Sam's Exchange: Falling pillars - Moving to an open market system

© Photo : Source: Sam BardenSam Barden
Sam Barden - Sputnik International
Rupert Murdoch is listed in Forbes magazine as the 13th most powerful person in the world. He is not a publicly elected person, or a politician or a religious leader.

Rupert Murdoch is listed in Forbes magazine as the 13th most powerful person in the world.  He is not a publicly elected person, or a politician or a religious leader.  He is the world’s most powerful media magnate. Ben Bernanke, chairman of the Federal Reserve, and the world’s most powerful banker is at number 8. Looking up the list of the world’s most powerful people is like looking at a road map for change. We are in a paradigm shift. Old systems are being rolled back, and it seems no one, or no institution is going to be left untouched. The move to an open market system is clearly happening, and it will likely include the bankrupting of the Federal Reserve, the collapse of the euro in its current form, the default of the United States on its debt and the emergence of a new reserve currency base which will include Russia and China.

Murdoch represents what is commonly referred to as the fourth estate, a societal or political force or institution whose influence is not consistently or officially recognized. That may have been the case in the past. Murdoch’s influence is widely recognized today, not least by the fact he is considered the world’s 13th most powerful figure. Leaders in Australia, the United States and Britain have for many years actively sought his blessing before being elected leader of their country. His influence over the media and public opinion should not be underestimated. His Empire is getting a well-earned shakedown, with arrests at the senior level, which may yet include a Murdoch or two. News Limited will not survive in its current form.

The Federal Reserve is the U.S.’s Central Bank, and due to the fact that the U.S. dollar is the world’s only reserve currency, the Fed as it is known, is by proxy the world’s central bank. The Fed has more influence over the global finance system than any other institution. As chairman of the Federal Reserve, Ben Bernanke is the 8th most powerful person in the world. The Fed is owned by private banks, and is considered the lender of last resort. However, recently, the U.S. Treasury has begun selling bonds to raise funds for the Federal Reserve, to help it meet its unprecedented borrowing needs. We know the Fed has taken a lot of toxic waste onto its balance sheet in order to bail out the U.S. banking system and keep afloat the too-big-to-fail banks. Is the Federal Reserve too big to fail? The answer is probably not, and at any rate we are likely to find out in the not too distant future.

The Fed is out of money and as the pinnacle of the world’s banking system is representative of the many zombie banks waiting to be put out of their misery. In its current form, the Federal Reserve serves no useful purpose, and the bankers who run it behind closed doors might find themselves in the public spotlight, being forced to explain and account for where all the money has gone?

The British prime minister and the German chancellor fill the spot for number 7 and 6 on the Forbes list respectively. The European debt crisis is actually a European banking crisis, and the number one causality is going to be the euro. The repeated attempts to make the people of Europe pay for the banks losses via IMF loans and government austerity measures is not working. There will be European debt defaults and bank crashes. Neither the German nor British government will be in a position to help. Nor will the IMF, China or the United States.

It will be amongst the final four most powerful people in the world to play the end game out (4. Russia’s Prime Minister Vladimir Putin; 3. King Abdullah of Saudi Arabia; 2. U.S. President Barak Obama; 1. Chinese President Hu Jintoa). The last pillar of the old monetary system to fall will be the single currency reserve system: the U.S. dollar. The United States will default on its debt if not now, soon. Oil will stop trading exclusively in dollars and move to a multi-currency basis, including the Russian ruble and the Chinese yuan. This will form the basis for a new multi-currency system.

The default of the United States’ debt will not be the Armageddon event some are predicting. A new market system will emerge and quickly. This system will be one which is multi-lateral both politically and economically. Markets will be transparent, networked and disintermediated. This means that banks will become service providers for transactions rather than counterparties to them. The world’s currency base will be asset backed and decisions on monetary policy will be based on efficient use of resources rather than resource exploitation. A truly global market place will emerge where trade balance rather than deficit or surplus spending will be the goal of each country in the new paradigm of open markets. 

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Current markets are anything but global or integrated.  What if we had a paradigm shift in the way we think and transact when doing business with each other?  Balanced global trade can only occur if we have transparent, accessible and efficient markets.  We are on the cusp of achieving this, although most people cannot see it.  Sam’s Exchange aims to give its readers a clearer view and a platform for discussion.  Markets, trade and economics are in fact nothing more than the result of our thoughts and actions expressed in numbers, not the reverse.

Sam Barden is founding Partner of SBI Markets DMCC, a Dubai-registered commodities trading and advisory company.  Barden has worked in the global financial markets for more than 17 years in Europe, Russia and the Middle East.  He has advised and executed strategic transactions for both the government and private sector, in particular in energy and commodity markets, advising various energy producing nations on their strategic market developments and interaction.  He holds a degree in economics and finance from Victoria University, Melbourne, Australia.

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