With Trump set for his most important meeting with a foreign leader tomorrow,, when he will meet China’s president Xi Jinping at Mar-A-Lago, Goldman’s Alec Philips  lays out the agenda for what to expect and key deliverables from tomorrow’s meeting.

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Markets are focused on the meeting this Thursday and Friday between US President Trump and Chinese President Xi, which stands as a key event in a vital global bilateral relationship–between the two countries that represent the world’s two largest economies and two largest militaries. The meeting will mark the start of a new US-China dialogue but, in our view, the probability of significant breakthroughs seems low in light of the still-evolving nature of the Trump Administration’s policy toward China and the limited amount of interaction to date. Indeed, comments from senior officials at a White House press briefing held yesterday described it as an “introductory meeting” and an opportunity to “set a framework for discussions on trade and investment”, and indicated that “President Trump really views this meeting as a first step”.

President Trump has signaled a desire to fundamentally shift aspects of the relationship, particularly regarding economic and trade-related issues. Chinese policy has become increasingly assertive, both economically and geopolitically, but in light of upcoming leadership changes ahead of this autumn’s 19th Party Congress, President Xi is apt to be keen to preserve aspects of the status quo and avoid disruptive changes.

This meeting is also notable for its timing, as it comes much earlier than comparable US-China meetings in new administrations, which have tended to occur in the fall of the inaugural year; in the last three US administrations, the initial meetings occurred in November 1993, October 2001, and November 2009, for example. Unlike some of these prior meetings, at this early stage the Trump Administration’s policy approach on China is not entirely clear, and some important officials, like the US Ambassador to China Terry Branstad and US Trade Representative Robert Lighthizer, still await Senate confirmation. (From the Chinese perspective this may be an attraction of the early meeting date, giving President Xi and his team the chance to influence the new administration’s policy before its direction is fully set.) Nevertheless, the White House has opted to hold this “very difficult” meeting, as President Trump described it, and has held out the possibility that “something dramatic” could be achieved.

To date, the interactions of senior Trump Administration officials with China have consisted of a February 9 phone call with President Xi, in which President Trump reaffirmed the Administration’s continuation of the “One China policy”, despite publicly calling it into question earlier, and conversations among Secretary of State Tillerson, Treasury Secretary Mnuchin, and Secretary of Defense Mattis with Chinese officials. Secretary Tillerson met with President Xi in Beijing on March 19, and reiterated the Chinese desire for a relationship based on “non-conflict, non-confrontation, mutual respect, and win-win cooperation”. Chinese State Councillor Yang Jiechi, Foreign Minister Wang Yi, and Ambassador to the US Cui Tiankai have met with various White House and cabinet officials (with Councillor Yang briefly meeting President Trump about a month ago). In addition to a discussion of the economic relationship, strategic issues were reportedly an important focus in many of these meetings, particularly China’s potential role in containing North Korea’s nuclear ambitions.

From the US side, President Trump seems likely to raise China’s foreign exchange policy, given that in the past he has said “they’re grand champions at manipulation of currency”. Still, it would seem counterproductive to make this a central aspect of the discussion given that China has been intervening to support the RMB. Our expectation at the moment is that the Administration will avoid naming China a currency manipulator soon after this meeting, while noting that the administration has concerns about China’s policy.

President Trump could also raise issues of market access for US firms and intellectual property protection, among other perennial irritants to the US-China trade relationship. On these issues, we believe it’s quite unlikely that any significant decisions will be announced, but it does seem likely that these preliminary talks could set the stage for more important discussions later this year or next. While we do not expect many “deliverables” on trade policy to emerge from this week’s meeting, it would not surprise us to see the announcement of new investment by Chinese companies in the US.

More generally, this week’s meeting looks likely to be an early test of the Trump Administration’s view, reiterated in its recent report to Congress on the President’s 2017 Trade Agenda, that the US should not allow geopolitical strategic considerations to outweigh economic considerations in international relationships. The Trump Administration appears particularly focused on the need for Sino-US cooperation on the increasingly important situation in North Korea. However, when asked what incentive the US had to offer China for its help, President Trump replied: “Trade is the incentive. It is all about trade.” This line of thinking appears to be more consistent with maintaining the linkage between strategic and economic issues than President Trump’s broader comments on trade might suggest.

From the Chinese perspective, we believe protecting China’s core strategic interests—particularly the maintenance of the “One China” status quo with respect to Taiwan—will come first. It might seem that the Taiwan issue should be “off the table” at this point given President Trump’s public acceptance of the status quo in the February 9 call. However, US officials have publicly mooted the possibility of a large arms sale to Taiwan in the near future, and Chinese officials will presumably do their best to discourage this.

Another hot-button security issue for China is the ongoing US installation of an antimissile battery in South Korea (the Terminal High Altitude Air Defense, or THAAD, system) to counter potential attacks from the North. Although defensive in nature, some publicly cited figures suggest the range of the THAAD radar would overlap Chinese territory, perhaps significantly. Chinese policymakers have made their displeasure public, and Korean firms have faced numerous retaliatory actions including a dropoff of group tours to Korea, boycotts of Korean imports including music and television programs, and a sudden spree of closures of Lotte department stores in China for fire safety and other reasons (Lotte being the conglomerate that sold the land used for the THAAD battery). We expect the impact to be material for Korea’s tourism receipts and current account this year, and the THAAD installation to be a topic of the Trump-Xi conversations.

Beyond these immediate concerns, Chinese policymakers may seek US validation of—or perhaps more realistically, lack of active opposition to–their global ambitions in other areas such as multilateral cooperation on climate change, formal acknowledgment of China’s “great power” status, continuation of a non-confrontational stance of the US in the South China Sea, among other issues.

On the economic front, in our view, China’s most critical objective will be to avoid a protectionist broadside. The imposition of a large across-the-board tariff from the United States—a possibility that President Trump raised during the campaign—could have a significant impact on export growth and the overall economy, potentially jeopardizing China’s GDP growth target this year or next. Assuming this can be avoided for now, we expect Chinese policymakers will have several positive items on their agenda as well. For example, they are likely to advocate for recognition of China as a “market economy” for WTO purposes (although an official at the aforementioned White House briefing indicated that the Trump Administration views it as “very important that they continue to be designated as a nonmarket economy”), and attempt to secure less stringent security reviews of Chinese investments in US firms.

China can offer several things to the US in return, including:

• Improved market access for US exports… In interviews, Commerce Secretary Wilbur Ross has indicated his goal to see greater US exports to China, in part via lowered Chinese tariff barriers and quotas. President Xi and other Chinese leaders might be willing to commit to additional purchases of US goods, particularly to the extent the volume could easily be diverted from other suppliers to China (for example, agricultural commodities and LNG have been noted in media reports).
• …and investment. Foreign firms have become disenchanted with Chinese investment, according to recent surveys by the US and European Chambers of Commerce in China, with many viewing the playing field as not level. Past negotiations towards a Bilateral Investment Treaty between the US and China might provide a template for areas of agreement in the service sector in particular.
• Infrastructure and other investment in the US. Despite being the second-largest economy in the world, China is far down the list in terms of cumulative inbound direct investment in the United States. Top-level cooperation could potentially facilitate Chinese investment or “public-private partnerships” in non-sensitive infrastructure, though it is unclear whether and in what form the Trump Administration might welcome this.
• Continued FX management. The Trump Administration might seek assurances that China would avoid significant devaluation vis-à-vis the US dollar. In our view, Chinese authorities have been supporting the currency out of their own self-interest in an effort to dissuade potentially destabilizing capital outflows. So it’s entirely possible they would agree as a “concession” to a policy that they would likely pursue regardless.
• Geopolitical cooperation. North Korea is the most obvious place, though far from the only one, where China’s support would be extremely helpful to US objectives. As the dominant trading partner of North Korea, China has substantial policy leverage (e.g., the ability to effectively suspend oil supply), though it clearly has no desire to see chaos in the North.

In conclusion, the Mar-a-Lago discussions will be the first of many meetings and an opportunity to “set the table” for the future, but the talks are more likely to be important in terms of the rapport and discussion framework established by the two leaders than in terms of substantive negotiating breakthroughs.

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Authored by Mike Shedlock via MishTalk.com,

The debate over productivity rages on. Some believe productivity is understated. Others believe it is overstated.

Janet Yellen believes a lack of strong productivity gains may be responsible for tepid wage gains.

Financial Times writer Edward Luce is confused, as are many others. Luce discusses The Mystery of Weak US Productivity.

Osborne on Productivity

In 2105, then UK chancellor George Osborne made boosting UK Productivity a Priority.

“Let me be clear: improving the productivity of our country is the route to raising standards of living for everyone in this country,” he said. “Our future prosperity depends on it.”

Greenspan on Productivity

In an Interview with Gold Investor Alan Greenspan blamed the aging of baby boomers.

We have been through a protracted period of stagnant productivity growth, particularly in the developed world, driven largely by the aging of the ‘baby boom’ generation. Social benefits (entitlements in the US) are crowding out gross domestic savings, the primary source for funding investment, dollar for dollar. The decline in gross domestic savings as a share of GDP has suppressed gross non-residential capital investment.

 

Output per hour has been growing at approximately 1⁄2% annually in the US and other developed countries over the past five years, compared with an earlier growth rate closer to 2%. That is a huge difference, which is reflected proportionately in the gross domestic product and in people’s standard of living.

 

As productivity growth slows down, the whole economic system slows down. That has provoked despair and a consequent rise in economic populism from Brexit to Trump. Populism is not a philosophy or a concept, like socialism or capitalism, for example. Rather it is a cry of pain, where people are saying: Do something. Help!

Yellen on Productivity

On May 22, 2015, Janet Yellen pointed a finger at the recession while also blaming low productivity for lack of wage growth in her Outlook for the Economy.

I have mentioned the tepid pace of wage gains in recent years, and while I do take this as evidence of slack in the labor market, it also may be a reflection of relatively weak productivity growth.

 

Economists debate how optimistic to be about our nation’s productivity prospects. Some argue that the decade starting in the mid-1990s was exceptional, with unusually large advances in information technologies, and that the more recent period provides a better guide to the future. Others are more optimistic, suggesting that recent technological innovation remains as impressive as ever, and that history shows it may take some years to fully reap the economic benefits of such innovations.7 I do not know who is right, but I do believe that, as a nation, we should be pursuing policies to support longer-run growth in productivity.

 

It also is possible that a portion of the relatively weak productivity growth we have seen recently may be the result of the recession itself.

G7 Productivity 1975-2015

Chart from the Resolution Foundation.

Myth #1 Shattered

Yellen blamed the recession and lack of productivity for poor earnings growth. Greenspan blamed the aging of baby boomers.

Given real earnings have been nearly flat since 1979 while real output is up 94.9%, those theories are obviously faulty.

Doesn’t the Fed bother to test their theories against actual data? You have the answer.

The Fed is puzzled over rising income inequality. It ought to look in the mirror. Its bubble-blowing tactics and insistence on 2% inflation in a technological price-deflationary world are to blame.

Myth #2 Shattered

Economists and writers are puzzled by the decline in productivity. I can explain in a series of charts.

The decline in overall productivity is tied to a slowdown in manufacturing productivity. This too should not be hard to figure out.

Despite all the talk of burger robots, trucking robots, Amazon robots etc, productivity enhancements in the service sector are very slow

1. We need the same number if not more teachers, policeman, firefighters, etc.
2. We need an increasing number of nurses due to aging and poor diets.
3. We have not seen any enhancements in trucking or limo services.
4. Amazon likely boosted productivity but that is at the expense of a decline in productivity at brick-and-mortar stores. It takes a minimum number of people just to open the doors.

Why the Slowdown in Manufacturing?

In the first quarter of 1979, there were 17.465 million manufacturing employees. The index of real output was 69.789.

In the fourth quarter of 2016, there were 12.235 million manufacturing employees, a decline of 5.23 million jobs. Meanwhile, the index of real output jumped to 86% 129.665.

The law of diminishing returns is in play. Robots are not going to eliminate every job.

Profit Warning

Manufacturing shipments are down vs the index of aggregate wages. This is a strong profit warning.

Productivity Overstated or Understated?

Many believe productivity is understated. They cite cell phones and other technological advances.

That’s actually a reason to believe productivity is declining. People are tied to their phones for work. How many hours do people spend on the phone while on vacation, on weekends, or on their days off answering corporate emails?

There are no numbers on the above, nor are there any numbers on the hours that supervisors at McDonald’s, Target, Macys etc, put in. Given performance pressures on big box retailers, pressures to work more than 40 hours while getting paid for 40 hours must be intense.

Myth-Shattering Conclusions

1. Declining productivity is not responsible for tepid wage gains as many, if not most economists believe.
2. Declining overall productivity is directly tied to declining manufacturing productivity.
3. Service sector productivity is likely overstated due to off-hours work by email or phone.
4. The Fed’s serial bubble blowing efforts, bank bailouts, and insistence on 2% inflation in a deflationary world are to blame for stagnant real wages.
5. The Fed cannot do a damn thing to increase productivity other than to get the hell out of they way. Abolishing the Fed would be an excellent start.

Those who are baffled by productivity never bothered to put their theories to rudimentary tests.

Nonetheless, Greenspan is correct on some things, especially social benefits crowding out genuine investment. Thus, those proposing some sort of guaranteed minimum living wage are totally off base.

Entitlements are already a massive problem, let’s not make them worse.  Massive handouts have never solved any economic problems, and never will.

Missing Data

Unfortunately, there is no data prior to 1979 for my Myth #1 chart.

It is quite possible, if not highly likely, the productivity mess that appears to have started in 1979 has its actual roots in 1971 when Nixon closed the gold window.

Regardless, the above charts show the secular stagnation theory of Larry Summers and Brad DeLong is highly suspect.

Secular Stagnation Thesis

Brad DeLong discusses Larry Summers’ “secular stagnation thesis” in Three, Four… Many Secular Stagnations!

DeLong list 17 reasons and his number one reason is “High income inequality, which boosts savings too much because the rich can’t think of other things they’d rather do with their money.”

Pin the Tail on the Donkey

At no point does either DeLong or Summers pin the tail on this donkey. Neither can, because income inequality is a symptom of the problem.

That problem started the moment Nixon closed the gold window. The event is now described as “Nixon Shock”.

Indeed it was. Unencumbered by a need to redeem gold, credit exploded.

Credit Market Before and After Gold Window Closed

Gold Window Synopsis

1. Total credit exploded from $1.7 trillion to $63.5 trillion at the end of 2015.
2. To service that growing pile of debt, the Fed had to keep slashing interest rates.
3. Instead of allowing consumers to benefit from technological advances that are inherently price deflationary, the Fed sought to increase inflation. This is to the benefit of the banks and already wealthy.
4. A policy of 2% inflation coupled with no restraints on trade deficits (thanks to removal of the gold window), encouraged the outsourcing of jobs.
5. After the dot-com bubble burst in 2001, the Greenspan Fed stepped on gas blowing the biggest housing bubble on record. Then the Fed bailed out the banks, the asset holders and the wealthy. This chain of events left the median person being worse off than before.
6. Given that executive pay is based on performance, rising share prices further benefited the top 1%.
7. Fed policy itself, coupled with a rampant expansion of credit thanks to Nixon closing the gold window is totally responsible for the rising income inequality from 1971-present.

Attacking Symptoms

Instead of attacking the symptoms of the problem, as Summers and DeLong do, let’s be honest about the real problem. Let’s also be honest about the alleged scourge of deflation.

My Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit” has gone unanswered.

There is no answer because history and logic both show that concerns over consumer price deflation are seriously misplaced.

The BIS did a study and found routine deflation was not any problem at all.

“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the BIS study.

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

The final irony in this ridiculous mix is central bank policies stimulate massive wealth inequality fueled by soaring stock prices.

Grasping Reality With Both Hands

Delong’s blog is entitled “Grasping Reality With Both Hands“. It would behoove, Delong, Summers, and Ben Bernanke to do just that.

A good starting point is “why” income inequality is rising as opposed to investigating ridiculous wealth-transfer schemes and government stimulus projects in a fool’s mission to fix a problem that Summers, DeLong, Bernanke, Krugman, and Yellen all fail to understand.

Finally, it would be a good idea to consider what happens when service sector productivity picks up (and it will, led by driverless trucks).

Here’s a hint for Yellen: Millions of workers will be displaced and demand for jobs will pick up. Wages pressures will be to the downside, the opposite of what Yellen believes.

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In what may be the most dramatic shake-up at the White House since Mike Flynn resigned, moments ago Bloomberg reported that President Trump has reorganized his National Security Council on Wednesday, removing his chief strategist, Stephen Bannon, and downgrading the role of his Homeland Security Adviser, Tom Bossert, according to a person familiar with the decision and a regulatory filing.

As Bloomberg adds, Susan Rice’s successor, National Security Adviser H.R. McMaster, was given responsibility for setting the agenda for meetings of the NSC or the Homeland Security Council, and was authorized to delegate that authority to Bossert, at his discretion, according to the filing.

Under the move, the national intelligence director, Dan Coats, and the chairman of the Joint Chiefs of Staff, Marine Corps General Joseph Dunford, are again “regular attendees” of the NSC’s principals committee.

 

Bannon, the former executive chairman of Breitbart News, was elevated to the National Security Council’s principals committee at the beginning of Trump’s presidency. The move drew criticism from some members of Congress and Washington’s foreign policy establishment.

It was not immediately clear if the shake up is indicative of a major split between Trump and his right hand man and chief ideological advisor, or if this is merely a routine shake up, although following repeated complaints about Bannon’s posting, it is likely the former.

In any case, the most likely outcome of the shake up is that the “Goldman” circle around Trump is about to get exponentially more powerful.

The filing showing Bannon’s demotion is below:

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Submitted by OilPrice

Mexico’s oil and gas regulator said last week that the country’s proved hydrocarbon reserves will drop by 10.6 percent in 2017. This forecast, coupled with the lower oil production that state company Petroleos Mexicanos (Pemex) reported for yet another year in 2016, is painting a rather bleak picture of Mexico’s reserves.

Without resumption in investments and more drilling, and if no significant finds occur, Mexico will be running out of reserves within 9 years, according to an official from the National Hydrocarbons Commission.

However, the energy reform that ended Pemex’s monopoly and allowed foreign companies to invest in Mexico’s oil exploration and production is expected to start yielding results by the end of this decade. The deepwater bidding round last December attracted major international oil companies, and Mexico awarded blocks to consortia including Chevron, Exxon, Statoil, BP, Total, and China Offshore Oil Corporation.

In addition, the analysts are now largely calling the end of the downturn and expect deepwater investment to pick up in coming years.

Mexico’s National Hydrocarbons Commission said last week that as of January 1, 2017, the country’s proved oil and gas reserves are estimated at 9.16 billion barrels of oil equivalent, down by 10.6 percent from the 10.243 billion boe as of the beginning of 2016. Proved oil reserves were down 7.9 percent to 7.037 billion barrels from 7.641 billion barrels estimated as of 2016.

In its 2016 results release, Pemex reported crude oil production of 2.154 million bpd last year, down by 5 percent over 2015, mostly due to natural declines of a number of producing fields.

According to the EIA, Mexico’s crude oil production has been steadily dropping since 2005 as a result of natural production declines from Cantarell and other large offshore fields.

Surely, the oil price slump has not helped Mexico’s output either, and has complicated the energy reform that the country started implementing in 2013.

But now, steadier prices and new projects involving international oil companies are expected to start offsetting declines after 2020, according to the International Energy Agency (IEA).

Projected crude oil production bottoms out at under 2 million bpd towards 2020 and then rises as the reform efforts bear fruit, new projects – notably deepwater developments – start operation and higher oil prices improve profitability, the IEA said in its Mexico Energy Outlook last year.

Mexico is already seeing its first international offshore drilling success, after Italy’s oil major Eni said last month that the first well drilled by an international oil major in Mexico since the 2013 reform “indicates a meaningful upside to the original estimates”.

A Rystad Energy analysis from last month compares the potential of the Brazilian and Mexican E&P markets to attract foreign investment. According to Kjetil Solbraekke, Head of Rio Office at Rystad Energy, currently planned exploration activity in Mexico and Brazil point to increased capex in both countries, and “numbers indicate that Mexico can reach the same level of investments as Brazil in 15 years.”

In addition, Rystad Energy says that “there are reasons to believe that the exploration play types are fairly similar in Mexico as they are in the U.S. There is also reason to believe that the discoveries might be in the same range as in the U.S. and more or less of similar productivity.”

Potential discoveries aside, the deepwater drilling industry is emerging leaner and more cost-competitive from the oil price slump, according to a Wood Mackenzie report from last week. Global deepwater project costs have dropped by 20 percent since 2014, WoodMac has estimated. The energy consultancy reckons that “the playing field between tight oil and deepwater is about to get a lot more level”, with deepwater breakevens pushed down, while cost inflation is “back with a vengeance” in tight oil projects.

According to the IEA’s Mexico outlook report, the main source of future growth in crude production is projected to come from deepwater fields.

So Mexico’s hopes for offsetting production and reserves decline are pinned on higher oil prices, the landmark energy reform, and the international oil majors resuming deepwater investment after the downturn.

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The Real Reason The Federal Government Have Been Keen to Blame Russia for Everything: Gold

Posted with permission and written by Rory Hall of the Daily Coin (CLICK HERE FOR ORIGINAL)

 

 

 

How would you feel if you had planned a gathering of your closest family and friends and your list of invites grows to include some 185 guests. You also invited your known trouble-making cousin. Your cousin shows up drunk, armed and belligerent. He begins harassing a good portion of the guests, smashes some of your prized possessions and then, as an added bonus, he shoots and kills 12 of your guests.

 

As your cousin is leaving the gathering, he takes your wallet and your wife’s purse. He also goes in your bedroom, opens your safe and removes all your gold and silver. Your cousin now has all your credit and debit cards and all the cash you had on hand. You can not conduct business in any manner. You can’t even pay the caterer for their services.

 

If this sounds like a horrific story, you’re right – it is. The drunken cousin is a metaphor for how the U.S. has been acting for the past several years and how it has treated countries around the world. Do you suppose some of these nations are more than a little tired of being treated in this manner? Do you suppose that instead of acting as this oppressive “cousin” acts that some of these countries would find it better to simply develop a way to leave the “gathering” in a peaceful manner and get on with their own business?

 

As we reported on March 30, China and Russia are taking steps to move away from their out of control “cousin”, the Federal Reserve Note, U.S. dollar, world reserve currency.

 

We learned in March 2016 that Kazakistan had been in formal talks with the Shanghai Gold Exchange regarding gold as currency along the New Silk Road (One Belt One Road) spearheaded by China. Kazakistan also smelts most of Russia’s gold and mines a small amount gold annually and is a member of both the Shanghai Cooperation Organization (SCO) and Eurasia Economic Union (EEU).

 

Then, in October of 2016 we continued covering how China had been working directly with the IMF to get the yuan/renminbi currency added to the SDR basket of currencies for global trade. That now appears to be a cover story for what lay ahead. With the renminbi now a global currency that changes how the renminbi functions within the currency markets and in global trade negotiations.

 

For the better part of the past year it has seemed as if the mainstream media, with talking points from the federal government, had been 100% obsessed with “Russia did it!!” “It” could be anything as the story has morphed so many times it’s hard to keep track. The “it” is not near as important as the cheerleading by the MSM to remind the public Russia is to blame!

 

The Russian obsession has, for the past several months, been running along side a new “enemy” – China. China and the South China Sea has been another point of beating war drums for the mainstream media. We now have two new enemies outside of Syrian President Assad, Iran, Iraq, Libya and whoever else we feel we need to bully. The whole list of enemies continues to grow even though there are exactly zero threats to the U.S. from any of these countries.

 

China began working their CIPS system, global trade settlement system, in October 2016, the same time the renminbi joined the SDR basket, allowing China to conduct global trade outside the U.S. owned and operated SWIFT system. Both systems are used to settle global trade transactions and the SWIFT system has been geared to the Federal Reserve Note – U.S. dollar – while the CIPS system is geared to the Chinese renminbi.

 

China International Payment System (CIPS) was launched last October [2015] and is now entering into the second phase of its implementation. Phase Two will allow for a further widening of the trading band between the RMB and USD, which will in turn give the Federal Reserve additional room to raise rates. I predicted almost two years ago that CIPS would not overthrow or compete with the USD dominated SWIFT. I suggested that both platforms would share a base code and would work together to transform the monetary framework. That is exactly what is happening.

China strategically stated their gold reserves for the first time in 6 years in the lead up to the SDR announcement last year. This exact strategic announcement by China was predicted here on POM. Source

Enter Russia and their global trade settlement system based in Russian rubles. It is not quite ready for prime time, but not to worry, they are working around the clock to put the final pieces in place. Within the past two weeks Russia announced to the world where the system is, specifically, along with what is already in place.

 

“There were threats that we can be disconnected from SWIFT. We have finished working on our own payment system, and if something happens, all operations in SWIFT format will work inside the country. We have created an alternative,” Nabiullina said at a meeting with President Vladimir Putin on Wednesday.

She also added that 90 percent of ATMs in Russia are ready to accept the Mir payment system, a domestic version of Visa and MasterCard.
Source

The picture should be getting a little clearer as to why Russia and, now China, has become the absolute “enemy” and must made into a monster by the mainstream media who are utilizing the warmongers talking points coming out of the back hallways of the federal government. Odds are the people occupying the back hallways of the Federal Reserve are also providing guidance to the mainstream media in just how to keep the “Russian enemy” in front of the American people. If it’s not about the reserve currency, Federal Reserve Note, U.S. dollar, then explain this:

 

One of the most significant measures under consideration is the previously reported push for joint organization of trade in gold. In recent years, China and Russia have been the world’s most active buyers of the precious metal. On a visit to China last year, the deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.

“We discussed the question of trade in gold. BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” First Deputy Governor of the Russian Central Bank Sergey Shvetsov told Russia’s TASS news agency. Source

Let’s take a look at the next step. Now that Russia and China have systems to conduct global trade outside of the Federal Reserve Note, U.S. dollar, both nations can make decisions that benefit their countries, and benefit their business interest, without fear their currencies will be disabled like what happened to Iran in March 2012. Iran was only reconnected to the SWIFT system in February 2017. Having another nation control your currency is a can be devastating. Iran learned the hard way and both Russia and China now have the capability to keep all currencies functioning both internally and globally, outside the SWIFT, U.S. dollar system.

 

Just last week we learned the BRICS nations are discussing the development of a “gold marketplace”.

 

Future plans to facilitate transactions between Moscow and Beijing in gold would certainly explain why the two countries are leading gold producers and buyers.

Creating a BRICS “gold marketplace” would be an excellent way of bypassing the dollar while also using a “currency” that could be easily recycled for trade with other member nations.

And while trading in gold won’t happen overnight, BRICS states have already moved towards creating a “new financial architecture” that “tackles the dominance of the U.S. dollar in global finance”:

The initiatives taken by the member nations of BRICs (Brazil, Russia, India, China, and South Africa) to set up a new financial architecture at its eighth summit held in October 2016 in India have recently been under the spotlight. In order to avoid the International Monetary Fund (IMF) type of loan conditionalities and tackle the dominance of the United States (US) dollar in global finance, the new institutions set up by the BRICs are expected to provide a much needed change in the global financial architecture. These institutions include the New Development Bank (NDB), the BRICS-led Contingency Reserve Fund (CRF), and the Asian Infrastructure Investment Bank (AIIB).
Source

The Federal Reserve Note, U.S. dollar, has enjoyed a good long run as the world reserve currency. The Federal Reserve, their member banks and the U.S. federal government have stolen from nations around the world, 185 in total. The Federal Reserve, through the world reserve currency status, has been able to push inflation out of the U.S. economy and onto other nations. China and Russia, along with the member nations of the SCO, EEU and BRICS are in the final stages of moving completely away from the Federal Reserve Note, which is quickly becoming useless on the global stage.

 

China is already using a gold currency. $14.5 Million worth of gold currency was used in transactions during the 2017 Chinese Lunar New Year across the “we chat” platform. This is not a gold backed currency, this is a gold currency.

 

 

While these nations continue acquiring ton upon ton of gold, the U.S. continues to acquire billions upon billions in debt. Which scenario is more sustainable? As these nations continue to build out their trading systems, to circumvent the world reserve currency, how will the U.S. contend with this new reality? The U.S. government is currently acting like the drunken cousin described above.

 

Why would BRICS nations, who are responsible for a significant portion of global GDP, continue to accept how the U.S. has treated them? The belligerence coming out of the White House and Pentagon, by way of NATO, has created a global divide. The U.S. is broke and can not pay back the owed debt. We can only bully other nations, steal their gold and bomb those that do not fall into line. Russia and China are large enough, wealthy enough and strong enough, militarily, to stand up to the U.S. They have been quietly going about their business – conducting business – while the U.S. has continually conducted war with anyone and everyone. The U.S. has now set it’s sights on these two power house nations. These nations are not Syria, Libya, Iraq or any of the other tiny nations these warmongers have bullied. This time it will be different and the golden rule still applies – he who has the gold makes the rules. China and Russia have the gold, the U.S. has debt.

 

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

 

The Real Reason The Federal Government Have Been Keen to Blame Russia for Everything: Gold

Posted with permission and written by Rory Hall of the Daily Coin (CLICK HERE FOR ORIGINAL)

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An F-16 fighter jet crashed xi miles southwest of Joint Base Andrews, in Maryland. One person ejected from the plane and has been located by rescue crews.

BREAKING: F-16 jet crashes near Joint Base Andrews in Maryland https://t.co/1Fi5RrnGNr http://pic.twitter.com/TICrEBqbiJ

— NBC DFW (@NBCDFW) April 5, 2017

US Air Force officials told Fox News that an F-16 from DC National Guard went down south of National Harbor in Maryland near Andrews Air Force Base. The pilot inside ejected safely and was taken to a local hospital for treatment. The pilot’s condition is unknown.

“The pilot ejected safely in an unpopulated area. More information will be provided as it’s available,” a US Air Force official told Fox News. Prince George County firefighters confirmed on Twitter they were responding to a fighter jet crash in the Clinton, Maryland area.

#Breaking Photos of USAF pilot safely on the ground after F-16 crash in Clinton http://pic.twitter.com/BKbIYW8sj9

— Adrienne Winston (@AdrienneABC7) April 5, 2017

A witness told Fox 5 DC/WTTG that he was sitting on his porch when he heard a loud explosion. He said the jet was on fire and he saw the pilot eject.

“It was the biggest fire ball I’ve ever seen in my life,”Patrick Dotson said.

Prince George County firefighters confirmed on Twitter they were responding to a fighter jet crash in the Clinton, Maryland area.

#DEVELOPING: Piscataway Road/Rt-233 CLOSED between Tippet Road and Steed Road due to military jet crash in Clinton, Md. More info to come. http://pic.twitter.com/CkPhHZAJ8A

— FOX 5 DC (@fox5dc) April 5, 2017

Since 9/11, there is always at least one F-16 on eight minute alert status to take off in the case of emergency.

He said he ran into the woods after the plane crashed and saw the pilot standing up. Dotson said the pilot asked if the neighborhood was OK because he had live rounds on board.

Dotson said there were two jets involved, but only one crashed. Air Force officials have not confirmed a second jet.

via http://ift.tt/2nKduAw Tyler Durden