G20
7:21 pm on Mon 6th Apr by TheMoosra
Last week the Group of 20 nations sent their leaders to a conference in London. While most people were watching the rioters urinating in RBS branches, or gratuitously breaking windows in the name of some unknown political cause, I was watching the results of the conference.
There are several key issues to be brought into prominence.
1. The IMF has been seriously strengthened, and has the power to issue more loans than ever before; along with being the world\'s \"financial police\". This is an unprecedented shift of policy power from central governments to the IMF.
The IMF will engage in lending:
$500bn for the IMF to lend to struggling economies
$250bn to boost world trade
$250bn for a new IMF \"overdraft facility\" countries can draw on
$100bn that international development banks can lend to poorest countries
$6bn increase in lending for the poorest countries.
2. The IMF\'s special basket currency, known as \"Special Drawing Rights\", will be used to denominate $250bn of overdraft rights for countries to borrow against. The use of the SDR as the prominent lending currency as opposed to the US dollar is a sign that the global economy is shifting towards the usage of a new global currency.
What does this mean for the world?
1. A more globalised economy
2. A more interconnected financial lending system, surrounding the IMF
3. A new global currency in the making
4. Massive amounts of new money via lending to central banks, then through subsidiary banks and commercial banks- with leverage used on every step. Most countries maintain a tier1 capital ratio of between 5-10%. This means that we are looking at a global stimulus of between 10 and 20 trillion USD. Expect inflation.
5. The rise in prominence of the G20- a group of the most powerful economies in the world
In my opinion, this will go down in history as the next generation of global finance. Bretton-Woods part two.
There are several key issues to be brought into prominence.
1. The IMF has been seriously strengthened, and has the power to issue more loans than ever before; along with being the world\'s \"financial police\". This is an unprecedented shift of policy power from central governments to the IMF.
The IMF will engage in lending:
$500bn for the IMF to lend to struggling economies
$250bn to boost world trade
$250bn for a new IMF \"overdraft facility\" countries can draw on
$100bn that international development banks can lend to poorest countries
$6bn increase in lending for the poorest countries.
2. The IMF\'s special basket currency, known as \"Special Drawing Rights\", will be used to denominate $250bn of overdraft rights for countries to borrow against. The use of the SDR as the prominent lending currency as opposed to the US dollar is a sign that the global economy is shifting towards the usage of a new global currency.
What does this mean for the world?
1. A more globalised economy
2. A more interconnected financial lending system, surrounding the IMF
3. A new global currency in the making
4. Massive amounts of new money via lending to central banks, then through subsidiary banks and commercial banks- with leverage used on every step. Most countries maintain a tier1 capital ratio of between 5-10%. This means that we are looking at a global stimulus of between 10 and 20 trillion USD. Expect inflation.
5. The rise in prominence of the G20- a group of the most powerful economies in the world
In my opinion, this will go down in history as the next generation of global finance. Bretton-Woods part two.
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"The end move in politics is always to pick up a gun." - R. Buckminster Fuller