Friday, November 19, 2021

Jim Rickards: All Currencies Are Going to Devalue Simultaneously Against Gold, Prices Are Destined to Move Higher

The IMF has a printing press as powerful as the Fed and ECB printing presses and can flood the world with their world money. Displacing the dollar would involve a meeting and agreement similar to the original Bretton Woods agreement of 1944. The agreement could take many forms. Still, the process would conform to what many call The Great Reset.

This process has been underway since 1969 when the SDR was created. Several issues of SDRs were distributed between 1970 and 1981, then none were issued until 2009 in the aftermath of the Global Financial Crisis of 2008. A new issue was distributed earlier this year.

Global elites see the COVID pandemic and climate alarm as a two-headed Trojan Horse that can be used to foist SDRs on a global population who have suddenly become accustomed to following government orders.

The recent COP26 meeting of elite climate alarmists and heads of state in Glasgow highlighted the use of central bankers and financial regulation to push the alarmist agenda by cutting off lending and underwriting services to energy companies that don’t promote renewables or that pursue oil and gas exploration (go here to learn all about a coming global climate tax, and also, how you can actually profit from it).

So, yes, the trend toward a single world currency is real also.

Still, things don’t happen that quickly in elite circles. Even Bretton Woods took over two years to design and another five years to implement even under the duress of World War II. The transition from sterling to the U.S. dollar as the leading reserve currency took thirty years from 1914 to 1944. As they say, it’s complicated.

At one level, there is no immediate change. A CBDC dollar is still a dollar. A CBDC euro is still a euro. Absent a new Bretton Woods type fixed-exchange rate regime, these currencies would still fluctuate against each other. Our analyses would continue as before. Still, there are three huge changes that could emerge from The Great Reset.

The first is that a new global currency regime would be an opportunity to devalue all major currencies in order to promote inflation and steal wealth from savers. All currencies cannot devalue against all other currencies at the same time; that’s a mathematical impossibility.

Yet, all currencies could devalue simultaneously against gold. This could easily drive gold prices to $5,000 per ounce or much higher to achieve the desired inflation. EUR/USD might remain around $1.16, but both EUR and USD would be worth far less when measured by weight of gold. This would be an accelerated version of what happened in stages between 1925 and 1933, between 1971 and 1980, and again between 1999 and 2011.

The second change would be that CBDCs make it much easier to impose negative interest rates, confiscations, and account freezes on some or all account holders. This can be used for simple policy purposes or as a tool of the total surveillance state. Surveillance of incorrect behavior as defined by the Communist Party is the real driver of the digital yuan more than any aspirations to a yuan reserve currency role.

The third change would be the widespread issuance of SDRs and their adoption as the sole global reserve currency. A new Bretton Woods could force countries to hold 100% of their reserves in SDRs, and major corporations could be forced to maintain their books in SDRs. This could lead to a fixed-exchange rate regime with a peg based not on gold but on SDRs.

All of these shifts are now underway. Whether they play out over years or mere months remains to be seen. Exact outcomes are uncertain. What is certain is that I will watch developments closely and keep you ahead of the power curve as the elites continue their push toward digital money, world money, and the end of cash.

- Source, James Rickards via the Daily Reckoning