U.S. Trilogy: debt-based dollar and economy, stablecoin digital currency, BRICS new world.
Stock-Markets / Global Financial System Aug 10, 2024 - 02:54 PM GMTBy: Raymond_Matison
Debt-based dollar and economy
Over a century ago the United States Congress approved a deceitfully promoted Federal Reserve Central Bank, which then established a new debt-based monetary system. Its concept of creating and introducing ever more currency into a country which had little debt, initially worked well to create economic stimulus at the time, and currency available to participate in WWI and WWII. That stimulus also bought forth the wild market speculation of the 1920s, the necessary precursor for tightening of credit and the Great Depression. Outlawing citizen ownership of real money (Constitutionally designated as gold and silver coins) in 1934, it required citizens to turn in their gold coins to banks, which were complicit with government to steal money from citizens as gold was then revalued by from $20.63 to $35.00 an ounce.
After WWII, America emerged as the largest holder of gold in the world, and international currencies were backed in 1944 by the dollar, as the dollar was promised to be backed by gold. That promise was broken in 1971 as the United States closed its gold exchange window to foreign countries holding dollars, thereby violating its international promise, and short-changing all foreign country dollar holders. In consequence, a short period developed where unbacked U.S. dollar debt obligations were not readily accepted in international debt markets, and proceeds had to be guaranteed to be paid in Swiss francs.
By 1974, America had made an agreement to militarily protect the kingdom of Saudi Arabia, if it would sell its oil only in dollars to all buyers, and invest its excess funds into U.S. Treasury securities. This insightful U.S. move established the “petrodollar” and increased global demand for dollars, reestablishing the dollar as the global trade and investment currency of the world. Fast forward fifty years, and Saudi Arabia has declined to extend its original fifty-year agreement, exposing an unbacked dollar once more to market dynamics.
As the debt and its servicing requirements grew over decades, America reached a point where additional stimulus did not produce sufficient economic growth, and during the last decade increasing debt has produced the awakening and reality that our national debt not only can never be paid off, but it requires additional borrowing just to service the interest on this debt. If one is to add the unfunded liabilities of America’s social and other programs to the official debt, the numbers convey a frightening story of a truly bankrupt nation.
Consider that you are an investor buying a debt obligation of an industrial company for the purpose of it providing you with income for living expenses, or a company pre-funding for a large industrial multi-year project. Your original bond investment held a AAA rating and has been generally highly regarded. Several years pass, and this company starts to continually issue more debt - with some of the proceeds now being used to pay interest on your bonds. How do feel now about the changed circumstances of your original bond investment? Would you buy more of this company’s debt? Should foreign countries buy more of this debt, or sell their present holdings - as they seem to be doing? What if the bond issue is actually U.S. government debt, issued to pay interest on previous debt, and to borrow even more? How good is government’s “full faith and credit” to repay - in light of the above previously-cited historical events? Should foreign investors support an effort by aligned countries to develop a new monetary system which forecloses the opportunity to confiscate savings through persistent inflation and the broken promises of debt-based money?
Over the last twenty years interest rates on debt have been very low or essentially near zero per cent, and negative - that is confiscatory, when adjusted for inflation. Thus, all banks, insurance companies, endowment funds, and Social Security for two decades have not been earning adequate interest on their investments to fund their very real liabilities. Now compound this dilemma with the recent, and historically most rapidly rising interest rates of the last few years, which renders all previous purchases to substantial unrealized market losses, and the compound effect of these two dilemmas has risen to crisis proportions.
In the wake of this financial destruction, banks and insurance companies will fail. Social Security payments, despite real ravaging inflation, will have to be reduced. Indeed, all international banks which hold U.S. treasury bonds have huge unrealized losses, and are at risk of creating a world-wide bank crisis and failure. As a result of a banking crisis, credit availability to business and industry will be dramatically reduced - becoming a catalyst to a more rapidly contracting economy. The contracting economy will reduce jobs and incomes, and raise mortgage and other credit related defaults and bankruptcies. Ultimately, the debt-issued unbacked fiat currency will lose faith of its citizens, and this currency accelerates its decline into a collapse. Since the “decline” part has been ongoing for decades, the “collapse” part could be quite abrupt; and with the Sandman project including about 150 countries whose project is to jointly dump the dollar at one time, and the BRICS alliance countries to develop their own payment or money system, it could be very abrupt.
For decades banks have professed gold as a nonfinancial metal, and accordingly, have discarded it for dollar issued treasuries which earn some interest. In 2019, the central bank of central banks (Bank of International Settlements) elevated gold to a Tier 1 asset, comparable to the dollar; as a result, banks and countries have recently been buying gold in quantities which exceeds the industry’s annual mining capacity - reigniting the fundamental truth that gold is better and more reliable money than any paper currency. Indeed, the growth in the price of an ounce on gold over the last decade from about $1100 to $2400 does not signify an increase in the value of gold, but rather a decline in the purchasing value of our fiat currency. Based on its CPI, even using the FED’s own “adjusted” numbers, the purchasing value of our dollar since 1971 has declined by 87.3%.
The only remotely positive economic effect in recent years has come from the irrepressible advance of technology. At the time of our 2008 recession, far-sighted information technology, systems engineers and programmers were plotting as to how to make electronic payments as easy as sending emails, and electronic money un-inflatable. This means that banking functions could be transacted without the loss in value of currencies and absence of bank intermediaries – making most bank functions obsolete, disintermediating banks.
Last week Mr. Jerome Powell, chairman of the Federal Reserve, in response to a congressman’s question if “eliminating the Federal Reserve is best for promoting economic stability responded “yes”. The coming
transformation of our debt-based fiat monetary system to an asset-backed digital, permissionless blockchain system on a distributed ledger, that is available to all citizens would also limit government’s power to issue its inflatable currency and to “borrow” wealth from savers for distribution to non-savers, war, and other government projects will be profound. This new innovative technology-driven and asset-based monetary system is to become the foundation for a new world economy – often cited as the fourth industrial revolution.
Stablecoin digital currency
The use case of digital assets for the world’s several billion people either unbanked or under-banked is easy to see, as people can conduct business, pay and get paid where banks would find it unprofitable to set up branches. Indeed, this digital-payments system already has provided unimaginable opportunity, and made a huge improvement in the lives of millions of people. But the ability to pay for trade or other transactions without the trusted middle-man of a bank raises valid fears of collapse of a large portion of the banking industry. Individuals being able to self-custody assets, instead of keeping them at a bank or a stock broker with centralized control is frightening to bankers, custodians, and government, who since the foundation of our central bank in the last century have controlled the nation’s wealth.
In order to build this new monetary system, present world assets must first become tokenized such that they can be used on this new financial platform. The few companies which demonstrate a proof of concept regarding desired services such as tokanization will be rewarded with a social following and rising token prices, but to become viable for the world, the eco system must become interoperable between a multitude of different country markets and platforms. This infrastructure is being built out presently, and as soon as it is viable, the world will embrace this transformation to the Web3 global multichain interoperable monetary system.
A simple parable for comparison is to consider the then high-tech goal of the 1850s, when investors sought to complete America’s inter-continental railroad. Rails were being built from both coasts, which took years, but until the last spike was driven connecting these rails no trains traversed the continent, and few of the envisioned profits could be realized by investors. The rails are being currently built for the global electronic payments web, and its efficiencies and profits will come as these rails are completed. This also means that the more significant adoption of this technology is yet to occur.
Initially, it required knowledgeable computer technicians to acquire Bitcoin and other computer platform tokens, which generally provide some valuable asset, or useful computerized service. The subsidiary issue was to provide a means to convert fiat money to digital assets, and digital crypto tokens to some nation’s fiat currency. In order to remain relevant, some governments and banks are scrambling to drastically suppress current digital asset markets, and to devise a means to control the populace as it tries to escape the destruction of their present debt-based currency. Domestically, that government effort thus far has been supported by SEC’s regulation by enforcement, intimidation and lawsuits, rather by clearly established rules. Members of Congress bought off by the banking industry are fear mongering about criminal crypto activities and customer losses in the billions to prevent adoption, while the banking industry itself is paying billions in fines for money laundering and other criminal activities. Such unfortunate influence is off-shoring a considerable part of these new activity developers to more rule-friendly jurisdictions overseas, thereby denying these growth and development activities and job opportunities to Americans.
In order to retain financial control over the global plebs, central banks around the world seek to issue a Central Bank Digital Currency (CBDC), which has the worst attributes of debt-based currency. This currency can be programable, potentially denying the use of their funds to libertarians and other freedom loving opponents of intrusive or overbearing government policy. Fortunately, it appears that many politicians are against such draconian money control, and therefore, the country may be spared this indignity. However, since over 100 countries world-wide are researching the potential use of CBDC’s it is too early to predict how political tides will ultimately shift, particularly subsequent to a coming global financial crisis.
In the interim, American politicians are promoting stablecoins, a digital token which is backed 100% by the U.S. dollar. Such tokens may be issued by private companies who are strictly regulated, and whose reserves are frequently verified by audit. The stablecoin is an effective on/off ramp to the digital assets space, and given their volatility, it is quite welcome by those dealing in crypto. In addition, stablecoin issuers can sop up the trillions of dollars held in foreign accounts, which are increasingly likely to soon repatriate to the U.S. Thus, our government and banking system regulators sees this as useful, suppressing inflation. The downside to its users is that the “stablecoin” will be only as stable as the underlying currency, which in the dollar’s case could itself be quite unstable.
The currently largest and somewhat infamous stablecoin is called Tether (USDT) which has tokens and dollar backing amounting to about $112 billion. Since it is currently the largest stablecoin issuer, U.S. regulators have been trying to control and regulate it. Failing to control it, news media has been fear mongering its use, even as it has grown in global acceptance from roughly half its size to the present in just one year. Unfortunately for U.S. regulators, it is a Hong Kong based issuer who arguably is not required to follow U.S. law. It brings into conflict the principle whether dollars sent into and around the world can be controlled or regulated by U.S. agencies extraterritorially. It also brings into focus the reality that digital assets have no national boundaries, as one nation’s tokens can be sent to any country around the globe. In other words, the new tokenized digital asset revolution will require a more permissionless legal environment, which nearly all governments oppose – in order to control their citizens.
To bring new pressures to bear on USDT, Congress is now promoting U.S. issued stablecoins, as Europe already has passed specific regulations. Company Ripple, which has a token called XRP has announced that it will soon issue a stablecoin called RLUSD on its blockchain. Ripple was sued by the SEC, claiming that it and XRP was an unregistered security; however, it appears that the SEC has lost this suit, and instead Tether is to have local, legalized competition to reestablish more control of a U.S. dollar-backed stablecoin. But any stablecoin backed by any paper currency will be at a disadvantage to any other stablecoin backed by a real commodity asset.
Ever since dollars have become a global currency, and have been off-shored to foreign banks, foreigners will continue to use their dollar platforms that have been established in their part of the world. Such countries are also free to establish a credible token backed by gold, oil, or yuan. In that context, reflect on the fact that the U.S. and other western countries will issue its stable coin backed by the dollar, Euro or their own currency such as the pound, while other countries opposing the dollar currency will likely issue their stable coin backed by a commodity asset, as opposed to issuing a stablecoin with an unbacked inflationary paper currency. If any competing stablecoin will be underpinned by real assets, then a stablecoin backed by the U.S. dollar, or any other unbacked paper currency will become weak by comparison - over the longer term.
What makes a stablecoin weak if backed by any government’s currency? The most obvious indicator is the ratio of a country’s debt to its GDP. Economists Carmen M. Reinhart and Kenneth Rogoff in their book “This Time is Different” published in 2009, state (p. 21) that “Ultimately, default often occurs at levels of debt well below 60 per cent ratio of debt to GDP enshrined in Europe’s Maastricht Treaty, a clause intended to protect the euro system from government defaults”. Today, the ratio of debt to GDP of all countries in the European Union is above 100 per cent; while that for the U.S., supposedly issuing the strongest and safest currency in the world is a staggering 130%. By what could be a rare or even forbidden comparison, a number that we never see cited, is that the ratio of debt to GDP for our much-maligned and sanctioned “enemy” Russia is just 22 per cent. In the very near future, many stablecoins will be issued by centralized governments; which one’s will you buy – those backed by currencies or those backed by assets?
We should embrace no illusions that currency-based stablecoins or CBDC’s will somehow alleviate the repatriation of our foreign dollar ocean of currency coming back to the states, a grotesque national debt problem with a destructive effect on the value of our currency. The proverbial dollar currency goose is cooked, we are only debating as to how to serve it to the public.
Societal morality inversion.
Various groups have been planning the future direction for humanity; for example, about two thousand of the world’s most successful business people meet in Davos, Switzerland every year to determine their plan for humanity’s future. These World Economic Forum business leaders have concluded that the world should no longer use oil as a source of energy, thereby denying contentious energy producing countries revenues and financial influence, and that people should eat bugs, own nothing, and be happy. Leaving aside the question as to who it is that will then own everything, it does not seem like a desirable vision for humanity.
In another part of the world, nearly 21,000 people representing 139 countries concluded their meeting in June in St. Petersburg, Russia. Their discussions included strategies to finally escape or get rid of the last
vestiges of military and financial colonialism practiced by western nations such as Great Britain, France and other European nations, and the United States. These countries were also discussing how to minimize the influence of the U.S. dollar, and reduce its financial disadvantages and oppressive conditionalities of the World Bank and the IMF loans, unfavorable interest rate fluctuations, and adverse Forex market currency manipulations. They are interested to determine how the people of different civilizations, including a multitude of small and emerging economies may work together to benefit everyone.
In its decades of global leadership, the U.S. has wielded its power unsparingly, but generally has been careful to note that it is not acting alone, but on behalf itself and its allies. Who exactly are America’s allies? Among them surely is England and some of its former colonies such as Canada and Australia, then Germany and other countries of Europe, and Japan and South Korea. Many are formerly conquered nations, where America still has considerable military bases, or significant financial influence. So, are these nations truly allies, or are they really U.S. vassals doing America’s or Britain’s bidding? Britain still has considerable influence on American geopolitics through the Council of Foreign Affairs from which many of our elected or appointed top government officials are selected. In addition, it has recently become clear, that Israel, another U.S. ally through AIPAC (American Israel Political Action Committee) and its generous support to individual politician election funds sway power over Congress. Vietnam, a recent purported U.S. “ally” has recently hosted president Putin, much to the dismay of our government. Did the Vietnam people forget or forgive our long destructive war in Vietnam five decades ago? How is it possible to go from a hated enemy to being considered an ally?
We should hold no illusions that we live in a benevolent republic, as originally set up in America by its founders and revolutionary war against England. A study by Princeton and the Northwestern University conducted in 2014 analyzed years of Congressional legislation, and determined that we live in an oligopoly. That is, wealthy corporate unelected leaders control our elected politicians who in turn pass laws and legalized policies benefiting these overlords. Regardless of the political party or political system, they control government not voters.
So, the real basis and motivations of American geopolitics and foreign policy actions can be actually quite complex, obscure, unclear, and unpredictable. In our quest to remain the leading global power, we will likely use any and all strategies to continue our dominance. Therefore, we will only learn if our purported allies are real, after they too have a chance to become truly sovereign, or join BRICS without having their countries destroyed by sanctions, financial machinations, or covert regime change. America, of course, counts many more allies, including Saudi Arabia, India, Mexico, the Philippines, and many others. As the BRICS alliance grows, we will finally be able to determine in the next few years which countries are true allies of America, rather than its chimeras.
One common dominance tool that America has used repeatedly is to sanction other nations. To announce a sanction is really to confirm the start of an economic war against that nation. Sanctions cannot directly or effectively target the military, but targets all ordinary people, so that from their pain people will rise up against their own government, cause political change which will benefit the sanctioning nation. But sanctions also strengthen the determination of oppressed people to develop solutions, while hostility grows against the sanctioning nation. Currently, western European nations are nearly united with America in sanctioning Russia, even as these sanctions appear to be hurting Europe more than Russia. China, Russia and Iran have been sanctioned by the United States; now these countries are partners in the world’s largest non-western alliance (BRICS). The sanctions have not worked. The U.S. cannot militarily fight any one of these countries and guarantee a win, and to suppose that the U.S. could militarily engage all three countries and win – is just not credible.
For decades, the U.S. has also been fighting wars in other nations, dictating approved behavior for other countries. It has justified its actions on the basis of human rights, morality, and democracy, often fighting against formerly communist regimes or an imaginary immoral or otherwise degenerate enemy. But let us review some recorded history; author Caroline Elkins in her book “Legacy of Violence” published in 2022, details how the British Empire used violence to lord over their empire for over two centuries. Author Lyndsey O’Rourke in her important book “Covert Regime Change” published in 2018, lists sixty-four attempted events of U.S. agencies to overthrow foreign country administrations between 1949-1989 – most of which were attempted to prevent the spread of socialist or communist governments during this period. Sixty-four attempted covert regime changes?! This courageous author, because of the sensitive nature of the subject, can only write what is declassified or otherwise permitted, but read the book. All of this effort supposedly just in the name of freedom and democracy, and against socialism, Marxism, and communism?!
The author notes that “The end of the Cold War did not mean the end of American aggressive pursuit of regime change”. This writer is not aware of a sequel book detailing the complete list of regime changes since 1989, but here are some singular events: super forecaster and author Martin Armstrong in his book “The Plot to Seize Russia” published in 2023 exhaustingly details how in 1990 that country was an active “takeover” target. Kazakhstan is a fabulously rich nation in natural resources such as oil and uranium, whose location is key to completing China’s Belt and Road project. In 2020 there was a violent coup in progress, when its government asked Russia to send a peacekeeping g force to quell the riots. When Pakistan would not support U.S. condemnation of Russia’s war in Ukraine which is trying to keep Ukraine from joining NATO and keep its missiles from the Russian border, Pakistan’s president was suddenly removed and jailed through “popular revolt”. This year, after Bolivian president visited Russia’s president Putin, and spoke at its economic forum, and expressed interest in joining BRICS, president Luis Arce faced an unsuccessful military coup. America’s unflinching monetary, military, political, and satellite intelligence support to Ukraine may be seen as the second real plot to seize Russia, to break it apart and plunder its vast natural resources. Saudi Arabia’s government denies that an assassination attempt on the life of Mohammad bin Salman took place in May 2024, despite some private videos to the contrary posted on the internet. One can rationalize such an attempt as the petrodollar agreement was not extended. Must be those pesky Russians or Chinese who are to blame.
The U.S. is currently sacrificing Europe in order to attempt maintain its global hegemony; Europe may not yet fully understand this, and therefore is on board to continue the Ukraine war to weaken Russia. The strategic plan is simple, and has been utilized many times throughout history. The balance of power principle requires cutting down to size any country which could become a challenger to the then present hegemon. A Europe working harmoniously with low energy producer Russia could become a dangerous economic challenger to the United States. Therefore, getting Europe (NATO) involved in Ukraine’s war with Russia weakens both, which maintains U.S. power without creating casualties - is a great visionary, if unethical, strategy. Blowing up the Nord Stream pipeline was simply a rational and necessary target to achieve desired results.
As the U.S. and its allies are providing weapons to Ukraine, Russia has decided to reciprocate and will now also provide weapons to its allies, who arguably could confront the United States or belligerent NATO nations. Thus, Russian weapons in Belarus would concern NATO, weapons and technology to North Korea now will concern America’s military in South Korea and Japan, while the dangers of rockets in Cuba are obvious. The escalation of conflict stems from its original requirement that the United States simply honor its commitment of “not expanding one inch towards the East”, which is now sliding towards a serious global and possibly nuclear confrontation.
It appears that the last two world hegemons, Great Britain and the United States, used military power and financial guile to dominate over billions of people, while broadcasting a message of democracy, freedom, financial integrity, peace, escape from poverty, and the purity of their purpose. Main stream media has supported this message to a largely trusting, uninformed public. However, books and internet articles corroborate a shameful inverted morality, quite different from that declared by government and controlled mass media.
And lastly, we are confronted with our Secret Service established to protect presidents. They select the best, brightest, and most committed to this task, and provide the best training possible based on theoretical and historical real events. They include marksmen that could hit a grapefruit at one thousand yards, and shoot through a strawberry at 140 yards. They are familiar with the radius of the danger zone that has to be secured. Somehow a mistake is made which allows an assassin to move within one hundred forty yards and avoid security confrontation, while at least three different individuals see the assassin with a rifle climbing a roof, and alert security officers. These mistakes are then compounded when the Secret Service marksman rather than wounding, incapacitating, capturing, and interrogating this person, and having the nation learning about his accomplices instead kills him to forever burying the greater truth. It is professed that the assassin acted alone. Really?
Our society is so morally inverted, that our political leaders protect a physically age-infirmed and mentally confused president, ignoring our constitutionally constructed safeguards. This president has committed our nation to a long and costly proxy war in Ukraine, who still arguably has control of our nuclear codes that could start a nuclear war, endangering or destroying the whole of humanity. In contrast, these leaders or their supporters are publicly encouraging physical harm to a former president who has publicized that if he were elected, he would stop this war before he takes office. According to John Adams, one of our Founding Fathers, stated, that the United States Constitution was designed specifically for a moral and religious people. He noted that the Constitution is not adequate for governing any other kind of society. As our society becomes less moral and religious, it then should not surprise us that our society has become less governable.
BRICS new world
In 2006, BRIC nation foreign ministers representing the founding countries Brazil, Russia, India, and China first met to consider improved economic ties, reform the IMF, and establish a new reserve currency. As South Africa was added to this list of reformers, it became to be known as the BRICS alliance. In 2015, this author penned an article entitled BRICS, No CRISIS (See: http://www.marketoracle.co.uk/Article53009) which is still relevant today describing its plans, concluding that these CRISIS nations - by reordering the BRICS acronym in the order of their most powerful nations (China, Russia, India, South America via an expansion from Brazil, Iran which had expressed interest then in joining, and South Africa representing the larger African continent) by joining together would become the basis for a political and economic crisis for the West. In 2023, the nations of Saudi Arabia, United Arab Emirates, Egypt, Iran and Ethiopia were invited and joined the BRICS alliance.
Credible sources cite that there are now an additional 59 nations interested in joining this alliance in 2024. Regardless how many nations are actually invited to join this alliance, it is now understandable that the potential for a rapidly expanding BRICS is now a veritable economic and world order crisis for Anglo-Saxon nations, Europe, and the West. A yet unknown number of countries will be invited to join the BRICS alliance this year. We can only surmise that of the presently fifty-nine countries interested in joining BRICS enough countries may be invited and join, such that this alliance will be more powerful this year than any other alliance on the planet. BRICS does not have to accept fifty plus countries seeking to join it in order for it to prove its growing acceptance and power. It suffices that it has so many countries interested in joining, or if it eventually accepts countries such as Turkey, Pakistan, Venezuela, and Mexico; the global financial, economic, and military power in the world will have shifted to the challengers.
Before BRICS, concerned rapidly growing non-western countries wanted more and fairer representation in the IMF; when that appeared to be impossible this alliance was formed, which has tried to reform IMF’s policies. Being blocked by the established western powers, the logical alternative was to escape western dollar dominance by reducing or abandoning dependence on the SWIFT money transfer system, and develop a system of payments independent from western control, which uses sovereign currencies of the countries involved in the specific trade and devoid of political pressure and sanctions or potential seizure of global reserve money. This payment platform will solve the dollar-controlled trade inefficiency and western control. To be clear, it is not the intention of these countries to destroy the current global financial system, but rather to escape it and its control. For these countries, it means greater financial independence in a multipolar world. To accomplish this, it is embracing the Bank of International settlements mBRIDGE system, which likely will use digital assets to make immediate international payments and settlement of diverse nation currencies. Its most recently announced plan to create a parliamentary system for the BRICS members will provide an important governmental structure to what started out as an economic alliance guaranteeing representation and political influence globally - yet no single country will dominate everything, with multiple nodal centers diversifying its joint power.
How does the U.S. Trilogy end?
If the global geopolitical contest could be reduced to the game of chess, it would become relatively easy to determine which side may lose, just from the positioning of their pieces on the board - even before many pieces are played, traded, taken or lost. Over recent decades America has demonstrated its ability and willingness to initiate military action, but largely without a satisfactory or desired resolution. This can be seen in the past with its inability to conquer all of Korea, its withdrawal from Vietnam, present status in Iraq, shameful withdrawal from Afghanistan, and current status of America’s proxy war in Ukraine. Further, looking at the global decentralized positioning of America’s forces, inability to recruit new members to the military, its declining manufacturing infrastructure, its overbearing national debt, global de-dollarization, falling increasingly behind digital asset legislation and adoption, defensive sanctions and tariffs against China’s technology, our failing educational system, and our social decay, one can easily come to the conclusion that America no longer has the winning position. There are still many moves to be played in this geopolitical chess game before it is over, and it will take years, but the outcome is clear. The American century of global financial, military, moral, and geopolitical leadership is over.
Presidential elections will bring some constructive economic policies, which will change the trajectory of our decline; however, they cannot change the ultimate results of our geopolitical chess game. For example, stimulus can help in the short term, but it cannot change the forbidding consequences of our national debt. Also, nothing and no one can reverse dollars and treasury securities returning from foreign shores, which will cause severe inflation, if not totally destroy the dollar. Regardless of what we do, the BRICS coalition will continue to grow bringing with it a parallel trade and governance system, which will also destroy the debt-based monetary system, and establish the blockchain asset-based monetary reform.
Just as the world transferred its global leadership over six hundred years ago from Portugal to Spain, to Netherland, to France, to England and to the United States, it is now being transferred to the next global leader – the multipolar BRICS coalition nations. With the level of global resistance today to the U.S. dollar and its institutions, it is reasonable to posit that America no longer has neither the ability to set global geopolitical policies, nor reverse the decline of the U.S. dollar, deter the advent of trustless blockchain international low cost and fast settlement time bank-disintermediating payments system, nor repair our global national indebtedness - regardless of which political party wins, or who may become president. Unfortunately, it is too late to reverse course, and we all will have to live through this quite unpleasant and perhaps painful and irreversible transition.
What does this all mean to the investment scene? Sanctions are increasing animosity between nations, and reducing trade. Reduced trade negatively affects revenues and earnings, and increases product prices. Less new debt will be purchased by the countries America defines as its enemies, raising interest rates and inflation. Therefore, government debt as an investment may not perform well and should be limited or avoided. As the world is transitioning to a new asset-based monetary system, investments in real assets such as gold, oil, and commodities seems advisable. Equity prices despite being overvalued can still temporarily rise as the dollar weakens, but when the economy freezes from inflated prices which consumers can no longer afford, the market has to and will drastically reverse. Eventually equity prices should recover, but it could take decades, as it did in the Great Depression. Investments in digital asset technology will remain risky, but carry a commensurate return - as adoption increases globally. Persistent attempts at government control of this space will make them highly volatile in price – until the disintermediation is completed. We are entering the BRICS new multipolar world era.
Raymond Matison
Mr. Matison was an Institutional Investor magazine top ten financial analyst of the insurance industry, founded Kidder Peabody’s investment banking activities in the insurance industry, and was a Director, Investment Banking in Merrill Lynch Capital Markets. He can be e-mailed at rmatison@msn.com
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