Coming Emerging Market Debt Meltdown

It seems the one primary area that people disagree with the view of the future is the rise in the dollar that is on the horizon. I have warned that in discussions behind the curtain, there will be a move to replace the dollar as the reserve currency. I have also stated that the only possible solution will be a new world currency that is composed of a basket.

Dollar-Note

There are three subtle events that confirm this view is a lot sooner than anyone suspects. We may be looking at the rapid change in the world monetary system after 2015.75 with what we have called BIG BANG.

  • Obama's former Economic Adviser has stated now the U.S. should give up the reserve dollar status
  • The IMF is holding discussions on expanding SDRs
  • World Bank is also now suggesting a new currency for reserve purposes needs to be established
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    ECM-Sov-BigBang-2015

     

    Furthermore, so many people (mainly Americans) are so bearish on the dollar because of that they cannot see the simple fact that even $17 trillion in debt is nothing in comparison to $158 trillion in worldwide debt. They also fail to grasp that the U.S. debt is the ONLY place for money right now to park among nations. Europe has no single debt and as such we see predominantly the bunds of Germany going negative as capital shifts to Germany inside the EU.

     

    1900$X-M 1931 Sovereign Debt

    Additionally, the vast majority of people do not understand how capital moves and therein lies their problem. Just look at what happened in Europe. Back in 2010 when Greece first came on the radar as in trouble, capital began to flee and traders looked around to see who would be next. They suddenly discovered Portugal, Spain, and Italy. There are now sniffing around at France. In 1931, when all of Europe moved into default with a few exceptions, China and Asia as well as South America for the fourth time overall, capital fled to the USA sending the dollar to record highs. This set in motion the whole protectionism game as politicians did not understand what was developing.

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