STATISM IS THE WINNING IDEOLOGY FOR ECONOMIC SUCCESS OF SINGAPORE, JAPAN, CHINA, S KOREA & TAIWAN

Mention statism and it evokes a picture of big fat authoritatative menacing governments extracting every penny out of everyone, choking all oxygen out of the room. In political science the term simply means a recognition that the state has legal authority. It is a doctrine of state over individuals. Individuals serve the state. This is diametrically opposed to anarchism which is individual rights are sovereign over state.

The general perception of statism is a Leninist-que regime  In reality, statism spans a wide spectrum from minimalist 'night-watchman state' to maximalist full-bloom totalitatrian state. Night watchman state is where a government provides only the security services such as military, police, fire department, the courts, prisons, etc and stay out of everyone's way. A welfare state is where the government provides heavily free or subsidised education, health, housing, transport etc. An authoritarian state is one where the government regulates strongly the individuals' domain of free speech, religion, and other cultural aspects. A totalitarian state is one where you own nothing and be happy. 

From the political perspective, every country in the world is a statist by definition, it's just a matter of which part of the spectrum. 

In economics, statism is a way of governance where the state directs major aspects of the economy, either directly through state-owned enterprises and economic planning of production, or indirectly through economic interventionism and macro-economic regulation.

From the economics perspective, statism is present in every country in the world as governments plan and make economic policies and regulations. It is a question of the span that governments' direct involvement covers.

In general discussion, the label of statism is applied to a country that has characteristics of significantly high political controls and government involvement in economic planning, distribution of resources and production.

The perception of statism is in the mould of the Lenin era with their failed model of collectivism. Hardly anyone associates such states with economic success. However, what seems to have gone unnoticed, is several Asian countries that had seen unprecedented economic achievements, namely Japan, South Korea, Taiwan, Singapore and China, were statist regimes when they achieved economic miracles. Some of them remain statists today.. 

Japan:

Japan's government was authoritative during key phases of its industrialization. In 1868 the Tokugawa shogunate was replaced by the Meiji government with the emperor at its head. The new Meiji government was highly centralized and authoritarian. It tried to modernize Japan rapidly to prevent colonization by Western powers. During the 1930s Japan became militaristic and very authoritarian. After WWII Japan transitioned to a democratic government with universal suffrage and pluralism of political parties. However, for a long period of 1955-1993, Japan politics was dominated by the Liberal Democratic Party much like the PAP in Singapore.

Japan's modernisation and industrialisation started early in late 1800's during the Meiji Restoration. It's development speeded up tremendously after WWII, taking advantage of US assistance in the post-war reconstruction. The government played a critical role in economic planning and industrial policy. Japan's famed MITI (Ministry of International Trade and Industry) guided economic development which concentrated on heavy manufacturing and technology innovation. Government support spawned the development of the uniquely Japanese Keirutsu business groups like Sumitomo, Mitsui, Mitsubishi etc  This state-led model was responsible for Japan’s rapid industrialization, leading to the development of key industries such as automotive, electronics, and steel. Japan's economy boomed in 1950s to 1980s when it become one of the world’s largest economies.

South Korea:

Coming out of the Korean War, Sokor was under military dictatorship during it's industrialisation growth. These regimes implemented economic policies with a strong hand, often suppressing political dissent. Their economic growth in the 1960s to 1980s under authoritative regimes came at the expense of political freedoms and labor rights.

Sokor government used the same Japanese model where the government played a central role in economic planning and development, particularly under the leadership of Park Chung-hee in the 1960s and 1970s. The state directed resources into strategic industries and supported the growth of large family-owned conglomerates known as chaebols such as Samsung, Hyundai, Hanjin etc. This led to rapid industrialisation and transformation into a high-income economy. The country built a strong manufacturing base particularly in shipbuilding and electronic and electrical goods. 

Taiwan:

During the time of its rapid industrial growth 1950-1980s, Taiwan was under authoritative regime. From 1948-1987 was a period known as "White Terror" when the island republic was under Marshall Law. That was a period under a single party rule. The Kuomintang Party banned all political parties. Political dissent was crushed. There was extensive surveillance, censorship, and persecution of perceived political opponents.

The economy was state-led with the government directing investments into strategic sectors, promoted export-oriented industrialization, and established science and technology parks. These policies helped Taiwan develop a strong industrial base, particularly in electronics and information technology. Taiwan became a major player in the global semiconductor industry, contributing to its economic prosperity.

China:

In current times, China is the quintessential authoritative state. The CCP (Chinese Communist Part) is the sole ruling political party. There is no universal suffrage. Although there once was democratic selection of leadership within the party, the Constitution has been changed to allow President Xi unlimited term tenor. There are some for-show political parties who play no role in the government, and political opposition is not permitted. The internet is heavily censored. Foreign websites and social media platforms are blocked by the "Great Firewall" and domestic internet services are heavily monitored and controlled. China is a "Surveillance State" with extensive surveillance network capabilities using advanced facial recognition technology, data monitoring, and the Social Credit System, which tracks and credit scores citizens' behavior. China has a low score on human rights. Activists and human rights lawyers are often detained, imprisoned, or placed under house arrest. NGOs are strictly regulated, and quickly shut down when they step out of line. Religion is a no-no. There are still many controls over the movement of capital.

China's attempt at industrial development during the Mao era were abysmal failures. In 1978 Deng Xiaoping initiated economic reforms with the "Open Door Policy" which shifted China from a central planned economy to a socialist market economy and has never looked back. The Chinese structural reforms transformed the country from a poor, agrarian society into the world's second-largest economy, characterized by rapid industrialization, urbanization, and integration into the global economy.

China's economic model is essentially state capitalism with economic policies planned at central level and implemented at local levels. Market mechanisms and private enterprises are allowed. State-owned conglomerates helped drive huge infrastructure development and key strategic industries, particularly government financial institutions that funded private efforts. State capitalism was also directed towards Chinese objective of building influence in various parts of the world, notably via the Belt & Road Initiative. In one generation, the Chinese model took 800m people out of poverty through incredible drastic societal and economic restructuring under a relatively stable political backdrop, except for the failed Tiananmen Square uprising at its inception.

Singapore:

Singapore is generally considered an authoritative state due to a single-party dominance. The PAP (Peoples' Action Party) has been in power since 1959. Although opposition parties have made some inroad in recent decades, the over-powering presence of PAP in every facet of Singaporean life has created a public perception that PAP and government are synonymous. By and large the government has delivered on much of its promises for which has earned for itself a franchise with the guts to implement non-popular measures in the interest of the bigger good.

Singapore is very much a nanny state from provision of public apartment buildings to micro-management of housing allocation according to demographics, from nurseries to universities, from government run clinics to complicated medical subsidy schemes, etc. The over-dependence on government led initiatives have bred a level of fear of missing out, or denial of service, for participation in activism and advocacies that officialdom abhors, 

Singapore is a case where the unstoppable force always meets a moveable object. There is universal suffrage but an Eastern mindset has seen a public willingly accept government intrusion into individuals' spaces in exchange for the security of political and economic stability. Western abstracts of liberalism is not much of a deal to a public concerned mainly with bread and butter issues and getting their government built HDB apartments. The occasional government creep into freedom of expression and association has met with no outcry, such as the POFMA (protection from online falsehoods and manipulation) legislation and the amendment to the Constitution with retroactive effect to allow an illegally elected President to stay in office. The failed government-controlled media, Straits Times Group, was not allowed to be sold by private bidding, but has become full-fledged states media operating with taxpayer money in financial state grants.

The Singapore economic model is somewhat  like China's. Or perhaps the Chinese replicated Singapore's model scaled up. Deng Xiaoping had once instructed his Communist cadres to junk their Mao jackets and learn from foreign countries, especially Singapore. The Lion City is an open and free economy with state capitalism existing side by side and the government taking highly interventionist approach to managing the economy.. GLCs (government-linked companies) were set up to spear-head key industries where heavy capitalisation and expertise is lacking for the local business community to take the leap. It was a community of mercantile traders whose path to wealth accumulation is real estate. The key sectors the government planned for GLCs were a national airline and maritime carrier as well as in ship-building. It had tremendous success with SIA, NOL, Sembawang and Keppel. The notable private enterprise-driven sector was in the disc drive industry where for a time, Singapore was the number one producer in the world.

The government did the central planning for economic development and the Economic Development Board played a crucial role in attracting foreign investment. Singapore’s strategic state-led development policies transformed it from a low-income country to a global financial and trade hub with a significant ship-building base. Its extremely healthy fiscal position allowed Singapore to capture substantial share of FDI with a slew of enticements like tax holidays, grants, financial assistance packages, partnership with sovereign wealth fund for investment seed capital and lax immigration policies to ensure an adequate supply of foreign workers to augment the labour force. The government's deep involvement in economic development has seen the country cope and move with the times of new challenges which has seen restructuring and transformation from export-oriented to high-value economy, and currently into AI technology. 

Two other factors have contributed significantly to Singapore's economic development that none, or at best a few countries, have. Firstly is political continuity. PAP has been the ruling party since independence in 1965. This continuity has meant economic plans had a chance to play out, unlike other countries where changes in governments interrupt the paths taken. Secondly, Singapore is the only country in the world where the government owns 90% of the land. This has facilitated the government in planning and allocation of a crucial resource.

The Asian Tigers:

The economic miracles achieved in the 60s/70s/80s by Taiwan, Sokor, Singapore and Hong Kong led the quartet to be dubbed the Asia Tigers. Japan was not included as it achieved industrialisation much earlier. The Asian Tigers rose to economic preeminence on the back of export-driven industry. Of the four, only Hong Kong is not considered a statist regime. Prior to British handover to China in 1997, Hong Kong had one of the most laissez-faire economic policies and minimum government intervention in business.

Why these statist regimes succeeded:
Contrary to the notion that statist authortarian regimes all fail at economic development. Japan, Sokor, Taiwan, China and Singapore had rapid industrialisation and achieved economic miracles. Do Asian statists make a difference? There are a few commonalities that can account for their success where others have failed. 

Although they have been authoritarian, with massive government involvement in economic  planning and intervention, and even imposing certain restrictions, all the five governments worked towards a market-driven economy. 

They all invested heavily in the infrastructure needed to spur the economy.

More importantly, they were all equally invested in education. Coming out of the Mao era, China had lost one generation of scientists. Deng Xiaoping pushed for hundreds of thousands of scholars overseas. However, returnees to the motherland were disappointing. It was only after the economic success that the number of returnee scholars picked up. China had by then, built up their modern educational institutions. These countries consistently scored well in the world education index.

In economies where government funds private enterprises, or state-owned enterprises participate in the market with profit objectives, corruption and rent-seeking motivation is a big issue. There were massive financial scandals in Sokor, Japan and China. Systemic corruption is a scourge of many developing countries that seriously stymie their economic development. All these five countries have been serious in combating corruption and have been relatively successful at that.

Conclusion:

Contrary to a general notion of economic failures of authoritative states with overbearing presence of government in the market place, these five Asian countries have shown the advantages of economic statism can drive economic development provided there is political commitment.

The effectiveness of statism in promoting economic development depends on quality of governance to manage the upsides and mitigate the downsides. Statism can provide strategic direction, stability, and social equity, it also carries risks of inefficiency, corruption, and stifling private sector growth.

 

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FAILED TRUMP ASSASINATION - CONSPIRACY OF MORE THAN ONE SHOOTER

Ivan Raiklin :
"There are so many anomalous indicators that showcase that this was not just a rando that was up there (about a random shooter on the roof)...and as far as the indicators of global play here is that you not only have the shorting of the stock but you also have the faux news went ahead and live stream a rally. It's almost as if they wanted to deliberately showcase and have content for decades to show the exclusive look of an assassination of a presidential candidate? So many anomalous indicators that lead to the hypothesis this was foul play, it was an inside job and smells, looks, feels like the duck known as Jan 6 fedsurrection."

This is my second blog on anomalous indicators. In the first blog I debunked the conspiracy theory about Austen Private Wealth shorting $DJT and RUM. This blog discusses the conspiracy of more than one shooter.

To determine if there were more than 1 shooter, forensic study of the bullets' acoustics is required. Some basic information is necessary. There are two kinds of bullets -- subsonic and supersonic. Subsonic bullets travel below the speed of sound, supersonic bullets travel faster than the speed of sound. The speed of sound depends on altitude and environment temperature but generally can be stated at 1,125fps. There is a difference between sub and super sonic bullets in the sound they make.

Assault weapons like the AR-15 Crooks had commonly use supersonic bullets. But it is possible to use subsonic ones. It is almost certain that Crooks used supersonic bullets. The AR-15 can be chambered with a few calibres, it is not known what calibre his rife is. Different calibre size uses different bullets with different speeds. The speed of his bullets can range from a low of 2,000fps with Blackout bullet 150 grain, to a high of 3,200fps using .224 Valkyrie 60 grain V-max.

Every gun, regardless of sub or super sonic bullets, creates a 'muzzle' sound when fired. This is generally known as gunshot sound. a kind of boom sound. This sound is caused by the bullet pushing against the air as it leaves the barrel. The air is pressurised and causes the sound wave heard as a 'bum'. The sound wave is uni-directional, which means it spreads everywhere so anyone in the vicinity can hear it. There is often a problem of echo as the waves hit solid structures and bounce. So with open fields, there is little echo. In cities the buildings will cause much echoes. Echoes cause people to think they hear the gunshot coming from different directions. That is why in the John F Kennedy assassination, witnesses gave different views of where they though the shots came from. The muzzle sound dissipates over some distance. The further away from the origin of the sound, the decibels drop. That's called the hearing distance.

Supersonic bullets create another sound called the sonic boom. Any object that travels faster than the speed of sound creates a sonic boom. As the bullet travels, it compresses the air in front of it to create the N-wave. the N-wave falls behind the bullet because sound waves travel slower than the supersonic speed of the trajectile. The sonic boom sound waves travel in the shape of a cone cause a continuous sound within that cone area as it follows the bullet. As the cone area passes by a person, he hears a cracking sound like the snap of the fingers. Trump would have been hit by the bullet first, then a split second later, hear the crack of sonic boom, followed by another split second, comes the 'muzzle' dum sound called the report of the gun. Because the bullet came so close to him, Trump also heard the whizzling sound of the bullet flying past. Those not within the cone area will not hear the sonic boom, but heard the report 'dum' sound..

If there is an audio recording, audio analysis and editing software, such as audacity or MATLAB, can be used to translate bullet sound recordings to waveforms. This enables the distinct waveform, or signature of each bullet, to be studied. Some crucial information can be obtained. The time lapse between the sonic crack and the report 'dum' determines the velocity of the bullet. It also enables the estimation of the distance from where the sound was recorded to the origin. Audio recordings from different locations help to triangulate and determine the shooter's position. The make of the bullet may be fairly guessed which helps in narrowing down to the firearm type.

The sonic boom is very high frequency sound waves. High frequency is not the same as loudness. Over exposure to this high frequency can damage the eardrum causing tinnitus. There is no cure for tinnitus caused by such exposures. National service in the Army made me a life long sufferer of tinnitus with no compensation from the government. Today, national servicemen have to wear safety earplugs in life firing training.

Image 1 Orientation:
Apart from Trump, 3 other men were shot. Corey Comparatore who died, David Dutch 57 and James Copenhaver 74. James is a person of interest because, from the line of fire, he was behind Trump, and about 12 feet higher than the president. I'll explain later.

Image 1

Clip 1 audio recording taken in front of microphone on the stage:
You can hear the 'crack-dum' sound, the sonic boom followed by the report of the gun. The first 3 shots are very clear. The final shot is about 16 seconds later. Most people assume the last shot was the one taken by Secret Service counter-sniper agent. If that was the case, the reaction time was 16 seconds after the first shot. He was positioned on the roof behind Trump and some videos showed he seemed to be observing Crooks' direction on his scope. He lifted his eyes away from his scope momentarily before shots rang out. What took him so long to react? Several shots were heard between the first 3 and the last. Exactly how many is not absolutely clear yet. It sounded like 5, but there were echoes.

Clip 1 (16 sec) Shots fired

Clip 1.1 The clear waveforms of first 3 shots:
The first 3 shots are very clear so you can understand the waveforms easily. You hear clearly the crack-dum, ie the sonic boom and the report as the bullet passes by the recorder.

Clip 1.1 (30 sec) Soundwaves of first 3 shots

Clip 1.2 Waveforms of the other shots:
This is still from the video in clip 1 recorded in front of the rostrum. The waveforms are still good for shots 4 and 5 but there is a bit of echo. There are still audible the 'crack dum' sound of sonic boom and report. But shots 6 onwards there are too many noises.

Clip 1.2 (20 secs) Soundwaves of other shots

Image 2 Position of video recorders
We are going to look at video clip 2 (audio 2) which was recorded from a different location. Recap video clip 1 (audio 1) was in front of Trump. Two things to note at location of recorder 2. It is nearer to structures, thus expect echoes. It is also not in the line of fire thus cannot hear the crack of sonic boom, just the 'dum' report or the gunshot.

Image 2

Clip 2 Video taken near buildings
The video captures only sounds of the gunshots, no sonic boom.

Clip 2 (20 sec)

Clip 2.1 Wavesforms of video 2:
The first 3 shots are very clear. There are no echoes. The waveform for these 3 shots are on the left of your screen. The waveform on the right are the cluster of shots that came after. A bit confusing here. The numbers 1 to 6 are not the sequence number of the shorts In terms of sequence of shots fired, the numbers should be 4 to 9. Total 9 shots fired. The shots on the right all have echoes which show they are fired from a location different from the origin of shots 1,2, and 3. Meaning, without a doubt, there were at least 2 assassins.

Clip 2.1 (1min 45sec)

Clip 3 FINALLY, PROOF THERE WERE MORE THAN 1 SHOOTER:
The waveforms of the 2 videos are placed side by side to compare. The one recorded near the rostrum (video 1) is at the top. The two waveforms are aligned using the gun report. It shows shots 1,2, 4 and 5 are lined up, meaning, same shooter. Shots 3 and 6 were different shooters and slightly to the front, 50-100 meters. The other shots are not clear. There were 2 shooters, possibly 3.

Clip 3 (3-1/2 mins)

Clip 4 UPWARD & DOWNWARD TRAJECTORRIES:
This clip shows James getting hit. It seems he got hit from the first shot. This shot is very important in the forensic examination. It shows he was hit and there was a puff of smoke-like whiteness off the rails. It appears the bullet went through him, exit and careened off the rails and atomised some paintwork. For the bullet to still have that energy after hitting James, it is probably of a higher calibre than the .223 of Crooks' AR-15. If this was indeed the first shot, then the bullet hit Trump's ear and continued on it's path to hit James. It is crucial to understand James' position was elevated in relation to Trump at the rostrum. That means it was a rising shot. The shooter was not Crooks who was on the rooftop and whose bullet trajectory would have been downward. That perhaps explains why Corey was shot in the head. He popped up his head in the downward path of a shot from Crooks.

Clip 4 (30 sec) Upward & downward trajectories

Some experts think the first shot could be a shooter inside the building right below Crooks who was on the roof. The reason could be intentional so that his bullet signature would be almost the same as that fired by Crooks thus escaping detection. But if this were so, it is the Mother of all Bombshells. Because that building was supposedly occupied by the local police personnel. (And no one heard Crooks crawling on the zinc roof). The bullet sound wave signatures seem to indicate the same shooter fired shots 1,2,4 and 5. My opinion is these were all upward trajectories fired by a shooter on the ground. If he is not in the building then maybe Jovan Pulitzer is right. Jovan suggested this is a Malvo style shooting. (Lee Boyd Malvo of the DC Sniper Attack infamy in 2002) Shooter was concealed in a vehicle, out of surveillance. In an upward trajectory, the shooter misses 3 of the shots and the bullets went skyhigh. These 4 shots could not have been fired downwards by Crooks because he was lousy with guns and with that rapid fire, his shots will go wide. With downward trajectory, his stray shots would have gunned down more spectators packed so densely.

More than one week after the shooting, the leftist media were allowed to now say there may be 2 or 3 shooters. Or local counter-sniper helped shot Crooks. In today's technologically enabled world, the dark forces find it difficult to conceal. Deep state is now sowing distraction. The mentally challenged lone wolf shooter narrative is the CIA and deep state standard ploy. Crooks was the patsy in the same way as Lee Harvey Oswald was. Except that Oswald was smart. He knew at the last moment he was set up. So he ran, but not far. I would not be surprised at all if it turned out Crooks never fired a single shot.

Note:
Much of the contents here are picked off the good work of people like Jovan Pulitzer, Dr Chris Mortensen and Mike Adams. I rearranged some of the sequence for clarity and added some comments for better understanding. Those who want to see the full video of Mortensen, I have embedded it below. It is about half an hour long.

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FAILED TRUMP ASSASSINATION - THE SHORTING OF TRUMP'S COMPANIES DEBUNKED

Ivan Raiklin :
"There are so many anomalous indicators that showcase that this was not just a rando that was up there (about a random shooter on the roof)...and as far as the indicators of global play here is that you not only have the shorting of the stock but you also have the faux news went ahead and live stream a rally. It's almost as if they wanted to deliberately showcase and have content for decades to show the exclusive look of an assasination of a presidential candidate? So many anomalous indicators that lead to the hypothesis this was foul play, it was an inside job and smells, looks, feels like the duck known as Jan 6 fedsurrection."

It's conspiracy season in US with the failed July 13 assassination on Trump at Butler, Pennsaylvanna. The FBI, totally discredited for their political activism in the last four years, has asserted itself to head the official investigation. Those waiting for the truth from FBI wait in vain. The FBI and Congress are focussed on security lapses and the lone wolf theory. Could it be a simple case of a local young man, for reasons unkown, decided to make a hit on the president? Those who feel there may be something darker than this search for some things that may point to other matters of interest. FBI and Congress will never get past the lone wolf theory with their line of investigation.

In this blog, I will cover the anomalous indicator of shorting stocks.

Smart guys connect the dots to solve a puzzle. Smarter guys search for dots that are concealed. Now ask yourself, if you had priveledged information whispered in your ears that there will be a hit on Trump at the rally, what can you do to make a quick buck. Trumps' business empire will certainly suffer a kneejert dive in the stock market should he be killed. Some smart guy or guys started looking into the financial angle and lo and behold, SEC (Securities Exchange Commission) Reporting showed an investment company filed a report of a huge position taken in two of Trump's companies. This SEC reports are filed when companies buy or sell stocks listed in US. Temasek and GIC file such reports routinely.

There is a story travelling at the speed of light on the internet that an investment company Austin Private Wealth LLC shorted 12,000,000 shares in $DJT (ticker for Trump Media & Technology Group) on July 12, the day before the shooting. Shorting the shares means Austin sell the shares which they do not have. They expect the counters to drop when they can close their short position by buying back at a lower price and make a killing, sorry for the pun. So they had information about the assassination. If Trump is killed, his company share prices will drop.

The conspiracy theory is embellished by Austin's closed links to Blackrock. Bush family and many other well connected folks. Their advisor on foreign affairs is James A. Baker III, a well connected Deep Stater. These people surely knows what will happen on Jul 13.

Here are the facts:

Austin is not an investment company. It is a wealth management company. Thus what it invests is for account of their clients. Secondly, there are many prominent high-net worth names in their client list. Bush, Chenney, Rothschild etc. We do not know who traded those $DJT shares. July 12 was the day the report was filed for position as at Jun 28. It does not mean the shares were purchased one day before the hit. Lastly, it is not about shares. They did not short any shares. It was the purchase of put options, although technically, that is the same as hoping share prices will drop.

And here is the truth about the huge positions in put options:

Austin's F13 filing on Jul 12 showed they held 12,000,000 put options on $DJT and 34,000,000 put options on RUM (Rumble is also Trump's company). The filing before that was on 12 April 2024. Thus the trades were done between Apr 12 and Jul 12. When this was publicised, Austin made a statement that there was a filing error. This is their ecplanation:

"The SEC filing which showed that Austin Private Wealth shorted a large number of shares of Trump Media & Technology Group Corp (DJT) was incorrect and we immediately amended it as soon as we learned of the error. No client of APW holds, or has ever held, a put on DJT in the quantity initially reported. The correct holding amount was 12 contracts, or 1,200 shares — not 12 million shares, as was filed in error. In submitting the required report for the second quarter of 2024, a multiplier was applied by a third-party vendor that increased the number of the shares by a multiple of 10,000 for all options contracts (not just DJT). We did not catch the error before approving the filing."

Note they did not mention Rumble just because there is no internet noise about that counter. So are they correct about the multiplier effect of 10,000? I think what they mean is their reporting was outsourced and the vendor made an error of multiplying all put options by 10,000. So they actually held only 1,200 put options on $DJT and 3,400 put options on RUM.

A look at their Jul 12 filing indeed shows all put options in other counters were in millions. Filings on Apr 12 and Jul 16 (amendment) indeed show there were no millions in put options held. So the 'multiplier' explanation makes sense.

You can check the SEC forms here: Austin 13F HR date filed 12 Apr 2024, 12 Jul 2024, 16 Jul 2024

Sorry to burst the bubble. There is nothing to see here.

Next, let me explain why all those spreading this conspiracy either does not know anything about the finacial side of things or cannot think critically.

A put option contract involves 100 shares. So Austin's put options involve 1,200 x 100 = 120,000 $DJT shares and 4,400 x 100 = 340,000 RUM shares. If they had 12,000,000 put options in $DJT and 34,000,000 put options in RUM, it would involve 12,000,000 x 100 = 1,200,000,000 shares in $DJT and 34,000,000 x 100 = 4,400,000,000 shares in RUM.

This is ridiculous because $DJT and RUM simply do not have that sort of issued share capital. Technically it is possible to buy so much contracts as to exceed the underlying shares in the market. But many factors will come into placy. There are regulatory limits for options positions in each counter. Regulatory agencies will be alerted immediately to concentrated positions in a counter. This is to prevent manipulation and liquidity issues which is a systemic risk. The brokerages will be warry of counter-party delivery risks. There will be massive margins for Austin to maintain.

About put options:

A put option on shares is a contract that gives the holder the right, but not the obligation, to sell the relevant shares by a specified time, eg within one month. The buyer decides what is the price he is willing to sell the underlying asset within the term of the contract. Once that is determined, the premium, which is the price of the put option can be computed. The parameters that affect the amount of the premium is the intrinsic value (which is strike price less the current market price of the asset), the term to expiry of the contract, market risks such as interest rates, market volatility. There are formulas to compute this.

If market drops, the holder can exercise his right to sell at the strike price which is higher. The profit is the strike price less market price of the seet, less premiums paid. If the market rises, holder does not exercise the right to sell. He looses the premiums paid.

Put options is a way for investors to hedge their positions. It is also a good way for market speculation because if offers a lot of leverage. In this illustration, the conspiracy theory is someone knew about the assasination. He short sell $DJT. However $DJT shares were about US$40 which requires significant margins. If he buys options and let's say the premium is US$5, his margin is very much lower.

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RGS EXAM QUESTION ON THE ETHICS OF DOING HARM IS NOT SO EASY

In her Facebook post, Iris Koh referred to a question in a Raffles Girls' School examination paper which used her brushes with the Ministry of Health as a case review. Iris mused whether her alma mater had defamed her. I'm more interested in discussing the philosophical aspect of this RGS exam question, but in passing, Iris does seem to have locus standi as there seems to be prima facie defamation case. Firstly, RGS states Idris "adopts an anti-vaccination stance and claims to warn people about the dangers of vaccination". This is incorrect because Iris has never been anti-vax. She is only wary of the novel mRNA vax for Covid-19 and is merely sharing the views of many other medical experts who hold contrarian views. Secondly, RGS mentions MOH notes Iris' channel "perpetuates falsehoods and misleading information about Covid-19 and vaccines". This is MOH opinion and not fact. The falsehoods claimed by MOH have never been proven in courts nor by science. In the case of the vaccines the science is a work-in-progress, with the evidence against the claims of Big Pharma and those pushing it increasing day-by-day. These evidence are gushing out as media looses control over suppression of alternative voices, as the US Congress digs deeper into the ongoing inquiries, and several countries begin to take legal action in the face of irrefutable harm they have seen caused by the mad rush into untested vaccines permitted under hastily legislated 'emergency use authorisation' that sheltered Big Pharma from liabilities.

I am not sure the RGS question is an English Language, General Paper or a Moral Studies examination setting. In the interest of good English, I find these instances in "Source A" rather odd : 

(a) It says MOH welcomes "the latest removal of content from the YouTube channel by Iris Koh...". Why the heck should Iris remove the said content?.
(b) And in the final sentence "We advise members ..." Surely RGS never send out any advisory of the sort? 

Given only 8 marks are allocated to the question, I suspect students are not expected to dwell into a critical exposition of Mill's Harm Principle because that would have demanded inappropriately more time. The expectations of the examiner seems to be for students to define the harm principle and substantiate it with the example of Iris' acts. The "Source A" is framed like a leading question, that is, the examiner is looking for a confirmation answer.  In other words, if this were a lesson in critical thinking, it is actually being suppressed. The students are actually being led to regurgitate what's been told.

This is actually a 'loaded question' which is a complex question with a presupposition of an unverified assumption. It is a trick question often found in debates and social online arguments. It sets up an assumption that forces one to accept and thus entrapped to respond in accordance with the agenda of the questioner. An example is the Israel-Palestinian conflict. A typical question is "Israeli genocide has seen 30,000 Palestinians killed, mostly women and men. Why are you supporting Israel?". The statement is unverified (how do you know 30,000 figure is correct? How do you know majority is women and children?) but it forces one to side with Palestinians, assuming one is not a genocidal maniac.

The presupposition in 'Source A' makes two assumptions. Firstly, the MOH's opinion is assumed absolute. The reality is there are serious questions raised by medical experts. How is it wrong to bring contrarian views into the public domain? Note that Iris never assert her opinions, how could she, being a non-medical person. She was sharing other professional expert views. Secondly, YouTube and Facebook's opaque grounds for suspension are assumed absolute. It is a fact these Big Techs use some AI to detect violations of their guidelines. It is also a fact these Big Techs are involved in political activism. Liberal partisanship bias have been built into their AI algorithms. Everyone, except fools, have woken up to this fact long time ago.

"The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant."  John Stuart Mill's Harm Principle

Given this basic understanding, as I am sure this is the level of instructions to students, I would think the model answer is something like this:

"The vaccines are safe and prevent you from being infected with Covid-19. Iris Koh spreads misinformation that the vaccines are ineffective and has dangerous negative effects. For this reason, Facebook and YouTube have taken many of Iris' posts down for breach of their community rules. Clearly, Iris' false claims are harmful as some people may be influenced by her and refuse to take the jabs, thus exposing them to risk of Covid-19 infection. Under the harm principle, which states blah..blah..blah... the MOH is clearly justified to take action against Idris."

The question is this. Is the MOE twisting the harm principle to elevate the government's role in suppressing the rights of individuals? The harm principle is actually a fundamental tenet of liberal philosophy, you know, the 'me me me and government out of my way' ideology.

JS Mill's book "On Liberty" is a philosophical view on individual freedom and autonomy. Personal liberty is the freedom of speech and the right to live life as one wishes. Individuals are capable of making rational choices. People should be allowed to take personal responsibilities, to learn from their own experiences, their mistakes, their failures. Social progress is possible only if there is a diversity of opinions and lifestyles. The government should have limited capacity to interfere into the individuals' space. Mills obviously was aware unfettered individual liberty leads to anarchy. And so he made the distinction of the actions of individuals into 'Self-Regarding' and 'Other-Regarding' types. Self-regarding actions affect only the individual, non-self regarding actions affect other people. The intrusion of the government should only be allowed when other-regarding actions of an individual does harm to others.

Laws and rules and regulations set the boundaries for the individuals. These are absolutes laid down by the government which in many cases, curtail individual liberty. In the case of a democratically run country, it is the tyranny of the majority. Is this bad? Well. show me a better system. Under a dictatorial regime, it is a social control tool wielded to stay in power.

As we live in a democracy, we have to accept the limitations to individual freedom fenced up by laws and rules and regulations. It is however, incumbent on everyone who cherish individual freedom to be constantly aware of government overreach. This means taking an interest in current affairs, seek knowledge, share information, and express opinions. Those with great conviction, often driven by what they feel are the interests of the community, pursue advocacies and activism. The pursuit of Iris is to be seen in this context.

History has shown such pursuits often has a life of their own.  Advocacies and activism lead to agitations that germinate movements and then a wholesale rebellion. A good example is ancient China's Yellow Turban Rebellion (184-205 CE). Deep-seated social and economic ills, bureaucratic corruption and natural disasters led to great suffering and discontent by the peasantry and poor people. Taoist teachings influenced the idea of a 'Great Era'. From a message of healing and religious ceremonies it grew into a movement against the Han Dynasty and a revolution for change. The rebellion was put down by the government violently.

Individual liberty does not come automatically and freely. Brave souls have fought and sacrificed their lives for it. Thomas Jefferson famously wrote "The Tree of Liberty must be refreshed from time to time with the blood of patriots and tyrants". Many have wrongly quoted this in support of violence by those oppressed. The context of Jefferson's quote was during the Shay's rebellion in Massachusetts, an armed rebellion against the government raising taxes during a debt crisis. Jefferson had noted such uprisings are often founded by ill-informed groups. According to Jefferson, "the remedy was to set them right as to facts, pardon and pacify them." Liberty is not to be taken likely. It has to be protected from the government. This does not necessarily mean a call for bloodshed. Jefferson's thoughts alluded to people who fight for liberty, though often ill-informed, are patriots and deserving of being given the facts and pardoned. 

A balanced view is to see Iris' actions in this light. Whether one agrees with her or not, her advocacy against the novel mRNA vaccines comes from the place of the heart with the interest of the community. It is the brave and selfless soul that is willing to make the sacrifice to fight for a belief in the interest of others. Iris' belief is not about toppling a government, but for more respect to alternative narratives about the dangers of the novel vaccines in the face of evidence suppressed by unseen hands. Thus far, Iris has acted within the bounds of law and rules and regulations. The MOH has not "set them (her) right as to facts, pardon and pacify them (her). MOH has refused to discuss the mounting evidence being presented on the dangers of the vaccines and the data on deaths and injuries arising from its use.

Whether a democracy or dictatorship, governments may allow some leeway for such advocacies. Granted it is never an easy task to draw the red line. It seems the red line in advocacy and activism according to the MOE, is harm to the public. The MOE now wants to make Iris' case a teaching moment, which in my opinion, is great. I have always preached the utilitarian use of teaching moments. 

When I was a young teenager brought up with Buddhist values, I was not really spiritual and did not cared much for religion other than respecting the cultural aspects. I had thought a good place in the afterlife is destined for me simply by a life of mantra of 'do no harm unto others'. What could be wrong with this simple principle? But I was wrong. 

In my twenties, a friend recommended a book "The Pebbles". I stand corrected as the memory is now foggy, but I think it was authored by Richard Bach, that Jonathan Livingstone Seagull guy. The Pebbles is a very thin book which does not appear in Google search. I was fortunate to see it one day at a bookstore at Raffles Place. Briefly, it is about the life of a pebble as it rolled downstream. Along the way it had many conversations with various pebbles. It is classic Bach's writing of his philosophical thoughts of life, freedom and the pursuits of one's passion. To my utter surprise, the sage pebble destroyed my belief system that 'do no harm unto others' is the absolute moral code.

What the sage pebble said about the downside of  'do no harm unto others' is reverberated in the criticisms of Mill's Harm Doctrine.

There is no objective definition of harm, it is open to subjective whims. Something that constitutes harm is seen differently by individuals and cultures. It may also be seen differently under different contexts. The avoidance of harm may lead to harmful consequences. In Iris' case, the vaccine may cause harm. An elderly person who then does not take the vaccination may contract Covid-19 and dies. On the other hand, MOH's pro-vaccination view is to prevent harm. But a vaccinated person may be harmed by the vaccines.


It is a principle of inaction, ie avoidance of duty. This idea of avoiding harm provides no guidance in situations of complex  ethical dilemmas. The best illustration is the 'trolley dilemma'.

A trolley comes to a line switch. Line A has one person tied to the rail, line B has 4 persons tied to the rail. Which line should the trolley be switched when either action will cause harm.

Ethical decisions often requires trade-offs. Avoiding harm to some may be causing harm to others. The 'harm principle' provides no guidance on how to manage this. The best illustration is abortion. Not wanting to harm the woman's rights means taking the life of an unborn.

Ethical dilemmas are often context dependent. Again in the case of abortion as example, it may be necessary to abort and kill the unborn to save the life of the mother.

Mill's focus of liberty on 'self-regarding' acts leads to the idea of social atomism which sees society as the aggregate of self-interest individuals. Individuals, or groups of individuals, might well argue some self-interests as 'self-regarding' and in so doing, avoid their responsibilities to society. For example, Seventh Day Adventist may say conscription is harm to them as their religion forbids the carrying of arms.

As I have learnt from the sage pebble, I hope RGS students understand the harm principle cannot be applied per se in most issues which often involve moral complexities with variant outcomes and ethical dilemmas of moral ambiguity. As for the school, I like it that they take a teaching moment to educate students but I hope the difficult topic has not been approached only at the superficial level that 'no harm unto others' is absolute. For the MOE, I hope the question did not come from political motivation. Lastly, as for Iris, I hope she looks beyond the narrow scope of perceived personal injury and make peace with her alma mater, and make it a win-win outcome for all if students of RGS go beyond a simplistic understanding of the harm doctrine and examine the real life multi-faceted complexity of MOH's claims against her advocacy.

Addendum:

As if for proof of my point about MOH's reliance on Facebook's suspension on posts for breach of their Community Guidelines is blind faith, my attempt to publish this on my FB page was met with instant, and I really mean instant, take down. Judge for yourself. Is the content here educational or offensive? 

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DEDOLLARISATION - WHAT WILL BRICS DO?

This is a three-part post on the march towards dedollarisation. The first post looked at the motivations for dedollarisation. The second part looked at the geopolitics vs macroeconomics, and this concluding part is second guessing what BRICS+ new currency system will be. Details are scarce at the moment but BRICS+ had promised this coming October Summit an important announcement regarding the reserve currency will be announced. Before October arrives, let's look at some of the issues.

The original BRIC was founded in 2009 by Brazil, Russia, India and China. It became BRICS in 2010 when South Africa joined. Today it is BRICS+ when Iran, Egypt, Ethiopia and UAE joined in 2024. Argentina and Saudi Arabia were supposed to join this year. Argentina backed out under new President Javier Milieu, in keeping with his campaign promise. Saudis are reconsidering.

Objectives

The West likes to portray BRICS+ as a China-led group intend on pursuing anti-US agendas. The original BRIC announcements made it clear their purpose was economic cooperation and how they can be more involved in global affairs. In 2015 they set up New Development Bank with US$100b funding, which they say will cooperate with IMF and World Bank. NDF loans will not force conditions on borrowing states the way IMF and World bank do. In the same year, the Contingent Reserve Arrangement Fund with a pooled fund of US$100b was established to help member states in times of liquidity problems. The grouping has mentioned the need for a new global reserve currency. It has never mentioned the purpose was to attack the USD's position, but it is obvious their primary aim was to find ways to reduce reliance on the USD for their trades with each other.

The EURO model

The Euro bloc is a monetary union which means all member states replace their currencies with a single new currency and give up sovereignty over monetary policies to a central EU central bank. This model is impossible for BRICS for various reasons. A monetary union means a borderless movement of goods and people which will be a disaster as the flow will naturally be from the poorer states to the richer ones. It is impossible for a grouping of states with different ideologies, different styles of government, different levels of economic development, and multicultural, to achieve monetary union.

Use the major currency

"Two tigers cannot live in the same mountain"

Some call BRICS currencies the 5R's - Real, Ruble, Rupee, Renmenbi and Rand. The group could easily adopt one of the 'R" as the preferred currency to use with each other. If it comes down to that, Chinese RMB is the obvious choice in deference to the size of its economy. There is a problem. An old Chinese proverb says "Two tigers cannot live in the same mountain". With political history in the way, India will never allow the RMB to be used as the reserve currency for the bloc.

It is not just the use of a reserve currency, but the need for a new cross-border payment system parallel to SWIFT. The group has signed agreements for cooperation in information and communication technology development as well as a proposed undersea optical fibre cable for communications within the group to overcome US intelligence surveillance. Despite this, the 'two tigers' impasse caused the original BRIC countries to go separate ways to develope their own payment systems as back-up to SWIFT. Brazil has their Pix, Russia has SPFS (System for Transfer of Financial Messages), India has the SFMS (Structured Financial Messaging System, and China the CIPS (Cross-border Interbank Payment System)

The Triffin Dilemma

Should they select any of the 5R currencies, whether RMB or any other, the issuing country will suffer what is known as the Triffin Dilemma. To serve both the state and the global economy, a conflict of interest arises. The country's short term domestic monetary policies will clash with the long term economic objectives of the global economy. 

As a reserve currency, the issuing country needs to keep supplying the world with its currency. This means it needs to keep persistent trade deficits. The consequence is its domestic economy suffers with loss of production output, lost of jobs and increased national debt. All this in turn leads to loss of confidence in the currency by the international community.

This is exactly the situation the USD finds itself today. Should the RMB be used as the reserve currency by BRICS+, China will end up exactly like the US. It will take a longer time as the RMB will serve a smaller economy with the BRICS+ having an aggregate of only 30% share of world economy. But the Triffin dilemma will eventually visit China.

Will they create an entirely new currency?

They could retain existing national currencies but a create a new one for cross-border transactions amongst themselves. This idea has been proposed before. In 1944 when 50 countries gathered at Bretton Woods to discuss a new exchange system, renown economist John Maynard Keynes proposed using a new currency called Bancor. An importer will use his home currency to buy Bancor to pay the exporter. The purpose behind Bancor was to smoothen out the trade imbalances. The country that is a net exporter will accumulate more Bancor. Those with credit balances in Bancor will be charged an interest. This way, it forces the net exporting country to spend their Bancor away. Bancor was not accepted at Bretton Woods because it was complicated and the world's objective at the time was to speed up economic development.

In the case of BRICS+, the primary objective is merely to cut dependence on USD as the major currency for international trade. The bancor idea would be a Rube Goldberg machine, which is a contraption to make a simple solution unnecessarily complicated.

Would it be fiat currency or based on gold?

They could create a new currency like bancor but leave out the rebalancing of trade imbalances part. In which case, would be it fiat, or a gold system? Fiat means there is nothing to back the currency. All currencies in the world today are fiat.

If they want to use a currency backed by gold, they will end up just like the US in 1973. In order to support the huge amount of trade of all BRICS+ members, a massive amount of the reserve currency has to be issued over time, thus their need for gold increases.They will run out of gold.

If they create a new currency, how is the monetary policies going to be managed? Monetary policies refer to the management of the money supply and related values, ie interest rates and exchange values. This necessitates a separate and independent central bank, just as in the case of Euro. But without a monetary union, individual state monetary policies will conflict with the group 'central bank'.

Blockchain technology

BRICS+ have made some teasers publicly that it will be based on blockchain technology. That means it will be tokenised, i.e., a crypto-currency. Similar problems of monetary sovereignty and Triffin Dilemma remains, though not seen openly.

1. Centralised or decentralised?
A decentralised system comes with too much questions this blog cannot do justice to. However, this will be central bank issues, which by its nature would definitely be centralised platform. The same questions of who controls and manages the monetary policies, and state vs central system conflicts remain. How will tokens be issued?
2. Crypto currency or stable coin?
In order to maintain stability, the crypto tokens will be stable coins. This means the tokens will be backed by something. If it is backed by gold, the same problems as the US faced in 1973 when it ran out of gold to back the USD applies. If it is to be backed by currency, which currency? Most likely it will be by a basket of currencies. In which case, the Triffin Dilemma is ever present. The issuing countries of the backing currencies need to constantly supply the currencies needed by the bloc. Thus the need to run persistent trade deficits.
3. Central Bank Digital Currency
Even a CBDC needs price discovery to find its equilibrium in a free and open market. The ecosystem of a financial market needs time to develope - the derivatives, the investing and speculating markets, etc.

What has BRICS+ been doing about dedollarising

China has blazed its own trail for the use of RMB for cross-border payments between itself and other countries. It has completed many tasks to booster the eco-system necessary to promote the use of RMB internationally. These include bilateral swap agreements, which guarantees liquidity of RMB, with many BRICS+ countries and others . It has implemented CIPS payment system, had RMB-denominated oil prices quoted on several exchanges, RMB oil futures quoted in Shanghai International Energy Exchange, established offshore RMB hubs in several financial centres. It is actively working for more oil trades to be transacted in RMB. This has been very successful to the extent that there has been a significant increase in RMB settlements over SWIFT although it is still under 5% of global aggregate. However, slightly more than half of China's cross-border payments to and from the rest of the world is now in RMB. These payments are over CIPS and thus not captured in SWIFT data.

World reserve currency does not bother China anymore

No matter how much a currency is being used in the world, the amount of currencies to be held as reserves is the function of central banks. This explains why even though RMB is the second largest economy in the world and RMB settlements have increased tremendously, it still remains at a very low 2.15% of reserve currencies held globally in Q1 of 2024 (per IMF). Important considerations to central banks are the stability of currencies which is why non-traditional currencies have now found favour with central banks as they diversify their portfolio of foreign currency reserves to include AUD, CAD and others such as SGD. Another very important factor is the currency must have liquid capital markets for central banks to park their reserves. RMB is considered higher risk due to its issues with free convertibility, Chinese communist mindset, opaqueness and lesser developed capital markets. 

However, it matters not to China how much of RMB is held as reserves by the world. What matters is the usage of RMB in cross-border settlements which effectively lowers China's reliance on the USD.

China's foreign reserves in the past 10 years have dipped from US$3.9T in 2014 to about US$3.2T in 2024. This corresponds to a substantial decrease in US Treasury bill holdings in the period from US$1.3T in 2014 to US$0.98T in 2023. Many reason have been proposed by many experts, but I see clearly the relationship to China's success in getting countries that trade with them to use RMB. As China becomes less dependent on USD and can trade in its own currency, the need to hold USD reserves decreases. The decrease in holding USD reserves allows China to shave off holdings in US Treasury bills, thus lower their US exposure.

As a matter of fact, China must be the wise old man laughing in the room. It has persuaded much of the world to use RMB but does not suffer having its currency held up as reserves by other countries.

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DEDOLLARISATION - GEOPOLITICS AND MACROECONOMICS OF RESERVES

This is a three-part post on the march towards dedollarisation. The previous post looked at the motivations for dedollarisation. This part looks at the geopolitics vs macroeconomics and a concluding part will be second guessing BRICS+ new currency system.

One of the first reserve manager to be acutely aware of the risk of holding too much USD was China. The Belt and Road Initiative is a Chinese attempt to recycle their massive dollar holdings consequential to explosive economic growth, and rebalance trade imbalances. China is also the founding member of BRICs, an economic block which has dedollarisation as one of its objectives.

BRICS was formed in 2009 with original members Brazil, Russia, India, China, and South Africa. It has now expanded to include Iran, Egypt, Ethiopia, and the United Arab Emirates. There are now many other countries whose membership is pending. The organisation aims to stop using the USD in their trade with each other and thereby reduce their holding of the currency in their foreign reserves.

Currencies are held by countries as part of their foreign reserves due to their importance in world trade. Geopolitics and macroeconomics have a lot to do with that and since these factors are dynamic, the composition of world reserve currencies are always in flux.

The World Reserve Currencies Visualisation Chart

This visualisation from 'Visualcapitalist' shows changes to world reserve currencies from 1900 to 2022. The visualization chart shows the dynamics of the shares of currencies as reserves. The running commentary shows the geopolitics and macroeconomics behind the dynamics of reserves currencies.

At the turn of the 20th century, European colonialists Britain, France and Germany were the most powerful countries. The British Empire was the strongest and more than half of world reserves was in pound sterling.

* French franc : Towards WWI it gained share due to its strength as a financial centre and growth in its African colonies. The FRF grew at the expense of Sterling. After WWI, France suffered in its rebuilding and FRF lost ground and faded away. 1927 France recovered from devastation of WWI. It returned to the gold standard and its Poincaré Stabilization Plan succeeded in stabilising the economy. The FRF gained ground again in its use as foreign reserves. By 1936 on, France suffered political instability and labour unrest. Devaluation of FRF by 30% caused its decline thereafter.

* Deutschemark : Industrialisation and colonial expansion made DEM stable and strong 1900-1914. From 1915-1923 WWI, war debt, suspension of gold standard, money printing, hyper-inflation and war reparation destroyed the DEM. In 1923 the DEM disappeared as it was replaced by Rentenmark. The next year Germany and Rentsmark disappeared, to be replaced by Weiner Republic (1929-1939) and Reichsmark. After WWII, the DEM returned in 1948 in Germany's reconstruction. Germany experienced an economic miracle in 1960s onwards as industrialisation took off. The DEM returned as a stable and important reserve currency which was able to sustain the re-unification of West and East Germany in 1990s. Germany then prepared for transition to the Euro and in 2002 the DEM was withdrawn.

* Swiss franc: In 1928 CHF gained importance as it returned to gold standard and its neutrality and banking secrecy made it a heaven for parking funds when Europe was still unstable.

* Yen : Japan rose from the ashes of WWII to achieve economic takeoff in 1960s. Much thanks to government interventionism policies and US aid. In 70s and 80s Japan became a global player and Yen became an important reserve currency. In 1985, after the Plaza Accord meant to devalue the USD, Yen appreciation impacted its export competitiveness. Yen's decline as reserve currency started. By the 1990s to current date, Japan's economy stagnated due to deflation and its reserve status remained flat.

* Pound sterling : Britain did not suffer much in WWI due to support from its colonies. it was politically stable, and its maritime trade still prospered. In 1925/1926 Britain suffered from serious labour unrest and over-valued pound sterling when it returned to the gold standard. Its exports floundered and the USD overtook GBP as number 1 reserve currency. By 1928 after GBP found its equilibrium to gold, its strength improved again. When Great Depression came, Britain acted fast to abandon gold in 1931so it gained ground over FRF and USD. The formation of the Sterling Area (1939-1972) which comprised its ex-colonies who used GBP as its currency, or their currencies pegged to GBP, centralised their Sterling reserves in London. This greatly helped Britain to manage the currency and GBP soared to 80% of world reserves, surpassing US which was still trying to get out of the depression. In 1944 Bretton Woods Agreement, USD was pegged to gold and all other currencies were pegged to USD. This was the beginning of the fall of GBD. In the 50s and 60s, industrial strife and socialist policies caused Britain serious balance of payments problems and GBP declined. Could have been worse but for the Sterling Area. In 1967 GBP was forced to revalue. 1979 Sterling Area ceased. GBP has never recovered.

* ECU : Euro Currency Unit is not a real currency. It is a basket of currencies as a precursor of Euro. It was officially introduced in 1979 and gained quick acceptance. It proved to be a stable unit of account for European central banks.

* Euro : Euro was introduced in 1999 and replaced ECU. Euro's share of use as reserve currency grew greatly when DEM was replaced by Euro in 2002. It has proven stable as a reserve currency and was able to ride out the 2009 European sovereign debt crisis and Brexit in 2016.

* USD : US emerged after WWI as a creditor nation and USD was in demand as reserve currency after 1914. Then the Roaring Twenties followed. US flourished and its financial institutions became important globally. In 1929 the stock markets collapsed as a the Great Depression set in. US was late in leaving the gold standard in 1933 and USD suffered. USD retreated all the way till 1947. In the WWII period, US became the producer of goods for the free world. Its economy boomed following the war. With Bretton Woods agreement in 1944 USD was fixed against gold and all currencies pegged to USD. With post war boom and all currencies pegged to USD, the currency USD was in great demand all the way to 1973 counting for 85% of world reserves. By 1973 with US running out of gold, Richard Nixon took the dollar out of gold standard. All currencies in the world became fiat (some currencies were pegged to more stable currencies). In 70s/80s, Germany and Japan economies boomed and DEM and JPY, together with the popularity of ECU, reduced USD share of reserves.

The US is the world's largest economy representing 25% of global GDP and the USD ranks highest as reserve currency, having 55% share of world reserves currencies. In comparison, China is the second largest economy with 18% of world GDP but having Renmenbi at a mere 2.5% as reserves currency. Clearly, the economic size, although an important factor, is not the crucial determinator of the use of a country's currency as reserves by the world.

The key determinant for use of a currency as reserves is the willingness of the market to accept the currency, which itself is dependent on many factors such as political stability, macroeconomics, financial and capital markets, transactional finance costs, etc. This is clearly demonstrated in the ex-Sterling Area and the Euro where economic blocks provide the high aggregate demand for the relevant currencies. It is the same as USD, the currency most companies in the world price their products and services thus creating the massive demand.

The Petrol Dollar:

The greatest ignorance and misinformation about the petroldollar goes like this. In 1974 the evil Jew, Henry Kissinger, as US Secretary of State, forced the Saudi Arabia government into an agreement to price their oil in USD in exchange for American protection. As dominant member of OPEC, Saudi's use of USD to price oil influenced all oil producers to follow suit. This created the huge demand for USD which is largely the reason why it is now the biggest reserve currency. Now the fear is with dedollarisation, oil producers may switch to other currencies, making the USD a lame duck. That 50 year old US-Saudi agreement expired in 2024.

The great misinformation is an evil Jew Henry Kissinger forced the Saudis to use USD. Islamist Brotherhood propaganda may well want this out there for posterity. The reality is this. Saudi oil was first discovered in 1938 by Americans. It follows they started to price oil in USD which by then was the currency with the eco-system to finance oil transactions which involve massive capital movements. Major oil producing countries end up with huge chunks of USD. All countries having a huge trade imbalance must find a way to sort out their balance of payments. Not doing so will eventually place huge upward pressures on their local curreny. Saudis built up of USD holdings need to be recycled, if possible, back to US. At the same time, in the 60s, with the growing power of OPEC, US sought to work closely with Saudi Arabia in foreign policies on the Middle East. The negotiations culminated in a Technical Cooperation Agreement (TCA) signed by Secretary of the Treasury William Simon and the Saudi Arabian Minister of Finance and National Economy Abalkhail dated 13 February 1974. Four months later, Secretary of State Henry Kissinger visited Riyadh. Kissinger and King Fadh signed a Joint Communique for Economic Cooperation on 7 June 1974. Kissinger's communique was for public consumption. The TCA was the implementing agreement which was for 5 years and extendable thereafter every 5 years. There is no 50 year agreement as everyone thought. I have seen the orginal TCA but lost that link. Here is the link to an extension of the TCA.

An US-Saudi Arabia Economic Cooperation Commission (ECC) was set up to implement the TCA. Here is the link to the report by government to Congress House Committee on Foreign Relation on the ECC. It was about (1) fostering closer political ties through economic cooperation, (2) assisting Saudi industrialization and development while recycling petrodollars and (3) facilitating the flow to Saudi Arabia of American goods, services, and technology. Both TCA and ECC says nothing about the pricing of oil nor any military cooperation. It was basically about technology transfer for mutual benefit. 

The Yom Kippur War broke out in October 1973. OPEC cut production and placed an embargo on countries that supported Israel. The market reacted and crude oil rose up more than 3 to 4 times from out US$25/barrel. At that kind of price level, it made it more imperative for Saudi Arabia to recycle their USD hoard.

It is correct pricing oil in USD drives a huge demand for the currency. Based on US$84 per barrel of crude today, and world demand of 100m barrels daily, US$84b is required to grease the physical commodity trade. However, the reality is much much more USD is required to drive the oil trade daily. USD liquidity is also needed in the derivatives, foreign exchange and credits markets. The derivatives for commodities is several times that of the physical market. Using a conservative factor of 5, another USD420b is needed daily. For FX and credits markets, assume a factor of 0.1 each, another USD17b is required. In total about USD520b is needed daily to drive the oil trade. The point is, oil producers can price their crude in any currency, such as Renmenbi, but the reality is other currencies do not have developed financial markets that can support the oil trade.

Offshore USD :

Most people think it is the petroldollars that make the world go round for USD. It is actually the offshore USD that provides the liquidity. These are the USD parked in various financial centres like Hongkong, London, Zurich, Singapore, Tokyo. In Singapore, the offshore USD is primarily in the Asian Currency Unit (ACU). 

BRICS+

The original BRICS was formed in 2006 as an economic block. It originally comprised of Brazil, Russia, India, China, South Africa and by now has added Iran, Egypt, Ethiopia, and the United Arab Emirates and rebranded itself BRICS+. There are many other countries that have applied for membership which is expected to grow. In the wake of the Russo-Ukraine war, the US weaponised the USD and SWIFT, the international payment system, by unilateral sanctions against Russia. Many countries not beholden to the West suddenly see the high risk of USD as a core reserve currency. The need for a payment system as an alternative reserve currency has taken more urgency.

BRICS had plans for a common currency and a system for trade settlement independent of the USD. It's been almost 2 decades and the original grouping has nothing to show. It had once seemed that BRICS will settle on using RMB as their common currency given the size of China's economy. 

Internationalising the Renmenbi :

China is now the second largest economy in the world, making up about 17% of world economy.  Beijing has long understood that as its economy grows larger, it needed to internationalise the RMB. It has moved in many ways to achieve this objective. China's Belt and Road Initiative was one big picture plan to promote the use of its currency. China too has tried to encourange an offshore Renmenbi. Designated clearing houses have been set up in their offshore centres to handle RMB transactions. It has arranged many swap facilities with central banks to provide RMB liquidity. It has nurtured a dim-sum bond market, ie RMB-denominated bonds issued overseas. Several Free Trade Zones have been set up in some cities like Shanghai. These allow for freer moment of RMB for foreign investors.

China’s Cross-Border Interbank Payment System (CIPS) was launched in 2015. In 2016 IMF added RMB to its basket of currencies for the Special Drawing Rights. RMB-denominated oil spot prices are now quoted in many exchanges and in 2018 RMB-denominated oil futures was listed on the Shanghai International Energy Exchange. . 

Currency mobility

China has full current account mobility. This means there is no restrictions on the movement of RMB in trade and services related transactions and remittances. However there is no full capital account mobility. There are still certain restrictions on movement of capital for investment related activities. It is the same status as India.

How RMB is faring

RMB settlements over CIPS has seen over RMB 480b ($75 billion) in Q4 2015 to RMB 33t ($4.6 trillion) in Q3 2023. The RMB oil futures in Shanghai International Energy Exchange has seen remarkable growth.

China has done much, but it is still a long way to go. Yet RMB's share of reserves is only 2.5%.+. It needs to build confidence in RMB which requires to demonstrate stability in the currency, politics and the economy. 

Is it geopolitics?

After Russia invaded Ukraine in February 2022, G7 and several countries including some global corporations, sanctioned the Russians. The US weaponised the USD and SWIFT which heightened the risks of using USD as reserves currency. The chart above shows an increase in RMB payments over SWIFT. Although its share in global payments is small, its volume has doubled from 2+% to 4+%. According to SWIFT, the RMB was the 4th most used currency in cross-border payments overall. It's even more impressive for trade-related payments where RMB capped at 6% and is in 2nd place after USD. RMB's share is actually much higher than 4% since SWIFT report does not capture payments over the CIPS, China's own payment system. Is geopolitics really pushing countries to consider alternative reserves currency?

What is the real trend

In free and open economies, markets reponse to, amongst other issues, financial costs. In deciding which currency to price products and services or conduct their transactions, the cost of currencies is always in play. Take the case of the RMB payments after the Russian invasian. Why did the volume of trade-related payments increase so much? Import-export sector is underpined by trade financing which is short term funding of 3,6,9 or 12 months generally. Interest differentials has a bearing on the cost and determination of currency to use. The chart below shows the short term interest rates of USD and RMB.

The short term interest rate of USD has been pretty much cheaper than RMB in recent past. USD lends itself as the cheaper source for trade financing. The two interest rates intersect at about the time of Russian invasion and the differential rose to more than 250 basis points. Suddenly, the RMB became cheaper as a source for short term financing. Markets respond to this dynamics and switch to RMB funding which leads to increased volumes in RMB settlements.

The reason for the spike in USD short term rates is due to FED action to bring US high inflation rates down. China's inflation was not as high as the US and had no need to raise the interest rate which remained relatively stable. Going into the foreseeable medium term future, it does not appear the FED is in a position to bring the rates down to the era of almost zero rates of the past as high inflation persists.

What central banks do

The traditional narrative is central banks keep in reserves certain foreign currencies relative to the country's need for liquidity in those currencies. With China being an important trading partner for most countries, one would assume the RMB should command a high percentage in use as world reserve currency. RMB started to appear as reserve currency in 2015 and peaked in May 2021 at 2.8%. In 2024 Q1 it was down to 2.15% (per IMF). The visualisation video above also shows that somewhere 2013/2014 onwards, central banks began to hold reserves spread out over smaller currencies - RMB, CHF, AUD, CAD and over 3.5% of other currencies (SGD included). In reality, central banks hold their reserves in currencies that are widely traded, stable, offers relatively better returns, and diversified,. Specific currency liquidity risks can be mitigated by arranging swap agreements with the relevant central banks. Central banks will even hold reserves in gold when they view long term demand trends. All the BRICKS+ countries are building their gold reserves. 

China will do all it can to internationalise RMB, transactions in the currency may increase, but central banks are unlikely to put a lot of their reserves in it. The reason is RMB is not freely and easily convertible, which is a structural change that Chinese Communist Party is unwilling to reform..

Conclusion

Niels Graham and Hung Tran of Atlantic Council GeoEconomics Center warned "... policy makers to disaggregate these macro effects from the very real geopolitical backlash against sanctions and similar tools that are also pushing countries to explore dollar alternatives."  

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