For over 50 years, the world has been moving toward globalization, working more cooperatively together.
But in the last two to three years, the world has stopped working together — it’s more fractured now.
Russia is trying to define itself as a serious global power. China’s trying to ascend to become the dominant global tech power. The U.S. is trying to hold on to its place as the dominant overall nuclear powered global power.
So, what we have today is an international world war for absolute dominion/power to make the rules for the next 50 to 100 years.
How is this new war game played?
With finance and global monetary policies advised by BANK OF International Settlement, World Bank, IMF and the UN/ NATO.
These big macro moves, they always take longer to play out than you think that they’re going to so we wont see the Big Picture unfolding within a year or two....oh no, it will take decades dearies, but unfold they will and in the process, hundreds of millions will die as they become collateral damage to this Great Game.
The key is to watch central banks and their strongest weapon...the gilt markets (goverment bonds). These government bonds and currencies are the bread and butter of governments — and governments are the most powerful entities in the world. They don’t just want to sit by and watch their kingdoms crumble to the ground.
And I think what’s happened the last couple of weeks in Britain has kind of shocked them into action.
In my opinion, this is just getting started. I think we’re gonna get into a sovereign-debt crisis, next. There’s no good decisions; there’s just less bad ones. So while we may have a couple of weeks or even a couple of months of calm after the last two weeks, I think it’s just getting started.
Don't be frightened but i believe entire countries will collapse, new countries drawn up, borders redrawn and communities uprooted before all these games these elites play are over.
In very simple terms, I think inflation is going to get much worse. I don’t think this is all going to play out over the next two or three months. It’s going to take at least 5 to 7 years, maybe more than that.
Can governments and society especially globally be able to withstand the coming category 5 storm?
Even now, at the very beginning stages we can see small European nations struggling to control their inflation level. They’re all facing, to a certain extent, popular uprisings, and populist far right policies are gaining traction. This is the elites great game, isn't it?
To reduce demand. To lower the population.
This is competition on a global scale — East versus West, nihilism of the West vs consumerism of the East.
This clash of civilisations is happening in front our eyes, folks. On one side,the U.S. wants to enforce its will. On the other, Russia wants to enforce its will.
And in all of this, China just wants to be left alone to do what she wants. ...which is to make money!
We’re getting to the point where it’s going to get decided.
I don’t think that will be next week, but over the next ten years, it’s probably going to play out. .and the winner in my mind, will be the country with the most impressive tech.
Power and Energy creation is the bottom line in this war, folks !
But I don’t think it’s going to be easy for anybody else,though. Especially small countries like ours who also happen to be major commodity exporters.
There is bound to be alliances made and broken along the way ...very similar to how Panama and the Latin America countries suffered through from the 60s onwards.
This is also why i believe locally Singapore will be the British Equivalent to that Tinker, Tailor, Soldier, Spy game that will ensue here in the future. 'Nuff said. Use your imagination.
Now back to the matter at hand...currencies and valuations...so, to get a better understanding of what’s happening at a structural level..... over recent weeks and months, the greenback has strengthened enormously against all the world’s other major currencies, from the pound and the euro to the Japanese yen and Chinese yuan — creating an increasing amount of chaos in financial markets, with Great Britain at the top of the list.
That in a nutshell is the entire problem.
We HAVE to use the US dollar for all our trade's.
For decades we have been trained to think in one currency — that being the dollar. And the reason is because, with the United States being the global leader, the global hegemon, they have the war machines to back their global reserve currency status.
So not only do we use the dollar for our local day-to-day business and purchases, but the dollar is also used throughout the world for foreign exchange base rate. So people outside the United States have grown up thinking in two different currencies. They understand things in their local currencies, but then they also conduct business and financings in dollar terms.
The reason the dollar has been getting stronger today is exactly that. And when the interest rate in America goes up, every hedge fund, investment house and pension fund rushes over to the US dollar for earning interest which makes their strength invincible....
These is where monetary policy makes its greatest impact. For more than a decade, but especially since the pandemic, all countries have been using the same basic policies to manage their economies: a mix of fiscal stimulus and low interest rates to encourage growth.
Under those conditions, the relative value of a currency comes down to the level of demand. And since the dollar is the global reserve currency, there’s just simply a lot more demand for dollars around the world than there is for euros or yen or pounds.
Like it or not, whether you think it’s appropriate or not, whether you think it’s sustainable or not, the fact is there’s an incredible amount of demand for dollars right now. There’s just no other alternative for settling debts around the world...which is why Brazil, Russia, India, China and African Nations want a competing reserve currency amongst themselves.
What I think has happened since the great financial crisis was essentially that, in order to bail out the world, governments and central banks around the world just flooded the market with new money.
In a world where capital can flow around the globe, it’s not so important who prints the money; it’s more important who captures the money — Everybody’s printing money, everybody is jolly well financing their debts in US dollar but the United States is the only one that has the reserve currency power..or the ability to print that currency.
And when you talk about strong international demand for dollars, you’re talking about, for instance, the global-market oil being priced in dollars. When other countries trade internationally, commodities are generally priced in dollars. So when a company in Japan buys soybeans from Brazil, it’s typically invoiced in dollars.
Not only that but countries all over the world borrow in dollars because there’s a greater demand for dollars on a global basis. But, only the US has the authority to print that dollar...can you see their strength now?
Overall, there’s an incredible amount of dollar-denominated debt outside the United States. This all works fine as long as the dollar stays at a relatively benign level. But as the dollar gets stronger, it becomes even harder for these other countries and these other international entities to pay back that dollar debt.
Think of it like this: Let’s say you live in the U.K. and you’re denominated in pounds and you take out $100 in debt denominated in dollars, and at the end of the year, you have to pay it back. Well, if the pound loses 10 percent versus the dollar over that time period, now you’re effectively having to pay $110 back rather than paying $100 back, right?
As that dynamic worsens, there starts to be a rise in global defaults. This again is ....at this point, unavoidable.
Once these defaults start to happen, it can have a knock-on effect, which creates more defaults and more financial volatility and more contagion. And now with global growth slowing, they are all hitting the wall — they just don’t have the cash to make those dollar-denominated payments that just keep rising in their local currencies.
That is why in my opinion a recession followed by a stagflation event will occur across the globe.
Let us see through a real-world example... in my calculation as early as Chinese New Year 2023 in some highly indebted countries.
Let’s use Europe as an example. Europe is in this energy crisis because of supply-chain issues, the war with Russia, all of these reasons.
Europe is now having a tough time getting energy. The energy they can get is increasing in price. So that in itself would be bad. But then consider that the dollar has risen close to 20 percent versus the euro over the past year — and remember, energy markets are priced in dollars. So not only has energy gotten more expensive overall, but for Europeans there’s a 20 percent kicker on top of it.
Now with everything getting more expensive, it is getting harder and harder to pay the bill. So what they’re doing is they’ll borrow more, and print more of their own currency to buy dollars and meet those payments.
But when they print more of their own currency, that just makes it lose even more value versus the dollar. Because more money must be accompanied by higher productivity not borrowings.
Throughout history, people typically don’t revolt when their standard of living is increasing, and they do revolt when it’s declining. So from a political perspective, these governments are having a hard time dealing with inflation because the population is upset about it. But governments almost always will choose to sacrifice the currency rather than sacrifice the bond market.
(Keep in mind the Federal Reserve is pursuing a very tight policy with the dollar right now.) This in turn creates even more demand for dollars. So credit is extended even more. The problem is once productivity drops, and credit available becomes more expensive, then the system can’t grow anymore.
Once the system cannot grow, that’s when you start to get these defaults.
As that dynamic worsens, there starts to be a rise in global defaults. Once these defaults start to happen, it can have a knock-on effect, which creates more defaults and more financial volatility and more contagion. And now with global growth slowing, they are all hitting the wall — they just don’t have the cash to make those dollar-denominated payments that just keep rising in their local currencies.
In the end, a government and central bank can’t save both the currency and the bond market. Ultimately, they’re going to have to choose one or the other.
The big political consideration is that when inflation is high, that’s when the citizenry gets very upset.
Remember...In a world where capital can flow around the globe, it’s not so important who prints the money; it’s more important who captures the money.
That is why in my mind...this slow train wreck will take a decade to settle.
