The U.S. Dollar is Based on Trust
The U.S. Dollar is Based on Trust
Trust is fragile
Newsletter #0010
Last week I listened to an interview between Jay Martin and Andy Schectman (Owner of Miles Franklin Precious Metals Investments). Andy presented chronological evidence which makes a compelling argument that the U.S. dollar’s hegemony as the world’s reserve currency could be at risk and that the world is primed for a “Great Reset” to occur.
I am not an expert on any of the subjects or events that are discussed in the interview or in this newsletter but found it important enough to at least share the notes I have taken so that you can come up with your own thoughts and conclusions.
At the least, I find this to be an incredibly important lesson in history.
Notes
Premise
The Fed isn't going to get tough on inflation but realizes the U.S. and World are in a bad place.
Klaus Schwab (Executive Chairman, World Economic Forum), says the World needs a Great Reset.
1944
Bretton Woods
The U.S. tells the world countries, "Let us hold your gold, and we will pay you $35/oz."
US Dollar becomes the world’s reserve currency and is pegged to gold.
1971
End of Bretton Woods Era
US Dollar is no longer pegged to gold and becomes fiat currency.
US President Nixon "suspends" the convertibility of the dollar into Gold.
France sends a warship to New York Harbor, demanding its Gold back.
Henry Kissinger makes an agreement with Saudi Arabia to only transact oil in US dollars in exchange for American security/protection.
2017
The capitulation of precious metals (ex. Gold, Silver) after 6 year of bear market (2011-2017).
Germany completes a program to repatriate $31 billion of gold from the U.S. and France.
Other countries follow (Austria, Hungary, Czech Republic, Turkey, etc.
2019
Bank of International Settlement (Central Bankers Central Bank) reclassify Gold as the Worlds only other Tier 1 reserve asset aside from US Dollar.
Tier 1 is considered a riskless asset. On par with cash. Same as the US dollar. It's safe.
Chinese Belt Road and Rail Initiative in development.
China's Belt Road and Rail Initiative intended to connect Asia, Africa, and parts of Europe ("old silk road") or 75% of the world's population, and 45% of global gross domestic product to be settled on China's digital yua. 20+ Billion successful transactions. Circumvents using US dollar. Suggests US de-dollarization.
2020
Large Sovereign Wealth Funds are seen removing large amounts of gold from exchanges and into their possession.
Now, not only are the country’s central banks taking buying back their gold, but now you have some of the most sophisticated private wealth funds buying back their gold and taking possession of it too.
International Monetary Fund, publicly requests a "New Bretton Woods."
There is a common theme of pushing away from the US dollar.
2021
Massive gold accumulation by more countries continues.
The U.S. withdraws from Afghanistan.
Withdrawal from Afghanistan symbolizes to U.S. ally’s lack of trust and betrayal.
Saudi Arabia announces joint military cooperation with Russia.
Saudi Arabia's agreement since 1970s to transact oil in US dollars is what has maintained the dollar as the reserve currency in exchange for U.S protection.
Now they're taking protection from Russia ironically after the US withdraws from Afghanistan. What has given the dollar its world reserve status more than anything has been Saudi Arabia's agreement to exclusively denominate oil in dollars.
Nigeria makes the same announcement to accept protection from Russia and declares it will sell its oil to China for Chinese bonds.
Russia, Turkey, Kazakhstan, Thailand, Japan, Brazil, Poland, and China continue accumulating gold.
2022
Saudi Arabia announces it is considering selling its oil to China for a yuan-denominated bond that they can immediately convert to Gold on the Shanghai gold exchange.
Russia gets kicked out of SWIFT.
Banning Russia from SWIFT suggests the disincentivization of continued de-dollarization.
Incentivizes Russia's movement from SWIFT (Society for Worldwide Interbank Financial Telecommunications) to China's CIPS (Cross Interbank Payment System)
Saudi Arabia announces they are contemplating joining the BRICS nations (Brazil, Russia, India, China, and South Africa)
Present
Russia and China publicly state we (BRICS nations) are now issuing coalesce currency to challenge for world reserve status.
The theme of coalescence against the U.S. and the dollar continues.
We continue to see massive repatriation of gold.
China has its massive Belt and Rail Infrastructure initiative in development.
Includes a digital yuan that can indoctrinate a large majority of the world population into a digital world reserve challenging dollar reserve status.
Dollar hegemony is breaking because Saudi Arabia and Nigeria taking protection from Russia and integrating with China's Belt and Road Initiative.
Countries are joining BRICS nations.
This relates back to Klaus Schwab, Executive Chairman World Economic Forum, saying, "The pandemic represents a rare but narrow window of opportunity to reflect, reimagine, and reset our world."
But what does Andy Schectman suggest it takes to cause the reset? How does this all blow up?
Saudi Arabia joins the BRICS nations and opens up oil purchases to multiple world currencies.
The dollar collapses and is being dumped globally.
Dollars return home, creating hyperinflation, and causing interest rates to go massively higher.
Stocks, Bonds, and Real Estate vaporize.
The Great Reset occurs and the Federal Reserve gets to point the finger at the rest of the world for causing this, rather than being responsible for breaking the U.S. economy.
If there was one major theme that I took from this interview, it is that the dollar (and all currency) is based on trust and that trust is extremely fragile.
I encourage you to listen to the actual interview between Jay Martin and Andy Schectman if you have the time.