Zurich-based monetary services giant Credit Suisse hasactually launched a report entitled “Bretton Woods III” in which its strategist argues that we are seeing the birth of a brand-new financial world order.
— Alex Gladstein 🌋 ⚡ (@gladstein) March 8, 2022Pretty wild analysis from @CreditSuisse
Hard to think it’s genuine. But if so, it forecasts:
-End of existing financial order
-New supremacy of “outside” over “inside” CB cash
-Inflation in the West
-High treasury yields and dollar decline
-Bitcoin to advantage, if it endures pic.twitter.com/gy0dfA9DJA
New Monetary World Order – Bretton Woods III
The report begins by stating:
We are experiencing the birth of Bretton Woods III – a brand-new world (monetary) order focused around commodity-based currencies in the East that will mostlikely deteriorate the Eurodollar system and likewise contribute to inflationary forces in the West.
Zoltan Pozsar, Credit Suisse strategist
“Bretton Woods” refers to the 1944 World War II contract in which 44 nations consented to a brand-new financial system in which the UnitedStates dollar was pegged to gold, and other currencies were pegged to the greenback.
The plan totally brokedown in 1971 when president Richard Nixon took the UnitedStates off the gold requirement. This marked the start of the existing fiat currency system, what the author terms “Bretton Woods II”, a routine in which the UnitedStates dollar’s worth was mostly backed by “inside cash” (mostly UnitedStates treasury bonds).
As G7 countries took Russia’s foreign exchange reserves following its intrusion of Ukraine, Pozsar argues that this marked the start of “Bretton Woods III”.
From the Bretton Woods period backed by gold bullion, to Bretton Woods II backed by inside cash (Treasuries with un-hedgeable confiscation threats), to Bretton Woods III backed by outside cash (gold bullion and other products).
Zoltan Pozsar, Credit Suisse strategist
The author notes that the West’s sanctions will outcome in self-inflicted monetary instability, even if it triggers discomfort for Russia. To think that sanctions won’t lead to rate stability threats is to “also think in unicorns”.
He includes that “this crisis is not like anything we haveactually seen because [Richard] Nixon took the UnitedStates dollar off gold in 1971”. Pozsar then concludes that the West will forthatreason always experience continued and increased levels of inflation.
‘Money Will Never Be the Same Again’
Pozsar details some possibilities as to what the future might appearance like and how the Chinese Communist Party might play a function (hint – a huge one). He concludes his analysis with an threatening alerting, stating:
“After this war is over, ‘money’ will neverever be the verysame onceagain … and Bitcoin (if it still exists then) will mostlikely advantage from all this.”
Over extended durations of time, Bitcoin has tended to act as a good hedge versus inflation inspiteof being associated with equities. However, justrecently it shocked analysts by breaking this connection and skyrocketing 15 percent overnight in action to the Russian/Ukrainian dispute.
We’re living through an extremely unstable and unsure duration of history, and no doubt the financial system will appearance really various in the years to come. Is Bitcoin going to play a function? Quite perhaps.
— Evan Prim (@EvanPrim) March 8, 2022It’s surreal to see international financing business beginning to see what’s coming when there was absolutelynothing however termination or agression towards concepts like this just a coupleof (admittedly long) years back.
Simultaneously amazing and scary.
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