T
The Byre
- Original Poster
- #1
The reset of the world's financial systems may have begun this week. But to explain what has happened, I must first delve into a bit of potted history -
On August 5th, 1971, a Frech warship loaded with dollar bills and paper US treasury bonds, docked in New York harbour. The captain was under orders from President Pompidou not to return until he could bring back, France’s gold, which had up until then, been stored in the vaults of The New York Federal Reserve Bank. France had asked politely for several years, but the NY-Fed stalled them.
This left the US Treasury and the NY Fed with a problem - refuse and this will unsettle the money markets and could cause a run on the dollar, despite being on the gold standard. Or give France its gold and wave goodbye to half of the NY Fed's gold reserves. A few days later, according to NATO records, the cruiser “Océan” (originally called the “Suffren” a training vessel based at Saint-Mandrier-sur-Mer) weighed anchor with Frances gold on board.
On August 15th, 1971, 50 years of the US dollar as a fiat currency began when Nixon ordered the dollar to be taken off the gold standard. For several days afterwards, US dollars were not accepted at European banks and US tourists waving travelers' cheques were stranded.
In 1974, Kissenger negotiated a six-page deal with Saudi Arabia in which the US would give SA military support and sell them advanced US military equipment in exchange for SA agreeing to accept only US dollars for oil. The dollar as a fiat currency was rescued and the fiat petrodollar was born. The Bank of International Settlement, based in Basel, Switzerland, declares the US dollar to be the one and only tier-one unit of exchange.
In 2017, after years of negotiations, the Deutsche Bundesbank manages to its gold back from the Bank of England and from Federal Reserve Bank - some 300 tons comes home to Mutti! Most other European central banks follow suit that year. This is followed over the next few years by central banks everywhere aggressively buying and storing gold.
In 2019, the Bank of International Settlement dropped a bombshell that I must admit I (together with almost everybody else!) completely missed - the dollar was no longer the only game in town. Gold was made a tier-one unit of exchange.
This bombshell means that any currency that can be exchanged for gold enjoys the benefits of having tier-one status - for example, bonds denominated in Chinese Huan that can be immediately exchanged for physical gold on the Shanghai Gold Exchange. This means that the hugely ambitious Belt-Road Initiative that will link 75% of humanity, launched in 2020, can be paid for with gold.
In 2021, the world was both horrified and enthralled by the sight of the chaotic US withdrawal of troops from Afghanistan when it discovered that there was almost no Afghanistan Army - it was mostly just a paper army of phantom payrolls - a giant exercise in corruption! Blinded by these events, almost nobody noticed that one day after the withdrawal, Saudi Arabia tore up the petrodollar deal and signed up with Russia in a joint energy venture. The very next day, Russia and China signed a similar deal with Nigeria. Iran soon followed - and all in bonds denominated in Huan and exchangeable for gold.
Just to underline this de-dollarisation of the world's money markets, China has so far sold $100bn in US Treasury bonds this year and a multitude of countries including Turkey, Egypt, Algeria, Brazil and India agree to trade in gold or use gold-based currencies. Simultaneously, major banks around the world have moved from manipulating the gold price down to investing in gold. Hedge funds and pension funds are rather foolishly shorting gold - I would not bet against the likes of Goldman Sachs and JP Morgan!
But this week, two things happened -
Firstly, Putin issued a statement, part of which read "The economy of imaginary wealth is being replaced by the economy of real, hard assets."
With this, he makes clear that not only are commodities undervalued but that the wild fugazi of debt that the West has created is totally unsustainable. For example, Germany manufactures €2tn in goods but those manufacturers have been using just €27bn in energy. They could easily afford to swallow much, much higher energy costs. But the prices for assets such as shares and property are artificially inflated by absurdly and artificially low interest rates.
Secondly (and possibly most dangerously) governments and the ECB have hinted that they may indulge in yet more QE. The retail banks within the Eurozone have already borrowed €2tn and this has now been rolled over to 2024 and may be rolled over after that. And Britain's newly minted Prime minister has already stated quite clearly that she is going to visit Pinocchio's Magic Money Tree. These are all acts that are highly inflationary!
It was his belief in The Magic Money Tree that got Pinocchio thrown into prison for stupidity!
And now the wake-up call! Trade in precious metals by US registered banks has been steadily climbing over the years. 20 years ago it was only about $4bn a year. Last year it had climbed to $78bn. Q1 of this year saw $492bn being traded. That was just for the first quarter - the first quarter of this year saw over six times as much precious metal trading as for all of last year!
What's going on? Is this The Great Reset?
On August 5th, 1971, a Frech warship loaded with dollar bills and paper US treasury bonds, docked in New York harbour. The captain was under orders from President Pompidou not to return until he could bring back, France’s gold, which had up until then, been stored in the vaults of The New York Federal Reserve Bank. France had asked politely for several years, but the NY-Fed stalled them.
This left the US Treasury and the NY Fed with a problem - refuse and this will unsettle the money markets and could cause a run on the dollar, despite being on the gold standard. Or give France its gold and wave goodbye to half of the NY Fed's gold reserves. A few days later, according to NATO records, the cruiser “Océan” (originally called the “Suffren” a training vessel based at Saint-Mandrier-sur-Mer) weighed anchor with Frances gold on board.
On August 15th, 1971, 50 years of the US dollar as a fiat currency began when Nixon ordered the dollar to be taken off the gold standard. For several days afterwards, US dollars were not accepted at European banks and US tourists waving travelers' cheques were stranded.
In 1974, Kissenger negotiated a six-page deal with Saudi Arabia in which the US would give SA military support and sell them advanced US military equipment in exchange for SA agreeing to accept only US dollars for oil. The dollar as a fiat currency was rescued and the fiat petrodollar was born. The Bank of International Settlement, based in Basel, Switzerland, declares the US dollar to be the one and only tier-one unit of exchange.
In 2017, after years of negotiations, the Deutsche Bundesbank manages to its gold back from the Bank of England and from Federal Reserve Bank - some 300 tons comes home to Mutti! Most other European central banks follow suit that year. This is followed over the next few years by central banks everywhere aggressively buying and storing gold.
In 2019, the Bank of International Settlement dropped a bombshell that I must admit I (together with almost everybody else!) completely missed - the dollar was no longer the only game in town. Gold was made a tier-one unit of exchange.
This bombshell means that any currency that can be exchanged for gold enjoys the benefits of having tier-one status - for example, bonds denominated in Chinese Huan that can be immediately exchanged for physical gold on the Shanghai Gold Exchange. This means that the hugely ambitious Belt-Road Initiative that will link 75% of humanity, launched in 2020, can be paid for with gold.
In 2021, the world was both horrified and enthralled by the sight of the chaotic US withdrawal of troops from Afghanistan when it discovered that there was almost no Afghanistan Army - it was mostly just a paper army of phantom payrolls - a giant exercise in corruption! Blinded by these events, almost nobody noticed that one day after the withdrawal, Saudi Arabia tore up the petrodollar deal and signed up with Russia in a joint energy venture. The very next day, Russia and China signed a similar deal with Nigeria. Iran soon followed - and all in bonds denominated in Huan and exchangeable for gold.
Just to underline this de-dollarisation of the world's money markets, China has so far sold $100bn in US Treasury bonds this year and a multitude of countries including Turkey, Egypt, Algeria, Brazil and India agree to trade in gold or use gold-based currencies. Simultaneously, major banks around the world have moved from manipulating the gold price down to investing in gold. Hedge funds and pension funds are rather foolishly shorting gold - I would not bet against the likes of Goldman Sachs and JP Morgan!
But this week, two things happened -
Firstly, Putin issued a statement, part of which read "The economy of imaginary wealth is being replaced by the economy of real, hard assets."
With this, he makes clear that not only are commodities undervalued but that the wild fugazi of debt that the West has created is totally unsustainable. For example, Germany manufactures €2tn in goods but those manufacturers have been using just €27bn in energy. They could easily afford to swallow much, much higher energy costs. But the prices for assets such as shares and property are artificially inflated by absurdly and artificially low interest rates.
Secondly (and possibly most dangerously) governments and the ECB have hinted that they may indulge in yet more QE. The retail banks within the Eurozone have already borrowed €2tn and this has now been rolled over to 2024 and may be rolled over after that. And Britain's newly minted Prime minister has already stated quite clearly that she is going to visit Pinocchio's Magic Money Tree. These are all acts that are highly inflationary!
It was his belief in The Magic Money Tree that got Pinocchio thrown into prison for stupidity!
And now the wake-up call! Trade in precious metals by US registered banks has been steadily climbing over the years. 20 years ago it was only about $4bn a year. Last year it had climbed to $78bn. Q1 of this year saw $492bn being traded. That was just for the first quarter - the first quarter of this year saw over six times as much precious metal trading as for all of last year!
What's going on? Is this The Great Reset?
