SDR's for trade between nations, gold for the rest of us when currencies collapse

It is inevitable that the monetary system the world has used over the past 43 years will not only come to an end, but all signs are warning that this end is very near. Going back to 1988, one of the Establishment's primary propaganda publications issued a forecast of a new global currency replacing the dollar by 2018, and here in 2016 we have already seen the beginnings of that currency through the IMF's announcement to circulate the M SDR (Special Drawing Rights) under Chinese authority.

This means of course that during the transition, all fiat currencies like the Dollar, Pound, Euro, and Yen will experience extreme devaluations, or in some cases like perhaps the Euro, outright elimination. But how long until this actually takes place? A month ago one of the chief architects of the Euro creation back in 1999 published an op-ed on how the currency was flawed, and that its days numbered thanks to the deteriorating confidence and value imposed upon it by the European Central Bank. And as we know in Japan over the past 20 years, the UK in recent months, and through the dumping of dollars by foreigners against the current global reserve, the clock is ticking on whether nations can get together in time to agree upon a way for a global reset, or if greed will bring their inevitable downfall through some global financial crisis. Right now the first or perhaps even primary model for the next global reserve currency already exists, and is being propagated in the markets and in trade. But this currency, known as the SDR, will only be available for nations to trade with one another at a central bank or Ministry level, and this leaves the 99.99% of us dealing with the aftermath of our own money's devaluation. Thus while the world banks and governments prepare for the SDR to save their financial systems, what remains for you and I are the physical forms of money that have been a part of economics from the beginning of civilization.

We’ll soon experience profound problems with the U.S. dollar. I expect to see inflation in some areas, deflation in others. On the world stage, we could see anything up to and including a full-fledged currency crisis.

Collapse is a calamitous process that destroys wealth like a tsunami hitting a seacoast.

We’ll see several stages of the collapse play out in any event, because central banks are out of room to steer monetary policy outside of a very narrow channel.

The Fed didn’t raise interest rates in 2010–11, when it should have bitten down on the proverbial bullet. Now, as the world economy teeters on the edge of major breakdown, the Fed can’t cut rates to boost the economy. Even if the Fed’s traditional rate-cutting medicine worked — and it doesn’t always work — that bottle of economic snake oil is nearly empty.

Aside from the Fed, other central banks around the world are in even worse shape. Many of them participated in the failed negative interest rate experiment. We can’t look to them for any help at all.

Sauve qui peut!

This will put increased importance on special drawing rights (SDRs), or world money, and gold as possible tools with which to truncate the next collapse. I expect that many nations will use SDRs as a method to protect themselves — certainly the U.S.

But if you’re not a country plugged into the central bank, what’s left for us mere mortals? Your best option is to use gold. - Daily Reckoning