A New Global Financial And Monetary Order Will Shortly Emerge

A new global Financial and Monetary order will short emerge as the Yen carry trade and quantative easing have failed as a means of leveraging Investments for gain and economic growth.

The borrowing of funds via the Bank of Japan at 0.25 interest is no longer profitable for investment gain; using yen carry funds to invest long no longer leverages stocks as the value of world stocks relative to the Japanese Yen, VT:FXY, has turned down. The optimized carry ETN, ICI, turned down on announcement of QE2 and has entered an Elliott Wave 3 of 3 Down.  

Exhaustion of quantative easing has turned the World Financials, IXG, lower. The Brazilian Financials, BRAF, Australian Bank, Westpac Banking, WBK, India Bank, HDFC Bank, HDB, the European Financials, EUFN, led by Banco Santender, STD, and the Emerging Market Financials, EMFN, the US Financials, XLF, and Banks, KBE, all fell lower, communicating an end to the seigniorage, that is moneyness provided by quantitative easing and the seigniorage of central banks globally.

Failure of seigniorage comes from the fall lower in distressed investments like those in mutual fund, FAGIX, which constitute a large part of the US Federal Reserve’s balance sheet, and which served to underwrite the recovery of the last two years.  Also the turn lower seen in the chart of junk bonds, JNK, from its recent high, and a topping out in world government bonds, BWX, serves as evidence to the end of US central bank seigniorage. Failure of seigniorage is also seen in the ratio of US Stocks, VTI:TLT,  relative to US Government Note, and in the ratio of world stocks relative to world government bonds, VT:BWX, both turning lower. Without seigniorage, world stocks, ACWI, and the S&P, SPY, are now going to fall precipitously world wide. And economic expansion will turn to economic contraction.

Thus both spigots of investment liquidity, that is first  the US Federal Reserve lowering of interest rates, and second the provision of carry trade loans by the Bank of Japan, have failed. The great world wide investment bubble has popped. The end of credit, as it has been known, has commenced.

The Milton Friedman neoliberal Free To Choose, Floating Currency Regime has come to an end.

A new global banking, financial and investment regime will soon emerge. It will feature a Seignior, a word which comes from Old English and means top dog banker who takes a cut. He will establish fiscal sovereignty, as well as credit seigniorage, and institute unified regulation of banking globally, as called for, by Timothy Geithner and reported by James Politi and Gillian Tett in the Financial Times.   

Steven M Collins of Prophecy Updates and Commentary writes that God’s ordained future will see  the “seven heads and ten horns” tear down of the existing global financial/monetary order before the beast system even comes into being, and the beast system has 42 months to rule the earth (Revelation 13:5)

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