Economic Collapse 2014 -- EMERGING CURRENCIES SELL OFF - Will a Global CURRENCY RESET Come Soon?

The worst selloff in emerging-market currencies in five years is beginning to reveal the extent of the fallout from the Federal Reserve's tapering of monetary stimulus, compounded by political and financial instability.

Investors are losing confidence in some of the biggest developing nations, extending the currency-market rout triggered last year when the Fed first signaled it would scale back stimulus. While Brazil, Russia, India, China and South Africa were the engines of global growth following the financial crisis in 2008, emerging markets now pose a threat to world financial stability. bond yeild percent

Currencies of commodity-exporting countries that depend on Chinese demand sank, with the rand plunging 0.9 percent, following yesterday's 1.1 percent decline. Brazil's real fell 0.1 percent while Chile's peso sank 0.3 percent after decreasing 1.2 percent yesterday.

Although it takes years for a shaky economic environment to develop, financial crises unfold rapidly. The Asian financial crisis in 1997--1998 was triggered by Thailand's decision to float its currency, the baht, on July 2, 1997, after abandoning its peg to the dollar. By December of that year, the dollar was worth more than 48 baht, a sharp appreciation from the 25 baht--per-dollar peg only six months earlier. Thailand's plummeting currency caused foreign investors to reassess other economies in the region, withdrawing their capital, and soon Indonesia, Malaysia, Taiwan, and South Korea were all mired in financial crises of differing degrees. In addition to IMF bailouts, the United States intervened directly to rescue these economies rather than risk further contagion or the quick transfer of a financial crisis across countries, both near and far, that could dampen its own prospects. Widespread currency and financial crises can also stall trade agreement negotiations, hindering global economic growth many years after countries are stabilized.
It looks like China is now getting ready to take the next step in "unplugging" the U.S. dollar as the world's reserve currency:

The office building of JPMorgan with its largest private gold vaults at Chase Manhattan Plaza, opposite to the New York Federal Reserve building, has been recently sold to the Chinese.
This indicates the US and China seem to be working together in advance towards a global currency reset whereby the US, Europe and China will back the SDR's with their gold reserves so the dollar replaced
A global debt restructuring will be needed. This will include a new global reserve system to replace the current failing dollar system, probably before 2020.

We assume it is a coincidence that on the day in which we demonstrate China's relentless appetite for gold, driven by what we and many others believe is the country's desire to have a call option on a gold-backed reserve currency when the time comes, just posted in China's official press agency, Xinhua, is an op-ed by writer Liu Chang in which he decries the "US fiscal failure which warrants a de-Americanized world" and flatly states that the world should consider a new reserve currency "that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States."

Of course, if China were serious, and if the world were to voluntarily engage in such a (r)evolutionary reserve currency transition, then all Magic Money Tree theories that the only thing better than near infinite debt is beyond infinite debt, would promptly be relegated to the historic dust heap of idiotic theories where they belong.

- Reform of the world's financial system should include the introduction of a new internatonal reserve currency to replace the U.S. dollar
- Fiscal impasse in the U.S. is a good time for "befuddled world" to start considering building a "de-Americanized world"

What about the danger of fractional reserve banking and fiat paper money? No word on that.