Kindleberger's Benevolent Hegemon

[R K]

http://delong.typepad.com/sdj/2013/11/dani-rodrik-on-on-the-large-dangerous-external-imbalances-that-underpin-the-fastest-growing-economies-performance-project-syn-1.html

Worth reading the whole blog but here's the conclusion:

In a sense, Kindleberger predicted all this in 1973. He saw the power and willingness of the US to bear the responsibility and burden of sacrifice required of benevolent hegemony as likely to falter in subsequent generations. He saw three positive and three negative branches on the then-future's probability tree. The positive outcomes were: " revived United States leadership… [ii] an assertion of leadership and assumption of responsibility... by Europe…” [sitting here, in 2013, one might be tempted to add emerging markets like China as potentially stepping into the leadership breach, although in practice the Chinese authorities have been reluctant to go there, and] [iii] cession of economic sovereignty to international institutions….” Here, in a sense, Kindleberger had both global and regional – meaning European – institutions in mind. “The last”, meaning a global solution, “is the most attractive”, he concluded,” but perhaps, because difficult, the least likely…" The negative outcomes were: "(a) the United States and the [EU] vying for leadership… ( one unable to lead and the other unwilling, as in 1929 to 1933… © each retaining a veto… without seeking to secure positive programmes…"

As we write, the North Atlantic world appears to have fallen foul to his bad outcome ©, with extraordinary political dysfunction in the US preventing its government from acting as a benevolent hegemon, and the ruling mandarins of Europe, in Germany in particular, unwilling to step up and convince their voters that they must assume the task.

It was fear of this future that led Kindleberger to end The World in Depression with the observation: “In these circumstances, the third positive alternative of international institutions with real authority and sovereignty is pressing.”

Indeed it is, more so now than ever

So the question is, if one assumes that global trade requires a 'benevolent hegemon' big enough and willing enough to be the consumer of last resort and provider of global liquidity, which outcome are we moving towards?

1. A revived US as the hegemon

2. Europe - which would require a dominant leadership partner within it, currently absent

3. Significantly beefed up global institutions with authority and power ceeded to it. (something Germany seems unable to agree to even within the EZ)

OR

The 4th and by far the least desirable outcome of course

WAR, starting again perhaps within Europe itself.

.

[Bloo Loo]

Im afraid I dont understand all that blarny.

what I do understand is that any system that relies 100% on perpetual growth is doomed to fail politically, energetically and in its influence and power. None of the cures to fix the inevitable arithmetic of the exponential nature of growth is politically acceptable....at the end of the day, even the benevolent will fall if subject to growth in all areas.

[Executive Sadman]

Im afraid I dont understand all that blarny.

what I do understand is that any system that relies 100% on perpetual growth is doomed to fail politically, energetically and in its influence and power. None of the cures to fix the inevitable arithmetic of the exponential nature of growth is politically acceptable....at the end of the day, even the benevolent will fall if subject to growth in all areas.

I think its more 'global' vs 'national' stuff.

All ******** if you ask me. The world is a different place to 1929-33. We dont need alliances, european unions of anything else. We have nuclear weapons and mutually assured destruction. Once again, science, not overpaid bureaucrats have saved our collective arses. There will be no more wars on the scale of WW2 for the very simple reason there will be no winners. Anyone who says different probably wants to make money for themselves by convincing everyone else they are somehow vital to world peace.

Think about Iran and Israel. Maybe if Iran had nuclear weapons Israel wouldnt be such a shitty neighbour in the middle east. A nuclear Iran would restore a balance of power.

[Bloo Loo]

snip

Think about Iran and Israel. Maybe if Iran had nuclear weapons Israel wouldnt be such a shitty neighbour in the middle east. A nuclear Iran would restore a balance of power.

Indeed, even a benevolent Isreal today is subject to failure due to the exponential nature of itself...its population, therefore its requirements for actual survival and most importantly for the survival of the leaders...one day, it MUST collect those resources and if people wont sell them,they will have no choice Politically but to take them.

This is the human condition and it is inevitable.

[zugzwang]

The Euro is a Bancor currency, it can't yet assume the role of global reserve currency, doubtful it ever will. Nor can the yuan, since China is running a permanent current account surplus. The yen might conceivably fulfill the role now that Japan has hollowed out and become a net importer, but nobody wants to own Japanese govt bonds and the economy appears close to terminal collapse under the weight of its geriatric burden. SDR basket? You're having a laugh. Solves none of the outstanding problems, may even create a few of its own. Which leaves the dollar, unchallenged. Sadly, after five years of ZIRP and QE, the debt-bloated, state-cartel rentier skimming status quo appears incapable of reviving the world's economic fortunes. A Second Great Depression looks as inevitable to me today as it did when I joined this site in 2007.

[Bloo Loo]

The Euro is a Bancor currency, it can't yet assume the role of global reserve currency, doubtful it ever will. Nor can the yuan, since China is running a permanent current account surplus. The yen might conceivably fulfill the role now that Japan has hollowed out and become a net importer, but nobody wants to own Japanese govt bonds and the economy appears close to terminal collapse under the weight of its geriatric burden. SDR basket? You're having a laugh. Solves none of the outstanding problems, may even create a few of its own. Which leaves the dollar, unchallenged. Sadly, after five years of ZIRP and QE, the debt-bloated, state-cartel rentier skimming status quo appears incapable of reviving the world's economic fortunes. A Second Great Depression looks as inevitable to me today as it did when I joined this site in 2007.

Surely the reserve currency is one that a large proportion of vendors would prefer to receive...

[Venger]

OR

The 4th and by far the least desirable outcome of course

WAR, starting again perhaps within Europe itself.

There's an economic continuation war of sorts that's been prosecuted by the housing VI haves, versus the prudent and the young, for many years now

The housing VI entire economic model of forever HPI failed, yet almost immediately the VIs rebooted it with hundreds of billions of QE, rates down from 5.5% in 2007 to holding for years at 0.5%, and now HTB2 to try and help entitled young people to push to the front of queue and pay the high prices owners want for houses, to keep market inflated.

Why not try on some deflation and lower prices and restructuring, rather than pursue forever growth to protect those who've overstretched, or to lock in HPI for the older VI. Instead of aching for some other country to start following policies to help protect the HPI and stop the overstretched from failing. Consumer of last resort willing to pay high prices - like Germany and it's hard earned savings? Germany has problems of its own. It may be willing to spend when investment opportunities represent good value, post-deflation, not at toppy values now.

[alexw]

There's an economic continuation war of sorts that's been prosecuted by the housing VI haves, versus the prudent and the young, for many years now

The housing VI entire economic model of forever HPI failed, yet almost immediately the VIs rebooted it with hundreds of billions of QE, rates down from 5.5% in 2007 to holding for years at 0.5%, and now HTB2 to try and help entitled young people to push to the front of queue and pay the high prices owners want for houses, to keep market inflated.

Why not try on some deflation and lower prices and restructuring, rather than pursue forever growth to protect those who've overstretched, or to lock in HPI for the older VI. Instead of aching for some other country to start following policies to help protect the HPI and stop the overstretched from failing. Consumer of last resort willing to pay high prices - like Germany and it's hard earned savings? Germany has problems of its own. It may be willing to spend when investment opportunities represent good value, post-deflation, not at toppy values now.

Gemany needs to stop investing and consume more, it's over-investment (read : loading up the PIIGS with debt) is destroying the eu economy. That rebalancing would normally be forced upon germany with free floating currencies, but because of the euro it is something it has to willingly choose or at least not actively fight against.

Deflation is not something we should choose, it is extremely economically destructive as greece is finding out. It causes the real value of debts to rise as companies and people are nolonger able to meet debt obligations, with each bankruptcy resulting in further losses to other individuals/companies, setting off a bankruptcy cascade. Moreover, previously repayable debts over time become unpayable. The end result of this is gradual continual destruction of the host economy with all that that brings - mass unemployment, falling living standards, falling economic output, etc. Note that deflation is not the same as letting economic bubbles pop.

[onlyme2]

Deflation is not something we should choose, it is extremely economically destructive as greece is finding out. It causes the real value of debts to rise as companies and people are nolonger able to meet debt obligations, with each bankruptcy resulting in further losses to other individuals/companies, setting off a bankruptcy cascade. Moreover, previously repayable debts over time become unpayable. The end result of this is gradual continual destruction of the host economy with all that that brings - mass unemployment, falling living standards, falling economic output, etc. Note that deflation is not the same as letting economic bubbles pop.

Deflation is not the problem - only for those who lent the money in the first place. The damage was done long ago. For a long time the young have been in a very poor situation with low wages and high cost of housing/living generally, except it didn't reach the media 5/10 years ago. Now they are in a single currency "deflation" in those bubbled sectors is exactly what needs to happen to rebalance earnings against their cost of living including real estate, those who lent the money should be defaulted on - which is explicitly what the eruopean banks don't want, which is why Greece is in such a mire now.

Edited November 16, 2013 by onlyme2

[Venger]

Deflation is not something we should choose, it is extremely economically destructive as greece is finding out. It causes the real value of debts to rise as companies and people are nolonger able to meet debt obligations, with each bankruptcy resulting in further losses to other individuals/companies, setting off a bankruptcy cascade.

5, 10, 20 years, younger generations might be very grateful for the rebalancing and opportunities its given them. Especially if they keep things steady, rather than pigging out and over-extending on some new boom.

It's already brought about some indications of positive changes. Young people with no debts less likely to go bankrupt than the over-extended, who get their assets liquidated and sold to new market participants cheaper. Including young people, one group who've already started their own company specifically for selling liquidated stock back to the market. I guess they'd be happier working on lower pay, for some old company magnate directors with yacht and garages full of performance cars, and house in the city and one in the countryside who needs to be rescued from his company having over-extended, and taking on burden of higher mortgage debt ect.

[zugzwang]

Gemany needs to stop investing and consume more, it's over-investment (read : loading up the PIIGS with debt) is destroying the eu economy. That rebalancing would normally be forced upon germany with free floating currencies, but because of the euro it is something it has to willingly choose or at least not actively fight against.

Deflation is not something we should choose, it is extremely economically destructive as greece is finding out. It causes the real value of debts to rise as companies and people are nolonger able to meet debt obligations, with each bankruptcy resulting in further losses to other individuals/companies, setting off a bankruptcy cascade. Moreover, previously repayable debts over time become unpayable. The end result of this is gradual continual destruction of the host economy with all that that brings - mass unemployment, falling living standards, falling economic output, etc. Note that deflation is not the same as letting economic bubbles pop.

The problem is that our debts are so excessive we no longer have a choice! Asset prices and current prices have to be brought back into equilibrium. ZIRP and QE are an attempt to achieve this in an orderly fashion. That experiment appears to have failed. The world economy is on the cusp of another recession, or worse. Financial markets are wildly overextended, so a significant correction here will lead to the cascade of failures you describe and depress economic activity still further. A repeat of 2008 is on the cards but with sovereigns now effectively sidelined because they are already overloaded with debt.

FYI, US export prices fall for the seventh month out of eight:

Prices for US exports unexpectedly fell in October, a worrisome sign of global economic weakness, while the cost of imports into America declined due to a sharp drop in the price of oil.

Export prices dropped 0.5 per cent last month, the seventh decline in eight months, the Labor Department said today. Analysts polled by Reuters had expected a slight increase in export prices.

The decline suggests that consumers in crisis-stricken Europe and other major trading partners are struggling so much that American producers have little leverage to raise prices.

The European Central Bank, which is struggling to support a recovery, cut interest rates earlier this month in part over concerns the region's weak economy is weighing too much on prices.

The Labor Department's report also showed that prices for US imports fell 0.7 per cent in October, which was a sharper decline than expected.

A 3.6 per cent fall in petroleum imports, which was the sharpest decline in over a year, drove the drop in overall prices. However, there were signs that weakness abroad was also fueling price declines.

Prices for imports from Japan dropped 0.2 percent last month, a possible sign that Japan's extremely accommodative monetary policy was putting downward pressure on its exchange rate and making its exports more competitive abroad.

In a possible sign of Japanese competitiveness, prices for auto imports fell 0.1 percent and were down 1.4 per cent in the year through October. The 12-month decline is the biggest drop since the Labor Department began tracking it in 1981. (Reuters)

http://www.irishtime...onomy-1.1596253

Edited November 17, 2013 by zugzwang

[R K]

The problem is that our debts are so excessive we no longer have a choice! Asset prices and current prices have to be brought back into equilibrium. ZIRP and QE are an attempt to achieve this in an orderly fashion. That experiment appears to have failed. The world economy is on the cusp of another recession, or worse. Financial markets are wildly overextended, so a significant correction here will lead to the cascade of failures you describe and depress economic activity still further. A repeat of 2008 is on the cards but with sovereigns now effectively sidelined because they are already overloaded with debt.

FYI, US export prices fall for the seventh month out of eight:

So to link it your post to the OP, you appear to be agreeing (but I may be misinterpreting you, so pls clarify) that not much has fundamentally been resolved because we still do not have Kindleberger's 'benevolent hegemon'.

FED (and other) CBs have created the bridge (to borrow from El-Erian) via zirp, QE and so forth to enable this to take place but the politicians have so far failed to seixe the opportunity presented to them.

Which takes us back to the original question - Where will this surplus recycling engine come from? US (again, I'd lump UK in with US too), a united Europe, new/updated global institutions?

China still seem to be a long long way from being in a position to do this and since they're embarking on their own particular set of ambitions with the 3rd Plenum they've more than got their hands full.

In the end someone has to be the global consumer of last resort and liquidity provider after all.

[zugzwang]

So to link it your post to the OP, you appear to be agreeing (but I may be misinterpreting you, so pls clarify) that not much has fundamentally been resolved because we still do not have Kindleberger's 'benevolent hegemon'.

FED (and other) CBs have created the bridge (to borrow from El-Erian) via zirp, QE and so forth to enable this to take place but the politicians have so far failed to seixe the opportunity presented to them.

Which takes us back to the original question - Where will this surplus recycling engine come from? US (again, I'd lump UK in with US too), a united Europe, new/updated global institutions?

China still seem to be a long long way from being in a position to do this and since they're embarking on their own particular set of ambitions with the 3rd Plenum they've more than got their hands full.

In the end someone has to be the global consumer of last resort and liquidity provider after all.

We're stuck with the dollar as global reserve currency the forseeable future as far as I can see. Maybe Bitcoin or similar could fulfill that role if the liquidity and volatility questions can be dealt with successfully; hard to see the euro or the yuan being in a position to replace the dollar for a long time, if ever. No-one seems to fully understand the complex dynamics of the USD reserve system even though it's been functioning for decades, so casually arguing against its resilience is a mistake. Then again if one looks at the present condition of the world in terms of debt, energy and information it's fairly evident that we're in an unprecedented era. The past may no longer be a reliable guide to the future. But liquidity provision is one thing and productive demand another. I would argue that the world is already over-consuming and has been for years which is why financial repression hasn't worked. Instead of the intended effect we've had the opposite: the dollar is appreciating in value, the US trade deficit is contracting when it should have stabilised, the gulf between asset prices and current prices has widenend when it should have narrowed. A systems wide re-set is indicated.

[NorthamptonBear]

Gemany needs to stop investing and consume more, it's over-investment (read : loading up the PIIGS with debt) is destroying the eu economy. That rebalancing would normally be forced upon germany with free floating currencies, but because of the euro it is something it has to willingly choose or at least not actively fight against.

Deflation is not something we should choose, it is extremely economically destructive as greece is finding out. It causes the real value of debts to rise as companies and people are nolonger able to meet debt obligations, with each bankruptcy resulting in further losses to other individuals/companies, setting off a bankruptcy cascade. Moreover, previously repayable debts over time become unpayable. The end result of this is gradual continual destruction of the host economy with all that that brings - mass unemployment, falling living standards, falling economic output, etc. Note that deflation is not the same as letting economic bubbles pop.

Deflation is fantastic. Your savings buy so much more.

Of course if you were an idiot and borrowed shedloads you're in trouble. But you would have been in trouble at some point anyway.

Assets that are just sitting there gathering dust as they were for speculation, or just kept in the family - they get sold on and those who had no access to these assets previously as they were unwilling to pay the stupid prices, can at last enjoy them.

Germans have less 'assets' ie they don't generally own their own house and don't buy extra ones.

In southern Europe, many properties are kept within the family, so net 'wealth' is higher.

But it's only worth something until everyone is forced to sell because incomes are low as the economies are so distorted.

Southern europe must either what people in other countries want in order to import goods that are better produced outside.

At the very least they are blessed with sun and sand and so they at least have tourism.

But the best thing to do is switch taxes to property assets that are underused, ensuring that productive labour and risking capital is rewarded while sitting on assets costs cash.

In order to ensure that people do not suffer, are able to survive with a little dignity - some of the tax from property can be paid out.

It is easiest to pay everyone, a lowish amount.

So the answer again, - deflation is good.

Land Value Tax and Citizens income is good.

Massive speculation and living on debt is bad.

Debt makes your life more fragile. Welath should exist in your skills, health and investments into world beating productive companies.

Germany has good industry, balance of trade. But the Germans do not have much wealth. They just have a sensible economy which is resilient to shocks.

[R K]

We're stuck with the dollar as global reserve currency the forseeable future as far as I can see. Maybe Bitcoin or similar could fulfill that role if the liquidity and volatility questions can be dealt with successfully; hard to see the euro or the yuan being in a position to replace the dollar for a long time, if ever. No-one seems to fully understand the complex dynamics of the USD reserve system even though it's been functioning for decades, so casually arguing against its resilience is a mistake. Then again if one looks at the present condition of the world in terms of debt, energy and information it's fairly evident that we're in an unprecedented era. The past may no longer be a reliable guide to the future. But liquidity provision is one thing and productive demand another. I would argue that the world is already over-consuming and has been for years which is why financial repression hasn't worked. Instead of the intended effect we've had the opposite: the dollar is appreciating in value, the US trade deficit is contracting when it should have stabilised, the gulf between asset prices and current prices has widenend when it should have narrowed. A systems wide re-set is indicated.

Agree.

Which probably means US to continue as the benevolent hegemon for some time to come, perhaps with a reduced deficit due to China starting to implement their 3rd plenum reforms, consume more and export fewer savings. But that will no doubt take a long time.

With Germany's current (insane and irrational except for themselves) stance towards the rest of the EZ I cannot see much changing there in the near term. Unless of course the Euro blows up and they're forced out and to revalue. i.e. forced to change their surplus model. That's what I believe will happen eventually. But that also leans towards the US continuing its roll.

The only other feasible alternative is a supra-national 'institutional' response. Chances of that look even more slim than Germany choosing to inflate though. But something may happen which gives the G2,7,8,20 or whatever the kick up the ar5e that they need.

[R K]

PBOC Says No Longer in China’s Interest to Increase Reserves

The People’s Bank of China said the country does not benefit any more from increases in its foreign-currency holdings, adding to signs policy makers will rein in dollar purchases that limit the yuan’s appreciation.

“It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading range, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting. Neither Yi nor Zhou gave a timeframe for any changes.

China’s foreign-exchange reserves surged $166 billion in the third quarter to a record $3.66 trillion, more than triple those of any other country and bigger than the gross domestic product of Germany, Europe’s largest economy. The increase suggested money poured into the nation’s assets even as developing nations from Brazil to India saw an exit of capital because of concern the Federal Reserve will taper stimulus.

Yi, who is also head of the State Administration of Foreign Exchange, said in the speech that the yuan’s appreciation benefits more people in China than it hurts

http://www.bloomberg.com/news/2013-11-20/pboc-says-no-longer-in-china-s-favor-to-boost-record-reserves.html

[zugzwang]

PBOC Says No Longer in China's Interest to Increase Reserves

http://www.bloomberg...d-reserves.html

Hmmm.

Things are deffo not looking good for the world economy going into 2014.

US CPI:

Dow-Jones UBS commodity index.

Fresh all-year, multi-year lows:

[R K]

Hmmm.

Things are deffo not looking good for the world economy going into 2014.

Big picture is China no longer accumulating surpluses, moving to floating currency.

Huge.

[R K]

[/url]

George Magnus ‏@georgemagnus1 Read on US global role retreat. My take: can we ever have new world order w/o benign global hegemon?

£££

[R K]

Globalisation in reverse

http://time.com/39880/globalization-in-reverse/

Recent conflicts everywhere from Ukraine to the Middle East and the South China Sea remind us (as Robert D. Kaplan wrote in TIME’s March 31 cover story) that geography still matters, even in a globalized age. Politically, the world is certainly not flat. New economic figures show how increasingly rocky our world is becoming economically too. Globalization is often defined as the free movement of goods, people and money across borders. Lately, all of those have come under threat–and not just because of sanctions limiting travel and the flow of money among Russia, the U.S. and Europe. Over the past two years, global trade growth has been lower than global GDP growth. It’s the first time that has happened since World War II, and it marks a turning point in the global economy, with sweeping implications for countries, companies and consumers.

With global economic integration seemingly in reverse, at least for the moment, many economists and trade experts are beginning to talk about a new era of deglobalization, during which countries turn inward. Some of the implications are worrisome. Complaints to the World Trade Organization about protectionism, intellectual-property theft and new trade barriers are rising. Trade talks themselves are no longer global but regional and local, threatening to create a destructive so-called spaghetti bowl of competing economic alliances.

Yet deglobalization isn’t necessarily all bad. As U.S. Trade Representative Michael Froman said at an economic summit in Washington recently, it also “means companies are looking at their extended value chains, supply chains, and deciding whether they want to move some production back to their home country.” That’s already happened in the U.S. A study by the Boston Consulting Group found that 21% of all manufacturing firms in the U.S. with $1 billion or more in sales are actively reshoring, and 54% say they are considering it.

[oracle]

The Euro is a Bancor currency, it can't yet assume the role of global reserve currency, doubtful it ever will. Nor can the yuan, since China is running a permanent current account surplus. The yen might conceivably fulfill the role now that Japan has hollowed out and become a net importer, but nobody wants to own Japanese govt bonds and the economy appears close to terminal collapse under the weight of its geriatric burden. SDR basket? You're having a laugh. Solves none of the outstanding problems, may even create a few of its own. Which leaves the dollar, unchallenged. Sadly, after five years of ZIRP and QE, the debt-bloated, state-cartel rentier skimming status quo appears incapable of reviving the world's economic fortunes. A Second Great Depression looks as inevitable to me today as it did when I joined this site in 2007.

part of the problem we have is the chronic imbalances between the major surplus and major deficit countries.,

....some of the defecit we have has been brought about by sheer spitefulness of some other countries by the way( remember that hitler said if he could not do it militarily it would be done economically....well SOMEONE has been reading the playbook)

even down to same news reports on endless loop, endless property shows etc etc, this is EXACTLY out of the fascist(and leninist) handbooks on how they handled their citizens..

....and frankly it's not on.

it's not conspiracy theory, it's conspiracy fact.

...but we must also share some of the blame for electing lousy politicians who have not resisted this...in fact quite a lot have been bought off and are willing accomplices.

we can turn this around, as long as enough people wake up and stop being anaesthatised by X factor.

[R K]

http://www.ft.com/cms/s/0/901e906c-97da-11e5-9228-87e603d47bdc.html?ftcamp=published_links%2Frss%2Fmarkets%2Ffeed%2F%2Fproduct

long journey, first step etc etc

[Killer Bunny]

Think about Iran and Israel. Maybe if Iran had nuclear weapons Israel wouldnt be such a shitty neighbour in the middle east. A nuclear Iran would restore a balance of power.

F'g t0sser and I don;t care if my account is closed as a result.

It's the only democracy in the ME. It is terrorised every f'g day by racist pr1cks like you but you don't want to know that. F'g t0sser. Muted of course.

The media never shows what Israelis go through EVERY SINGLE DAY. Look at @capitalistsUK and from time time s/he gives the reality.

No Western country would accept what they put up with but they have to bcos noone helps them. The media alters everything about Israel.

Edited December 1, 2015 by Killer Bunny

[Errol]

Multipolar world with no single power dominant. That's where we are almost at now.

War is the only alternative, as Russia, China and others will not accept a US hegemon in any form. The US will either concede that the hegemon is over (including the grotesque abuses of the dollar system) or it will try to defend its position. War will be on the only logical outcome if the US refuses to accept the inevitable. And I mean a war initiated by the US (and many believe this started some time ago).

Edited December 1, 2015 by Errol

[Errol]

PBOC Says No Longer in China’s Interest to Increase Reserves

http://www.bloomberg.com/news/2013-11-20/pboc-says-no-longer-in-china-s-favor-to-boost-record-reserves.html

Note the restriction to 'foreign currency holdings'.

They are still buying gold hand over fist. In ludicrous quantities.

Edited December 1, 2015 by Errol