Within the US borders, the population remains largely ignorant of the true significance of the global currency reserve concept. It is of paramount importance, yet almost never discussed in the financial press. The public within the United States simply assumes the country operates with the USDollar as its currency, with near blindness to its global role in trade and banking. The end of an era is coming, as the change will be powerful in its effect. The shock wave could hit this year in some form, in a manner to highlight its importance.
MEANING OF CURRENCY RESERVE
The term is tossed around in common manner, often without an explanation of what it means. A strict meaning is followed by a practical meaning. The USDollar serves as global currency reserve, insofar as the USTreasury Bond is the standard for bank reserve core asset usage. Numerous countries have a core foundation to their national banking system. They maintain core assets and ratios. It is not gold bullion, but rather the USGovt debt. It is the USTBond denominated in USDollars. Of course, such practice is upside down and lunatic. Debt operating as core assets in the global banking system is utterly reckless, insane, and bound to force a systemic breakdown. Such is the heresy and risk from the banker cabal.
The practical side of global currency reserve system is that trade payments are standardized as being executed in USDollar terms. A crude oil shipment, a grain shipment, a container vessel shipment, they are paid in USD terms, often with short-term USTreasury Bills. Also, international contracts like for consulting services or for installation of IT systems typically are written for payment in USD terms. As a result, the nations set to pay for a shipment or contract maintain huge USTreasury stores in their banking systems, ready to complete the trade payments.
This post was published at GoldSeek on Friday, 14 July 2017.