Gold and Monetary Statecraft: What’s Coming Next

Gold and Monetary Statecraft: What’s Coming Next


Sections

  1. Currency Statecraft
  2. International Statecraft: Trade or War
  3. Bitcoin’s Role in 40 Years
  4. Domestic Statecraft: CBDC, MMT, and You
  5. The Computer Chip is Energy and Money
  6. Multipolar Monetary Rebalancing
  7. Neo-Keynesians and Gold

 

…which is why Bretton Woods III is destined to happen. It’s already happening, and we will explore the Bretton Woods III topic in detail in our upcoming dispatch: War and Currency Aug 24, 2022- Z. Pozsar

Powell’s Jackson Hole speech was a macroeconomic bell being rung in a structural storm for us. Heard in context of what Zoltan Pozsar has been saying since February brought forth this short note on what we think Pozsar meant when he said his next post will be about Currency Statecraft.

The following is a 10,000 foot view trying to tie together the concepts heard, learned, and experienced into an outline of what we think will be the unspoken part in Pozsar’s next “dispatch”.

 

There will be a monetary standard that includes natural resources. It will be launched first by the East if they have their way. The West knows this is coming, and seeks to delay it or destabilize it as long as possible at least until it gets its own house in order. The West will then (depending on the timing and success of the East) launch its own alternative to: prevent the East from exporting inflation to the West, facilitate trade with nations ( like India) with one foot in both camps, and to trade with Eastern countries despite differences. Plus many other things not thought of yet. All of this will be fashioned after Mercantilist/Protectionist policies designed to maximize export of finished goods and minimize import of same.

The West’s version (in)famously referred to as Bretton Woods III now, will be used for international trade initially like an SDR basket, especially between countries that are “unfriendly” to each other. There will also be a mechanism loosely tying it to domestic fiat currency somehow.

To the extent that mechanism fails, money will be split into two components: Store of value (for international dealings) and Medium of exchange (for domestic civilian transactions) Continues…

Bitcoin, if it survives, will at least be a growing tool for bridging gaps between unfriendly and perhaps clandestine international deals. It will also be a tool of economic warfare as countries will accumulate strategic reserves much like oil. It will be protected like oil, and used like gold as currency at the CB level of last resort. It will almost never be adapted publicly by the world ( they can’t admit it’s perfect like they won’t ever again admit Gold is perfect) as there will be nations accumulating it and can weaponize it much like the Dollar or any other reserve fiat currency controlled by too few hands.

Much to the chagrin of many, ourselves included, MMT has not “failed”. It is the logical next step in the West’s derisive view of money as a store of value since 1971. Therefore, the tenets of MMT will continue to be repackaged and presented to the public despite the resurgence of real assets, shortages of good cross border collateral, and desire for harder money. To not do so would undermine the West’s philosophy and monetary premise assumed since the enlightenment.

Multipolar Monetary Rebalancing…

MMT will manifest in many ways; chief among them will be a drastic increase in fiscal spending and the heavy use of rising interest rates to counterbalance the ensuing inflation. They don’t have to call it MMT. But it is what they are doing anyway. Pozsar implied as much. To paraphrase: The era of easy money and tight fiscal with disinflationary tailwinds are over. The era of fiscal spending and monetary thrift with inflationary headwinds are upon us.

To be clear, MMT is not what Pozsar implied. MMT is about ignoring Monetary policy and only using Fiscal

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