, watching that paper get printed to

oblivion and then storing my wealth in paper again just because it's
someone elses paper.

All this talk about what's going to be the next reserve currency as if
anyone but the free market has control over that. If the free market
were capable of being outlawed, it wouldn't be the free market.

The free market will dictate what the next world reserve currency will
be and it looks for sure to be gold and silver. Defaults destroy trust in
third party holdings(banks) and overprinting destroys trust in things
that are easy to produce(paper). And defaults can not be stopped if the
thing owed is hard to produce, which is why Fractional Reserve
Banking could not work with gold/silver as the currency. Therefore
after the paper currency is printed to oblivion and people loose trust in
storing their wealth in anything that's easy to produce(paper), that will
be the end of Fractional Reserve Banking. Even though it's not what
the bankers want, at least the FRB system ended allot later than if they
chose to default the first time they faced default instead of printing to
avoid default. People keep talking about that the government should
let the banks default, that that would save the currency but they don't
talk about how that will hurt the banking system. If the banks default
people will not trust banks with their money and people will be
hoarding their money. I do believe that is the best thing but at the
same time as long as the money is paper can you really trust it as a
good store of wealth? In an instant that store of wealth can be
destroyed with the printing press. On top of that if you're looking to
store your wealth in something that is rare and the supply isn't
increasing rappidly why choose a governments paper promise over
physical gold/silver? With physical gold/silver, it's a garauntee that
the money supply will not grow much because you know how hard it
is to produce and supply gold/silver but with paper even if a
government promises to not let the printing get out of hand, there is
always the chance that it will. And it can happen so easily because of
how easy it is to print paper. On top of that it's almost a garauntee the
government will print to save the banks from default because if the
banks default, no one will trust to store their wealth in banks and the
banking system which the government benefits from will fail.

We will experience both of these things(defaults and overprinting)

world wide and in order for people to protect their wealth from both
angles they will run to hoarding their money themselves and storing
their wealth in gold and silver. There will be battles between
gold/silver and currencies that refuse to overprint and I believe
gold/silver will win the battle and become the currency of choice.
Unless people again fall for the head fake promise of nations that say
they will not let the money supply grow too large. Of course you can't
have a Fractional Reserve System without the money supply
increasing. FRB means lending and lending means increasing the
money supply. So the promise is a lie from the start. But for some
reason people still fall for the lie. This is evident by all the instances
of hyperinflation there has been throughout history. People just never
learn.

Anyway I'm going to keep my eye on where I store my wealth as to

not loose that wealth and those who don't will loose their wealth. I
guess it's why you have rich people and poor people.
 "8) US retailers will get crushed. As the dollar falls, the cost of
imports for retailers will increase, but the American consumer will be
unable to afford to these higher prices. Competition between desperate
retailers will force them the sell inventory at below cost, creating
massive losses. Retailers most heavily dependent on imports (ie: Wal-
Mart) will be the first to go under. Eventually as more and more
retailers go bankrupt, the few survivors will be able to raise prices
enough to cover costs, and the sector will stabilize at a fraction of its
current size.
"

This is what is happening and the credit crunch is causing this. The
worse the credit crunch gets, the more companies go out of business.
The more companies go out of business the more room and reason
there is for the remaining to raise prices. I believe we will reach very
small supply of companies and goods before the deleveraging is done
and because there will still be much deleveraging left, to cover
production/borrowing costs companies will have to raise prices very
high. This is what will cause the government to start printing larger
bills. It will be an attempt to stop the deleveraging so that
production/borrowing costs will decline so companies won't need to
raise prices. The debt is so large in order for the govt. to prevent
defaults, new larger bills will have to be made because $100 bills can
not be printed fast enough to stop defaults. So the streets will be paved
with Federal Reserve Notes in wheelbarrows just like Weimer and
Zimbabwe. this is NOT because they want to destroy the currency
BUT because they want to save the Fractional Reserve Banking
system. You hear it time and time again, we need to get the banks
lending again. That's all they are trying to do. Save the banking
system or at least milk it for as long as they can because they should
know destroying the easily produced currency(paper) leads people to
run to hard produced currencies(gold/silver) and I can't say this
enough, Fractional Reserve Banking can not work using currencies
that are hard to produce(gold/silver), otherwise defaults would not be
able to be prevented and the system ends quickly.

March 22, 2009 10:43 PM

Numonic said...
 Some people say defaulting on the debt will strengthen the currency.
But isn't it true that if you choose to stop increasing the money supply
meaning restrict lending, making it harder and more costly to borrow
then those future borrowing costs in order to be paid will have to be
passed on to the consumers and therefore the higher price will be a
sign of the curerency's decline? It seems to me that it is the great
credit contraction that will cause prices to rise through higher
borrowing/production costs being passed on to consumers not the
printing of more money. It's like the deflationists say, printing that
money means nothing when it's nothing compared to the debt that's
sucking that newly printed money out of circulation. Although I
acknowledge prices of things will rise. As far as prices rising you
shouldn't be blaming it on the printing of money when we're still in a
credit contraction, you need to recognize the credit contraction which
will cause borrowing/production costs to rise which then will be
passed on to consumers. This is what will cause prices to rise, not the
printing of more money. Am I the only one that sees it this way? The
newly printed money has no effect on prices because that newly
printed money is being sucked out of circulation by the great credit
contraction. The great credit contraction will lead to rising borrowing
costs which is what will cause the rise in prices of things. Isn't this
what hyperinflation is, this great credit contraction? So those
expecting prices of things(not debt) to remain low until this credit
contraction is over is sadly mistaken. As long as we're using a banking
system of borrowing and lending, the currency can not strengthen. So
if the currency is going to strengthen it's going to have to be out of the
banks and in the hands of it's owners(the ones who win the bank run
when the banks default). No more lending, that means no more
Fractional Reserve system because the system alone is a form of
lending as the people lend the banks their deposits expecting it back
sometime in the future. This means hoarding cash and no more
borrowing or lending. You can't expect people to trust the banking
system after it just let off a big default and evaporated the wealth of
everyone who trusted to store their wealth with the banks and because
of that lack of trust brought on by the huge default, it will be much
harder and more costly to borrow. The problem is debt, not good or
toxic debt but debt period.

March 22, 2009 11:56 PM

Martijn said...
 @Anonymous March 22, 2009 5:26 PM
Perhaps the U.S. are on a strategic plan in which it is not wise to use
their trump (gold) just yet...

@Numonic
I understand your rage, but a short formulation would certainly help to
get your point across better.

March 23, 2009 4:44 AM

Bowtie said...

Numonic:

People don't learn, we live in the now there is no past or future.

Debasing currency has been around since the beginning of trade.

Pharaoh's used to mix iron with gold and silver and try to peddle it off
for the same value.

I share your anger and frustration -- but we will have another

fractional reserve system and another paper currency.

March 23, 2009 5:41 AM

Bowtie said...

email

March 23, 2009 5:41 AM

NewOrleansPuma said...

Eric: Thanks for this analysis.

I have only recently discovered your blog on a search and am very
happy I have.

I have recommened today this article and your blog to the members of
PUMAPac at
www.pumapac.org

March 23, 2009 10:33 AM

Anonymous said...
 Blah blah blah. When? That's the question. I've been reading about
impending dollar doom for a half decade now.

March 23, 2009 11:16 AM

Anonymous said...

IQ test

Step one: Be the only nation to drop nuclear weapons on a powerful,

wily enemy

Step two: litter the planet with weapons, wars, miscellaneous armies,
focusing on hassles with more powerful adversaries, and churn out
more weapons than the next 14 producers combined.

Step three: Get everyone to fighting across the planet through covert
interference, but be sure to keep it out of your national media so that
your citizens are in the dark about where the money's gone.

Step four: Go deeply into debt to all nations, but especially to the
enemies your own public went broke and lost children to fight

Step five: neutralize the value of said debt to enemies, wiping out a
great deal of their capital base. Stiff 'em good.

Does this look like a people fit for survival? Darwin, are you out there
to call this one?

March 23, 2009 5:26 PM

Anonymous said...

12) American spending patterns will change, the standard of living

will drop and American labor will become cheaper relative to labor
from other countries

13) Cheaper American labor and a devalued US dollar will make

producing things in America viable once again

14) A resurgent more productive America with more real jobs will
begin to reverse 1) - 12)
 March 23, 2009 7:33 PM
Anonymous said...

Jew, Ashkenazi (Franco-German, Eastern and Central European Jews)

After the Northern Kingdom of Israel was conquered by the Assyrian

King Shalmaneser V, in 745-722 BCE, (for their sin before Yahweh),
the Israelites were exiled into (Assyria), 2 Kings 17:5-7. They
prospered during the years in Assyria, and became a huge number of
people. Outgrowing the land area they eventually migrated North
through the ‘Caucasus Mountains’, and into central and Western
Europe forming the European Nations, and are known as Caucasians
‘whites.’ As these Israelites migrated they influenced many people
groups, no longer having an organized religious priesthood, and not
having a nation or national identity, these migrating people,
descendants of Jacob/Israel nevertheless passed on their bits and
pieces of the ancient Scriptural worship system which was corrupted
through their many years of captive living in pagan Assyria. During
the 7th century A.D. these bits and pieces of the corrupt worship
system became a form of Jew-dah-ism and was embraced by the
Khazar King, his court, and the Khazar military class, who are
descendants of Ashkenaz. This new religion of Jew-dah-ism, became
the religion of the Khazars, and forms most of modern cultic
European Jewry.

In common parlance the present day ‘Jew’ is synonymous with the

‘Ashkenazi Khazar Jew’. Scripture refers to the Ashkenaz in Gen.
10:3, and in I Chron. 1:6, as one of the sons of Gomer, who was a son
of Japheth, son of Noah. Ashkenaz is also a brother of Togarmah (and
a nephew of Magog) who the Kazars, according to King Joseph, (of
the Kazars) claimed as their ancestor. The people who refer to
themselves as Ashkenazi Jews are not Israelites, and they are not
Semites because they do not descend from Noah’s son Shem. They
are Ashkenazi Khazar Jews, who descend from Noah’s son Japheth.
Approximately 85-90 percent of the Jews in the world call themselves
Ashkenazi Jews.

Present-day Jew-dah-ism, was formally formed into it’s basic cultic

form about 1,000 years ago, (according to the Jews), when - Rabbenu
Gershon of Mainz, Germany, published a ban on bigamy. This marks
the recorded beginning of the Ashkenazi Jews*, and Franco-German
halachic** creativity. The word ‘Ashkenazi’ is not Hebrew for the
word Germany, although the name has become ‘associated’ with
Germany because many Ashkenazi Jews organized in Russia, Eastern
Europe and Western Mongolia.

*Ashkenazi - (Franco-German, Eastern and Central European Jews).

**halachic - loose ‘interpretations’ of Old Testament laws

Jew, Sephardim (Spanish Jews)

After the Northern Kingdom of Israel was conquered by the Assyrian

King Shalmaneser V, in 745-722 BCE, (for their sin before Yahweh),
The Israelites were exiled into (Assyria), 2 Kings 17:5-7. The King
then imported people groups from his country (Assyria) to replace the
exiled Israelites to maintain and control the land of the exiles. The
Sepharvaim were one of these people groups, along with Cuthahites,
Arrahites, 2 Kings 17:24. They mingled with each other, along with
Edomites, who had migrated Northward from Idumea (field of Edom),
after Israel and the Yahudim (Judeans) were exiled. Adad and Anu
were ancient gods of Babylonia and were also the gods of these pagan
Sepharvaim people. The Sephardim Yudeans (Judeans) are a mongrel
people whose descent is directly from a mixture of this Assyrian
people group and the remnant of escaped Yudeans (Judeans) along
with Edomites who had migrated into the land originally occupied by
the Kingdom of Israel and the kingdom of Yahudah (Judah). This
made their religion also of mixed character, 2 Kings 17:24-41.

The people known as “Spanish Jews,” are descended from the

Canaanites, the people who colonized Carthage. Following its sack by
Rome, they adopted this Sepharvaim, or Sephardim name for
deceptive purposes and constitute 5% of world Jewry today. The
Sephardim Jews speak Latino, a mixture of Spanish and Hebrew. The
Sephardim Jews migrated West through Egypt, then North into Spain
from Judea and Samaria before, during, and after the destruction of
Jerusalem by the Romans in 70 CE,. This migration became known as
the “Jewish ‘Sephardim’ Diaspora”. Today, these Sephardim Jews are
still using their ancient adopted name Sephardim (the spelling is a
transliteration into English and not of significance). They settled in
Spain, Portugal, the Eastern Mediterranean, Italy, the Balkans,
 Salonica and Macedonia, eventually emigrating into France and
England, and Western Europe.

The Sepharviam Yudeans (Judeans) were known as Samaritans during

the time of Messiah, because they were living in Samaria, which was
the area from which Israel was removed by the Assyrian King
Shalmaneser V. The twelve apostles during the time if Messiah, were
instructed not to enter the cities of the Samaritans, Matt. 10:5.
Although the True Israelites of tribal descent, living in Samaria did
received the witness of Yahshua and the message of redemption from
the apostles, Acts, 1:8. Some of the mixed Samaritans also became
proselytes to the Christian faith, Acts 8:4-25.

The Sephardim Jews, (or Sepharviam Jews) are not of Israelite blood;
they are not of the tribe of Yahudah although they were called
Yudeans, ‘Judeans’, as an inhabitant, i.e. person living in the land
originally occupied by the tribe of Yahudah of Israel). Their descent is
mixed from Edom/Esau Canaanite stock. The Sephardim Jews, like
the Ashkenazi Khazar Jews are not a Semitic people. The word
Sephardim is not a Hebrew word for Spain, although the name has
become ‘associated’ with Spain because many Sephardim Jews
organized in Spain.

March 23, 2009 10:27 PM

cell said...

OK, the answer to this paper reserve issue are..CRNs, Commodity

Reserve Notes. Use a trusted escrow agency maybe a bank to vet out
the reserve units. Denominate the CRNs to a small amount with it
redeemable against the sale of the reserve. For example, someone has
1,000,000 Metric Tons of Iron ore at 64% pure. The current value is
$60 a metric ton. Issue metric Iron ore commodity reserve notes worth
$60,000,000 at present time. One ton per unit. These notes can be
used to develop and pay for the mine infrastructure and local
development and as a local trade units to grocery stores, taxes and so
on. This way we can create trillions of dollars of real backed reserve
notes all over the world. Better than gold.

March 23, 2009 11:15 PM

steve said...
 It won't happen though, will it. You article contains a lot of interesting
fact, but (and I'm a Marxist not a government shill) I've seen enough
crises to know that goddammerung speculation hardly ever works out.
The bastards always have some other trick up their sleeve, some
unexpected event saves them or the 'opponents' are either too
cowardly to challenge the status quo or get bought off in some way
we haven't got knowledge of.
The only route to take is world wide worker revolution.
But you knew that already!

March 24, 2009 1:35 AM

Anonymous said...

the economic collapse will bring high unemployment, and social and
political unrest.This will give demagogues a chance to rise to power.
This will be followed by world war three.
wakeup man

March 24, 2009 1:40 AM

Tom Dennen said...

AS GOOD AS GOLD!

I suspect China has studied the economic history of the West and has
decided not to buy into a controlled economic demolition and war
every fifty or sixty years since the South Sea bubble burst in the early
1700's.

If they back their currency with tangibles, very carefully join the
currencies now in the 'Special Drawing Rights' (SDR) basket with the
dollar, Euro, Pound and Yen ...

If they operate a federal or national reserve bank that is against the

law to be privately owned ...

If they regulated their monetary systems and outlawed usury

(compound interest) ...

... Why, Chinese money could be as good as gold!

March 24, 2009 2:50 AM