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 Exchange Reserves $1,534 $954 $476 $275 $275 $262 $180 $163 $153

Rank 1 2 3 4 5 6 7 8 9

Country China Japan Russia India Taiwan Korea, South Brazil Singapore Hong Kong

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Germany France Algeria Malaysia Italy Thailand Mexico Libya United Arab Emirates Turkey Switzerland United States Iran Poland Norway United Kingdom Indonesia Nigeria Argentina Canada Romania Etc« Total =

$136 $116 $111 $101 $94 $87 $87 $80 $77 $77 $75 $71 $69 $66 $61 $57 $57 $51 $46 $41 $40 $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.

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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: WalMart) 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 µCaucasus Mountains¶, and into central and Western Europe forming the European Nations, and are known as Caucasians µwhites.¶ 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 µJew¶ is synonymous with the µAshkenazi 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 µAshkenazi¶ is not Hebrew for the word Germany, although the name has become µassociated¶ with Germany because many Ashkenazi Jews organized in Russia, Eastern Europe and Western Mongolia. *Ashkenazi - (Franco-German, Eastern and Central European Jews). **halachic - loose µinterpretations¶ 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 ³Spanish 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 ³Jewish µSephardim¶ 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, µJudeans¶, 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 µassociated¶ 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