The Year Ahead - Part 1: Currency

by James Corbett
corbettreport.com
January 9, 2021

I don't need to tell you that we are living through world-historical times right now. The frequency of world-changing events is accelerating even as the impact of these events on our day-to-day lives is increasing.

As Lenin rightly observed: "There are decades where nothing happens; and there are weeks where decades happen." Perhaps there are years in which centuries happen.

With that in mind, I am taking my annual look at the year ahead and splitting it into three parts.

In this first installment, I will look at the tectonic shifts that are taking place in the global monetary space and consider what these changes portend for the future of the world economy.

Next week, I will examine the ongoing (generated) COVID crisis and what we can expect as the Era of Biosecurity continues to unfold.

Finally, I will turn my attention to world geopolitics, analyzing the types of conflicts that we can expect to see over the course of this year and explaining how these conflicts will set the stage for even more dramatic events over the course of the decade.

The Many Deaths of the Dollar

The dollar is dying, but this is nothing new. The dollar has died many deaths.

The dollar died on August 15, 1971 when Nixon closed the gold window.

It died again in 2001 with the triple-whammy of the bursting of the dot-com bubble, the exposure of the Enron and Worldcom frauds and the false flag attack on the World Trade Center.

It died again in 2007 when the meltdown in the subprime mortgage market began to eat its way through the banking system.

It died again in 2018 when China birthed the petroyuan, completed its SWIFT alternative and began trialing the digital yuan.

In fact, whether we extend the timeline backwards or forwards, we can find numerous points at which the dollar has died. But, like the phoenix of mythology, a new dollar always seems to rise from the ashes of the old dollar's funeral pyre.

In 1971 this rebirth took the form of the petrodollar. In 2001 it was Greenspan's housing bubble that propped up the dollar at home and the War of Terror that kept it afloat abroad. In 2008 the era of quantitative easing kicked off in earnest, with the Federal Reserve's ballooning balance sheet acting as a testament to the dollar's continued hegemony even as it served as a reminder that this dollar, too, is at death's door.

In every iteration of the birth/death cycle since the dollar was formally crowned world reserve currency at the Bretton Woods conference in 1944, the fundamental rules of the game have remained the same. The dollar has remained in its position of global predominance because, as any economist will tell you:

• US capital markets are the deepest and most developed, able to facilitate trillions of dollars of transactions per year with ease;
• The dollar is held in countries around the world, with (in the estimate of Fed Chair Jerome Powell) about half of the two trillion dollars' worth of federal reserve notes in circulation being held abroad;
• Most international trade is settled in US dollars and most assets and financial offerings are denominated in dollars;
• and the US has the world's largest economy.

What any economist won't tell you (but Catherine Austin Fitts of Solari.com does tell you in her masterful piece on The State of our Currencies) is that there is an equally important but considerably less technical reason that the dollar is king: brute force.

Of course the dollar's hegemony has been backed up throughout the era of Pax Americana by the barrel of the gun. It is no coincidence that the world's monetary superpower has simultaneously been the world's military superpower (or that the world 's previous naval superpower, Britain, was also the world's previous monetary superpower).

But things are changing rapidly and the old verities of the dollar's dominance listed above are beginning to come into question. Yes, international trade is still by and large settled in dollars, but the yuan has been making inroads for years and is now the second most-used currency in the world.

And the US as the world's largest economy? While that's true if we measure GDP in nominal terms, the Chinese economy surpassed the American economy in 2013 if we measure GDP by purchasing power parity (PPP).

And now with the insanity that melted its way through the world economy in 2020 continuing to resonate in 2021, it seems the dollar is dying once again. The only question of relevance is whether it, like the phoenix of lore, will be reborn from its own ashes, and, if so, what form that rebirth will take.

The Next Rebirth of the Dollar?

That the dollar is dying is readily apparent and non-controversial. Even arch-bankster Mark Carney acknowledged as much in a speech on The Growing Challenges for Monetary Policy in the current International Monetary and Financial System [IMFS] back in 2019:

"[A] destabilising asymmetry at the heart of the IMFS [international monetary and financial system] is growing," he told his bankster brethren at their annual retreat in Jackson Hole, Wyoming, concluding that "a multi-polar global economy requires a new IMFS to realise its full potential."

For those not versed in Banksterese, that's one of the world's most prominent banksters admitting that we are about to go through a changeover in the global monetary paradigm.

In case you need it spelled out for you, the very next month French President Emmanuel Macron put it even more bluntly:

We also need to rethink our economic and financial sovereignty. I spoke of Iran earlier. We can continue to defend our Iran agenda with pride. Why do we find ourselves in this situation? Because there is a de facto extraterritoriality of the dollar. Because our companies, even when we decide to protect them and take them forward, are dependent on the dollar. I am not saying that we need to fight the dollar, but we need to build real economic and financial sovereignty of the euro. And we have moved too slowly in this area as well. And what we need to build on is a strengthening, a greater integration of the Euro Area, a greater integration of financial markets of the Euro Area and stakeholders, and a capacity to build everything that truly establishes financial and monetary sovereignty. We are not there yet. And it is essential.

Then, in November of 2019, Russian President Putin was the next world misleader to pronounce the death of (this version of) the dollar:

The dollar enjoyed great trust around the world. It was almost the only universal currency in the world. For some reason, the United States began to use dollar settlements as a political tool, to impose restrictions on the use of the dollar. They began to bite the hand that feeds them. They'll collapse soon.

Keep in mind that all of this rhetoric about the death of the dollar was swirling around precisely as the Fed began its massive intervention in the repo markets that, as John Titus points out, was the real beginning of the economic and financial crisis that was covered up by the COVID scamdemic. And, as we know by now, the Fed has not just proceeded to expand its balance sheet to record levels, but done so at breakneck speed.

No, there is no doubt that the current monetary order is ending. But what will replace it?

Alasdair Macleod has a thoughtful piece on "The Psychology of Money" that correctly identifies the gravity of the situation ("We are coming to the end of the monetary era of fiat currencies"), but, predictably enough for the head of research at Goldmoney.com, comes to the conclusion that this will lead to a return to the gold standard:

Anyone who thinks governments will just stand back and let the people decide for themselves what is money, leading to us carrying around gold and silver coins, or transacting with cryptocurrencies between mobile phones, has failed to learn the lesson of government control. If only to prevent individuals taking away control of money from the state completely, governments will be forced to turn what is left of fiat money into gold substitutes to ensure widespread distribution. In this context, a gold substitute is a form of money exchangeable on demand by the holder for gold coinage at a fixed rate. In other words, the monetary system can only return to the generally accepted monetary conditions that existed prior to the First World War.

Although there is no doubt that Macleod is correct in stating that governments (and, more importantly by far, central bankers) are not going to stand idly by while the dollar crashes and burns, it seems unlikely that their endgame involves tying the global economy down to gold. 

A gold standard is not what the banksters have been calling for, it is not what they have been working toward for years, and it in no way comports with the systems that are being trialed at the moment. No, for years now, the banksters have been telegraphing a very different move: one into a completely virtual economy of central bank digital currencies.

Take the above-cited Mark Carney, for instance. In the very same speech where he called for a new international monetary and financial system, he discussed the technological "innovations" that are making the replacement of the dollar a real possibility:

The most high profile of these has been Libra – a new payments infrastructure based on an international stablecoin fully backed by reserve assets in a basket of currencies including the US dollar, the euro, and sterling. It could be exchanged between users on messaging platforms and with participating retailers.

While it may seem out-of-the-blue to those who haven't been paying attention, the fact that a powerful central banker is openly musing about an "international stablecoin" to form the backbone of a "new payments infrastructure" really shouldn't be surprising. After all:

• the Bank for International Settlements has been musing about Central Bank Cryptocurrencies since at least 2017 and has recently set up an Innovation Hub to work on the problem of how best to implement Central Bank Digital Currencies;
• the Bank of England governor has indicated that the BoE is already indicated that, "in a few years time, we will be heading toward some sort of digital currency";
• the IMF is holding virtual symposia on the question of central bank digital currencies (CBDCs) involving central bankers from around the world;
• the proposal for a digital dollar that was floated at the World Economic Forum last year has already found its way into multiple drafts of various COVID stimulus bills;
• China has already launched its digital RMB trial program;
• and the banksters are already telegraphing 2025 as a date for a likely rollout of CBDCs on a global scale.

It is not difficult to see why the bankster class is so eager to see this particular phoenix rise from the ashes of the dying petrodollar. The benefits of a central bank-administered digital currency are manifold. It allows for easy implementation of negative interest rates, for example, and precludes the possibility of people stuffing cash under their mattress to escape the de facto penalty on savings that such rates impose. It allows every single dollar in the economy to come under the purview of the tax office (see the Indian example for more on this). And, as John Titus noted in our most recent conversation, it has banksters like Agustin Carstens salivating at the possibility of being able to monitor every transaction in real time and disallow those transactions of which the central banks disapprove.

To be sure, the full rollout of central bank digital currencies is not going to happen this year, but the skids are being greased and the propaganda machine is going to be kicking into overdrive in the coming months to prepare the public consciousness for this changeover.

All of this brings us to by far the most important question:

What Can We Do?

None of what I have written here will be particularly surprising to those who have been keeping their eye on the ball in the banksters' shell game over the past decade. Ever since the global financial crisis of 2008, it has been apparent that the bankster class has been preparing the public for a transformation of the world monetary system. From the 2009 G20 to the beginning of the People's Bank of China's campaign to bring about a global reserve currency to the inclusion of the yuan in the IMF's Special Drawing Rights basket, the writing has been on the wall for King Dollar.

But, as usual, we the people are left wondering what we can do about this. Who do we call to ask for a change in monetary paradigm? What lever do we pull in the voting booth to end the bankster-created, debt-based fiat funny money system?

The answer, of course, is that there is no one to call and no politician to vote for to put an end to the banksters' scam. This scam has been going for centuries before you were born and is arguably the most terrible hoax ever perpetrated on humanity. The people running this confidence trick are not going to give you an option for winning the rigged game that they are playing. This is the entire point of the shell game: As long as you are playing their game you have lost. There is no way to win if we are participating in the system they have created.

The banksters are perfectly content for you to be paying attention to the ball in their hand, trying desperately to follow their movement and placing your bets on which shell they have placed the ball under. The one thing they desperately do not want is for us to walk away from the game itself. To question the limits of the monetary shackles that we have been placed in, and to come to an understanding of the nature of money itself. 

The answer, as always, lies not in how we can engineer a better system of centralized control. The answer lies in decentralizing to a point where the centralized system is ridiculous and redundant, like daily newspaper delivery in the age of the internet.

So how do we go about doing this? Well, given that 2021 is the year of the People's Reset, this is precisely the subject I'm going to be examining in a series of reports in the near future. The short-term answer will involve setting up emergency community trading mechanisms that will be able to keep us alive in our local area as we begin the plunge into the profound economic dislocation that will be starting this year.

The longer term strategy will involve truly understanding the most fundamental question of all: What is money? It is only after we really understand what we are dealing with that we will begin to be able to form our longer-term answer for constructing a viable post-central bank world.

To start with, I offer the following resources:

• Debt: The First 5,000 Years by David Graeber
• Money As Debt Official Site + Part I / Part II / Part III
• How To Beat The Banksters At Their Own Game

Stay tuned for more on the monetary front very soon. And, in the meantime, stay tuned for Part 2 and Part 3 of this series in the following weeks . . .

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