Did Russia Intentionally Trigger A Monetary System Reset? – Silver Doctors

Within the new system, international locations which provide the world with items can have the ability to implement commerce settlement in gold or…

by Dave Kranzler of Funding Analysis Dynamics

“We’re witnessing the beginning of Bretton Woods III – a brand new world (financial) order centered round commodity-based currencies within the East that can possible weaken the Eurodollar system and in addition contribute to inflationary forces within the West.” – Zoltan Pozsar, Bretton Woods III

Fiat forex is a “promise” to repay a debt obligation and nothing extra. A tough asset-backed forex is a assure that compensation will happen.

On March seventh Zoltan Pozsar, who previously labored on the NY Fed, was an advisor on the U.S. Treasury and at the moment is a strategist as Credit score Suisse, printed a analysis report titled “Bretton Woods III.” Anybody aware of the Bretton Woods settlement understands the reference. Nixon’s snipping of the ultimate thread connecting forex to gold is taken into account to be Bretton Woods II. Pozsar makes the case that Bretton Woods III is a reversion again to a financial system by which forex is backed by commodities versus being backed by a sovereign issuer’s “full religion and credit score.”

A disaster is unfolding.  A disaster of commodities. Commodities are collateral, and collateral is cash, and this disaster is concerning the rising attract of outdoor cash over inside cash. Bretton Woods II was constructed on inside cash, and its foundations crumbled per week in the past when the G7 seized Russia’s FX reserves. – ibid

The post-1971 fiat forex reserve banking system enabled by the removing of gold from the financial system is nothing greater than a Ponzi scheme. “Inside cash” refers back to the interbank repo/lending mechanism from which the fractional financial institution reserve financial system blossoms. Pozsar distinguishes “inside cash” from “exterior cash.” “Inside cash” is created by the Central Financial institution/inter-bank lending mechanism that may magically flip one greenback of reserve capital in to 9 {dollars} of “credit score” capital. And the one greenback of reserve capital is backed by nothing tangible – simply the “full religion and credit score” of the issuing entity.

Consider this financial system as an inverted pyramid – eg one thing like Exter’s Pyramid.  In chapter legislation, “full religion and credit score” can be thought-about, at greatest, an unsecured mortgage.  Get in line and pray that there’s worth left over to be distributed to the unsecureds.

In distinction, Pozsar references Bretton Woods III because the “rising attract of outdoor cash over inside cash,” the place “exterior cash” is “commodities collateral,” that means tangible belongings for which definitive worth will be decided, versus the sovereign promise of “full religion and credit score.”  In durations of banking crises, banks are reluctant to take part within the “inside recreation” (see 2008 and September 2019, for example) as a result of, at that time limit, they don’t belief the fiat forex collateral on which the fractional reserve banking system is based and thus are reluctant to lend cash to their banking friends. Each time this happens, the Central Banks need to print more cash to “lubricate” the system sufficient in order that it features. This in flip additional devalues the “inside cash” on which the system is based.

But when forex issued by Governments and printed by Central Banks is backed by exhausting belongings, this downside is averted. On this system, the counterparty to commerce or financing transactions would have the choice of demanding fee within the exhausting asset or belongings backing the forex – most probably gold or probably a pre-agreed upon commodity asset. Keep in mind, fiat forex is nothing greater than an unsecured debt instrument of the issuing entity.

It’s possible that Putin knew forward of time that the west’s response to Russia’s invasion of Ukraine can be to freeze Russian forex reserves held at western Central Banks. In fact, this response by the U.S./west delivered to gentle the inherent Achilles’ Heel of the trendy Central Financial institution fiat forex reserve system. Any nation that retains forex reserves for commerce settlement functions at overseas Central Banks, particularly the Federal Reserve and the ECB, is susceptible to having these reserves confiscated, thereby rendering them nugatory.

In response, Russia is now demanding fee for vitality in both rubles or gold from what it deems to be “unfriendly” international locations. Whereas within the “inside cash” banking system, settlement of commerce is merely a matter of accounting ledger changes on the respective Central Banks, on this commerce settlement association, a rustic buying oil or fuel from Russia in alternate for gold would want to 1) exhibit that the gold getting used for commerce fee really exists and a couple of) switch the possession rights to Russia. Russia in the end would possible demand repatriation of the gold. The U.S./G7 made it crystal clear that possession of belongings is 100% of the legislation.

The response by the west – led by the U.S. and its management of the worldwide reserve forex – in all probability has triggered a reset of the worldwide financial system. I really don’t just like the time period “Bretton Woods III” as a result of it references an settlement which, in its essence, destroyed the gold-backed world financial system. Regardless, it seems for now that Russia – possible with China’s tacit help – has set in movement a world financial system reset. Within the new system international locations which provide the world with items which have worth inelasticity of demand – oil, pure fuel and meals commodities, for example – can have the ability to implement commerce settlement in exhausting currencies – e.g. gold or different exhausting belongings – somewhat than fiat forex Central Financial institution accounting ledger changes. That is the character of the financial system reset that has been triggered. Welcome to Galt’s Gulch…

“Cash is the barometer of a society’s advantage. While you see that buying and selling is finished, not by consent, however by compulsion–whenever you see that so as to produce, you have to get hold of permission from males who produce nothing–whenever you see that cash is flowing to those that deal, not in items, however in favors–whenever you see that males get richer by graft and by pull than by work, and your legal guidelines don’t defend you in opposition to them, however defend them in opposition to you–whenever you see corruption being rewarded and honesty changing into a self-sacrifice–you might know that your society is doomed. Cash is so noble a medium that’s doesn’t compete with weapons and it doesn’t make phrases with brutality. It is not going to allow a rustic to outlive as half property, half-loot…

…Gold was an goal worth, an equal of wealth produced. Paper is a mortgage on wealth that doesn’t exist, backed by a gun geared toward those that are anticipated to provide it. Paper is a verify drawn by authorized looters upon an account which isn’t theirs: upon the advantage of the victims. Look ahead to the day when it bounces, marked, ‘Account overdrawn.’” – Francisco’s Cash Speech, Atlas Shrugged


Leave a Reply

GIPHY App Key not set. Please check settings