The "Vergulde
Draeck" Omen
The "Gilt Dragon"
Omen
== or ==
The Foreign Exchange "parity
condition" that will announce then end of the US Dollar
Abstract
There is a four currency Quadruple Witching
Condition or "Omen" that will announce the decline and
collapse of the United States Dollar (USD). The USD is no longer
sustainable as a viable exchange currency due to internalities
occurring within the American nation state. The US society (and
economy) are undergoing an ongoing and unrecoverable compete and total systemic
collapse.
When the four currency 'basket' Foreign Exchange (FOREX) "parity
conditions" are reached with the AUD, CAD, CHF & NZD
- expect a more substantial and substantive exodus out
of the USD (and USD denominated paper financial instruments and assets)
into physical assets and physical investments
- expect a direct exodus out of
USD denominated Sovereign Bonds, and State & Municipal
Bonds
- expect an ongoing exodus out of lower grade US
corporate bonds to increase exponentially
- expect USD exiting conditions far beyond the 2000 to
2010 global finance system conditions [that have essentially
caused a decade of money flight from the USD (and USD
denominated assets)]
Typically physical
possession of precious metals and physical commodities are considered the key to
survival during adverse economic conditions. So
Precious Metals (as an asset class) will probably increase in
value against the USD quasi-exponentially.
Summary
The endstage decline of
the US as a meaningful world economic, military and cultural
power will begin with a substantial and substantive currency
collapse. Total
failure and collapse has thousands of parents.
The US probably has 250 million surplus people -- that the US
finance system and economy can no longer afford to support.
As things stand now, the USD cannot lose for being
totally defeated.
After these financial events have run
their course : there will no exterminated tiger
rebound of the USD's value until multiple solar
cycles have passed. The US will essentially cease to be a
nation state worth investing in, and it will only continue on
as a place for all possible existent wealth to be extracted
and immediately repatriated elsewhere.
Many observers view the
ongoing collapse of the US currency and economy as having
started in structural changes made in the finance system as
far back as the late 1960s to mid-1970s. A substantial number
of observers of the US economy view the conditions for the
collapse of the US dollar as having originated in structural
changes made from the 1910s to 1940s. The collapse of the USD
and economy may simply be inevitable, a price for failing to
live within a nation state's natural limits.
The Quadruple Witching Condition
Regardless of historical or natural precedents -- when the
CONDITION is reached -- the world economic system will have to
find a new way of running itself. We live in interesting times, but for Australia, Canada and NZ
this will not be fun.
Symbols used
THE CONDITION
{
AUD => USD;
&
CAD => USD;
&
NZD => USD;
&
CHF => USD;
} returns True for Duration
Then expect the US Dollar to decline in value by up to nearly
80% (or its equivalent Standard Deviation) in SDR units in the
near or immediate future, depending on the durations of the
parity events.
Durations of the
"parity conditions" signalling collapse
- Less than one hour
: collapse signalled
- the minimum duration of this trigger is one
second, per triggering event
- the USD will probably drop in value in the next 5
to 7 working days within the boundary of (0.05 to 0.10)
SDRs, but recovery in value will ephemerally happen within
a fortnight
- the USD will probably not gain in value against a
larger basket of currencies in the
next 5 to 7 working days
- "working days" vs "calendar days" or "working week
vs calendar week" : ultimately one will be correct, it
depends on the triggering day (Monday versus Friday
etc...)
- the US currency has now moved into a "steady state
condition" where sustained parity is now possible
- More than one hour,
but less than 2 days : intermediate collapse signal
- if multiple hour long parity conditions exist
within a week (but are longer than an hour, but less than
40 hours) : a chaotic boundary zone condition now
exists
- expect more chaotic FOREX conditions (beyond the
USD, but also including the USD) and potentially greater
loss in SDR value
than estimated here
- this boundary condition, if not stable over a
fortnight or even 5 working days -- may soon signal more
profound collapses of the USD's value than a stable week
or month of "omen" triggering
- this is probably the most worrying signalling
condition, but by nature the hardest to predict
- Less than
one week : deeper
collapse signalled
- this is a sustained parity condition, it must be
True for at least 150 hours (of a 168 hour week)
- expect a drop of at least 0.10 SDRs to 0.25 SDRs
in value of the USD during the next fortnight, but the
drop may take up to 21 days to actually happen
- there is a probability of an ephemeral recovery of
the USD's value here, but no ephemeral recovery can be
guaranteed or assumed within the Accounting Cycle
- this drop in value of the USD should last more
than a week, but less than 3 months assuming an ephemeral
recovery based on extensive intervention
- this drop in value of the USD may be permanent
within the Accounting Cycle
- if multiple week long parity conditions persist
over 2 months (~50 days, baseline) then expect greater
losses to the USD value more similar to a solid month of
the parity conditions being true
- Less than
one month : profound
collapse signalled
- this is a sustained parity condition, it must be
true for at least 20 days
- there will be a drop in the value of the USD of
0.25 SDRs to 0.45 SDRs within the next (1 to 4) months
- this drop in the USD's overall value may last
anywhere between 3 to 6 months
- this drop in value of the USD will be permanent
within the Accounting Cycle -- but recovery to the ceiling
value may happen in the Accounting Cycle
- if parity 'Duration' > (28 ... 31) days, expect
up to a 0.30 SDRs to 0.50 SDRs loss in value to take place
much sooner and last for an unknown timeframe
- three collapses ~20 days duration over 3 months
will signal a total collapse of the USD within the next 6
months beginning immediately at the termination of 3rd
collapse, but the full collapse conditions may exist
within the 50th day
- but more than a month, then expect the long term
FOREX relationship to arise
- 1.00(AUD, NZD, CAD) = $100 USD
- The CHF may reach 1.00 CHF = 1000 USD
Note :
All of
these duration conditions should be seen in terms of probability
curves. Most of these probability curves are (and will be) by
nature nearly identical to each other. The parameter "loss"
(floor, ceiling) will change as expected, but this is explicitly
understood. However, triggerings of the "omen" greater than an
hour, but less than 2 days will signal unclear but known (yet
reasonably expectable) "predictable losses" in value of the USD.
Reasons for choosing this basket of currencies for the Quadruple
Witching Condition
- Australian Dollar : The Australian economy is very
much like the Canadian economy, with respect to its mix of
industrial inputs and outputs and stability.
- Australia does have a very 'Canada like' finance
system, but it is plagued by some of the same structural
design flaws that the Canadian finance system is plagued
with.
- The Australian Dollar is a reserve currency in the
Asia-Pacific region, but this reserve factor does vary
with distance.
- Australia is shackled with perhaps too few banks
per capita. Australia has a very limited number of
building societies and credit unions, and these entities
have equally limited participation and assets. This
structural problem alone should be enough to keep the AUD
below the USD, but since 2010 this structural problem has
had no negative effect on the value of the currency.
- The Australian economy may be directly affected by
US and UK finance system Derivative instruments.
- Canadian Dollar : The Canadian and Australian
economy have a lot in common, but the Canadian economy and
finance system are shackled to the failing and unhealthy US
finance system. In times of economic crisis, the Canadian
Dollar simply cannot be as strong as the Australian Dollar
with all other factors being equal.
- In spite of recent attempts by the Canadian
government and the Bank of Canada to keep the CAD below
parity with the USD, these attempts have yet to be fully
successful. This is in spite of the Canadian finance
system has some of the same structural flaws as the US
finance system, but without the direct influence of
"Derivative" finance instruments.
- The Canadian finance system has 'nearly identical'
set of structural flaws to the US finance system with
respect to Sovereign Debt and the socialization of risk.
- CADUSD parity works badly for the Canadian
economy, as the USD is still overused as a global medium
of value exchange.
- The Canadian Dollar is a reserve currency in the
Caribbean (and the Americas) and to a small extent in
Western Europe. However the CAD is not widely used as a
reserve currency in the Asia-Pacific region.
- Canada has banking concentration issues that are
as bad as Australia's. Yet Credit Unions (as a backup to
the banking system) are not as heavily used as they should
be. Credit Unions in Canada are heavily regulated by the
provinces, but their operations have been somewhat
federally liberalized since the 1990s. The FOREX markets
seem not to care about this structural finance system
problem.
- Canada has mostly been spared natural disasters
since the 1900s -- not at all similar to NZ (earthquakes :
1930s, 2010s) or Australia (droughts, variable by El Niño
/ La Niña) but this cannot hold forever. For Canada, the Cascadia Subduction Zone
earthquakes and tsunamis are overdue -- but many other
perfectly terrible natural disasters await.
- The Canadian finance system is not directly
exposed to Derivative risk, but has a massive indirect
exposure risk. A collapse in the US Derivative market
could easily push the CAD below parity for weeks or
months, but this has yet to happen.
- New Zealand Dollar : NZ is the English speaking
world's 'dog' currency. Unlike the AUD and CAD that are
heavily traded in the FOREX market globally, the NZ Dollar
is only traded in the Australasian region. Some FOREX
trading entities in North America and the European Union do
trade in the currency, but this has only been since the
2000s.
- The NZ finance system has some of the same
structural flaws as Australia's and Canada's finance
systems. Since protectionism ended in the 1980s, there has
been a steady decline in wages and economic production due
to the outsourcing. End product goods like wool socks are
not made in NZ. This 'end goods production loss' has been
an ongoing detriment to the nation's finances for a
generation.
- The NZ economy is more agricultural than
Australia's, but with respect to the Canadian economy
behaves analogously to British Columbia's economy.
- The Cook Islands have a unique relationship with
NZ. The Cook Islands use the NZD as their exclusive
currency. This makes the NZD a partial proxy for measuring
'offshore money flight' in the Asia-Pacific region.
- The Cook Islands (and to a lesser extent NZ
itself) do not have the offshore banking and incorporation
stigma (and associated risks) of Switzerland. Yet,
offshore money flight into the NZD is limited, but not
Zero.
- The NZD is an enigmatic and volatile currency.
Paying attention to the NZD versus other currencies can
reveal a lot of hidden trends in the global economy that
might not otherwise be visible.
- NZ's banks are
almost universally Australian owned. This is an
ongoing NZD risk problem, but this structural arrangement
has not changed in the past 100 years. There is at least
some substantial customer uptake of Kiwi Bank. Kiwi Bank
is NZ's 2nd Postal Bank, the 1st having been acquired by
ANZ. Kiwi Bank is solid financially, and reasonably well
run -- but subject to problematic political changes. These
structural banking problems are not good news for the NZ
finance system or the NZ Dollar.
- Credit Union and Building Society participation in
NZ is adequate, but not adequate enough if the Australian
owned banks fail. Some of these non-bank entities have
been subject to near failure conditions since 2007, but
many are quite solid. This 'mixed bag' of risk outside
standard banks is unusual but not new to the NZ economy.
Non-bank solvency is an important finance system
structural issue that is almost totally ignored by the
FOREX community outside of Australasia.
- The 2010-2011 Christchurch Earthquakes recovery
should be enough to keep the NZD below parity with the
USD. However, the US economy and finance system are
destroying USD assets and finance instruments at such a
high rate that NZD = USD may be inevitable.
- The NZ economy is not directly affected by US or
UK finance system Derivative instruments, but may be
indirectly affected. Ongoing US and UK Derivative market
losses may be keeping the NZD below USD parity, but this
is not known with any certainty.
- The Swiss Franc : The Swiss economy has some
analogues to NZ or Australia or Canada with respect to
industrial inputs and outputs and stability, but the banking
sector has made Switzerland's currency a gauge (or proxy)
for measuring 'global money flight' since the 1930s.
- Switzerland is
not alone in Europe in offering offshore banking &
incorporation services. Remember this : Andorra, Lichtenstein &
Monaco ... don't have their own currencies!
- Money flight into the CHF happens for good reasons
: to retain its value
and avoid confiscation.
- The CHFs behaviour has been known since the 1950s:
precious metals and fiat currencies flee to Switzerland
during economic downturns and geopolitical rearrangements.
Many finance analysts ignore this at their own peril, as
the extent of the money flight can undermine nations
pursuing policies that encourage money flight.
- The CHF is supposed to be backed by precious
metals. In reality the CHF and the South African Rand
probably have similar precious metals backing. The CHF is
clearly more of a 'Fiat currency' as it has been heavily
traded in the FOREX market since the 1970s.
- The solidness of the CHF should always be
questioned. South Africa (unlike
Switzerland) has Gold, Silver and Diamond mines!
- The Swiss finance system has gotten itself deeply
entwined in banking corruption issues (separate from money
flight issues) that have fundamentally undermined the
Western and Central European banking and finance
systems. Some entities in the Swiss finance system are
said to have created conditions that led to the 2007
Global Finance Crisis.
- The Swiss nation in relative terms may be at its debt saturation point.
- Switzerland, like the US and UK has financial
Derivatives sector. Domestically, only Futures and Options
seem to be permitted and traded. Swiss trading in offshore
Derivatives may ultimately determine the strength of the
CHF. Derivatives beyond the traditional "Futures and
Options" are attributed to weakening
the US and UK economies and
currencies.
- Switzerland's direct exposure to the Derivatives
sector may lead to a collapse of the CHF, but this is
totally dependant on Swiss entities being party to US and
UK transactions.
Quadruple Witching Conditions : Why do
they apply now and not at other times (with these
specific currencies)?
- There is a lot of hidden order in the global
finance system. If you follow the money (as one
always does in the FOREX market) the hidden patterns
can become obvious.
- The "Hindenburg Omen" (for example) has
more complex conditions than this witching
condition does, but is blind to FOREX.
- The FOREX market runs continuously with
heavy non-linear conditions (lack of investor
knowledge, herding, belief in things that are not
true ...). However, once a currency is understood to
be toxic by all parties involved -- it is doomed.
- These FOREX boundary conditions could never
have applied to the USD before the Nixon Shock.
- The global finance system was run
differently before the late 1960s.
- The 'refusenik' currency is the NZD, as it
has yet to see USD parity. This 'contrary to
expectations' behaviour cannot last indefinitely.
- The FOREX markets cannot be perpetually
pessimistic about the NZD.
|
|
Why measure loss in USD value in SDRs
when the USD is itself part of the SDR?
There clearly are some profound set
theory problems here!
- No other neutral (non-national) currency was
otherwise suitable or available.
- The SDR is not [and cannot be] a national
currency. These 'witching conditions' occur only
with national currencies -- and not with synthetic
currencies like the SDR.
- The USD's role in the SDR has been declining
since the SDR was created (except for 2001-2010).
- The USD may not be in the SDR basket of
currencies in the 2020s.
- During a global economic crisis precious
metals become too volatile in price to use for
the measurement of a collapsing
national currency in spite of
their stability against inflation.
- There are no equivalent (non-metal)
commodities that are stable enough to use in place
of precious metals for measuring a currency's
decline.
- SDR value changes (when looked at in
discreet timeframes that are less than a calendar
month) don't pose complex mathematical or accounting
issues that would exist in 3 to 9 month timeframes.
- Each 21 calendar days should be viewed as an
"autonomous discreet SDR value measurement block"
for the purpose of measuring a declining national
currency. The separable 'moving averages' in these
"windows" measured over the Accounting Cycle matter
here.
- Using Standard Deviation unit values (versus
% change) for this kind of FOREX quanta can be
problematic.
|
Notes
The UK Pound and Euro play no part in this "omen" for the
following reasons
- The UK Pound and Euro are "strong enough on their
own"
- The UK Pound and Euro are "decoupled enough on their own"
- The SDR contains them, and it has been above USD
parity for some time.
- Using these currencies (+the SDR) would pose even
more severe set theory problems.
- The UK Pound and Euro as omen conditions or
parameters are pointless,
useless and simply uninformative. Their role in the
global economy may be significant, but ancillary.
There are no substantial or substantive "Canary in the
coal mine" effects with respect to the the UK Pound or Euro
currencies against the US Dollar. This FOREX structural issue is
reasonably obvious to those who have studied these currencies
since 1970.
Because of the nature of the FOREX market, a currency's decline or advance
can only be measured in effectively in absolute terms against
another currency (or precious metals, or commodities like
Copper, Coal, Cadmium etc ... as some analysts do).
Once the change in value has been measured in absolute terms,
then differentials can be measured and quantified -- and only then can relative gains
and losses be seen. There are multiple divergent views
on the best way to measure a change in a currency's value over
time, and the issue is ultimately considered unresolved.
Unusual post 2007 Global Finance Crisis FOREX
market signals
The 'bizarro world' (AUD => CAD) vs USD has become emergent
since late March to early April 2011. However, there have been
many brief triggers of this condition since 2007 due to global
market FOREX instabilities. The AUD
> CAD has not become a permanent new FOREX trading
condition, but there is no evidence to prove that this is not a
new (and permanent) currency relationship.
In the entire history of
the AUD and CAD versus the USD since 1901
- The Australian Dollar has never exceeded the value
of the Canadian Dollar in the global currency markets
versus the USD.
- The current extraordinary trading value of the AUD
cannot historically be viewed as normal, and its causes
are unclear.
- This new Australian Dollar strength may indicate a
new state condition for the USD in some parts of the
global FOREX market.
- Is this a signal of wealth fleeing the (US and
USD) and heading to Asia via the AUD (and to a lesser
degree the NZD)? Is the CAD's new parity relationship with
the USD part of this money flight to Asia? More questions
are raised than answers, and one is only left to follow
the money.
Known Analytical
Economics issues
A basket of (fiat) currencies
inherently poses severe
"real value" measurement problems. These value
measurement problems are partly related to the matrix algebra "FOREX market currency
relationships" and to the way in which currencies themselves that are
"attributed value" in the FOREX market.
A currency's (gain-or-loss) quantization path structure
- is measured over time
(typically daily or hourly)
- is unidirectional : Concrete-value -->
Differential-value
- must be measured via a neutral currency, like the
SDR
- SDR-change --> Percent-change
- SDR-change --> Percent-change -->
Standard-deviation-change
- SDR-change --> Standard-deviation-change
References
Currencies
Related topics
Analytical Economics
General
topic
- Technical
components (like Standard deviation, Know Sure Thing
Oscillator etc ...)
- Accountancy Cycle in this text means 7 years, the
internationally required time for retaining accounting
records.
- Bond
Credit Rating (format used exclusive to Bonds, not
other kinds of credit ratings)
- Value
Theory unless considered, no productive FOREX analysis
can be done.
- Money
illusion is the tendency of people to think of
currency in nominal, rather than real, terms.
- Fiat
money is by definition not backed by precious
metals.
- Hard
currency (None of the currencies discussed here
fully meet this constraint).
- Boundary
condition (also known as : Boundary value problem;
present here Stochastically)
- Stochastic
processes and boundary value problems (general topic
reading, applies generally to these conditions)
- Cauchy
boundary condition (this is happening at a deeper
level, per currency interactions)
- Impulse
response (a triggering
issue not
covered here, the "time domain" issues that arise
here are too small in power and magnitude to be considered
as pertinent)
Economic "omens"
- Hindenburg
Omen (an omen probably subject to "open market
manipulation" by government)
- There is no substantive or concrete scientific proofs
that this omen's "triggering conditions" cannot be
prevented (or reset) via computer aided trading systems
used by governments.
- Governments are the only entities that would want
to manipulate this omen, as keeping the "omen"
from triggering prevents market and social unrest.
- Governments, have unlimited amounts of money
available to them to "manipulate the conditions" that
trigger the omen.
- The 2011
US Debt Ceiling Crisis should have triggered the
omen multiple times (or at least one time), but no trigger
events occurred. In all probability this means that active
market manipulation to "reset the triggering conditions"
may be in use in (Winter, Spring, Summer) 2011.
- Ulcer
Index (another technical index, less known)
- etc ...
Related events
Geographical places of interest
Notice
- This document in no way provides financial advice,
it is a research document.
- This "omen" is an observation of nature, so must be
viewed as scientific research.
- This document is bound by the "Fair Dealing" use of
Australian, Canadian & NZ copyright law.
- This document has implied "Foreign works" status in
Canadian copyright law.
- Fair and reasonable use of this "omen" is encouraged
by the author.
| Created by |
Initial Idea
|
Last Revised
|
Current Version
|
Last Change |
| Max Power |
07 April 2009 |
15 March 2011 |
20 October 2011 |
AUD > CAD
paradox
|
