Money Notes 2 – THE GREAT RESET
by Gordon Swire

“One believes things because one has been conditioned to believe them.” – Aldous Huxley (Brave New World)

Money has been around for thousands of years, otherwise we’d all have to rely on barter like Fred and Wilma Flintstone, and the money used almost universally has been gold.

‘Gold bugs’ as the modern devotees are called, give many reasons for this, like it’s beautiful, small enough to be carried, can easily by divided, it’s durable etc., but by far the most important characteristic is it’s rarity, it can’t be manufactured at will.

The Persians used it, the Greeks, the Romans, the Portuguese, the Spanish, the Dutch, the British and then finally the world’s most recent empire, the Americans. Originally a US dollar was a measure of weight of gold, a 20^th of an ounce in fact, and the paper dollars handled by banks were guaranteed by and could be converted if need be, back into gold.

Until quite recently when a country needed to pay for something and was in a real fix, like in a war for example, they would be forced to fall back on their gold reserves as payment.

When the Second World War came to an end the USA which had become the workshop of the western world had accumulated most of the world’s gold, which they still hold today in Fort Knox, Kentucky. Everyone else was skint.

So, many countries were unable to guarantee their currencies with gold as they had before the war and a new system had to be invented for the post war economy.

This was the Bretton Woods agreement of 1944. America now had all the gold with the biggest economy and the biggest army so their dollar became the most secure and trusted currency in the world.

It was decided that solely the dollar backed by gold would become the world’s reserve currency and the 44 other countries at the conference agreed to value their currencies in relation to the dollar. Other mechanisms to enhance world trade were developed around the same time, like the Eurodollar, the International Monetary Fund and the World Bank, but it was the convertibility of the dollar to gold that was the bedrock of the system.

Everything went like a dream until as usually happens someone started cheating and that someone just happened to be in charge.

Vietnam was one of those weird wars hatched by the politicians back in the 1960’s. Apparently if this tiny country fell to the communist regime in the North, then the whole of the rest of Asia would fall to communism. It was called ‘the Domino Theory’ and the USA went to war to save the Western democracies.

Like lots and lots of wars costs grew exponentially, and to fund it the USA started issuing more dollars than their gold reserves allowed, they were in fact inflating their currency. In 1968 President Charles de Gaulle of France called their bluff and asked for the dollars held by the Bank of France to be converted back into physical gold. The reserves of Fort Knox were under pressure and this increased as the rest of the world twigged how profligate America was being in its creation of new dollars.

So, in 1971 and Initially ‘strictly as a temporary measure’, ha-ha, President Richard Nixon declared America and with it the rest of the world leave the gold standard. The dollar would no longer be convertible into gold. All currencies would now float and would simply be constantly valued against each other. This was the birth of the massive foreign exchange market and the ‘financialisation’ of money.

America still had all the kudos of owning the world’s reserve currency but they now also had one absolutely gargantuan advantage, they could create as many of those little green pieces of paper as they liked without being shackled to gold

The die was cast, debt could now be fed on steroids and our world could be magically changed. We entered a new age of abundance where advanced technologies leverage and multiply our levels of consumption, where our planet’s resources are overwhelmed and plundered, where advertising stuff has become revered as an art form, and where insiders close to the birthing of new money sources become uber rich.

But cracks in the edifice are growing, the growth in debt is unsustainable, interest rates are bordering negative territory, the party is getting out of control, it has to end, it was always a con trick.

“Never let a crisis go to waste” is a well-known Chinese proverb so, as if on cue, Covid-19 comes along and the world’s debt mountain has to be put on life support. The public are terrified of the raging pandemic so the motor’s well primed, it’s a great time to introduce new laws. A much Braver New World is upon us, a Currency Reset is gaining ground.

The town of Davos in Switzerland hosts the World Economic Forum each year and it’s where people who like to think they own the world meet to compare notes.

It’s founder Klaus Schwab recently stated:

‘Every country, from the United States to China, must participate, and every industry, from oil and gas to tech, must be transformed. In short, we need a ‘Great Reset’ of capitalism.’

Then Kristalina Georgieva, Managing Director of the International Monetary Fund recently gave a speech entitled:

‘A New Bretton Woods Moment’ and went on to say    “….debt is unsustainable, it should be restructured without delay.”

A currency reset, like the one the WEF and the IMF are referring to, is like changing which board game is being played by investors, business and governments on the global stage. It changes the rules by which the game of economics and trade is played.

So, it doesn’t take a lot of imagination to work out who will ultimately prosper from any reset. Just like the one in 1971 it’s DNA will be coded to enrich the assets of those close to the new money and just like 1971 it will probably have many insidious consequences for the children who follow.

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