Credit Suisse Says We Are Seeing The Birth Of A New World Monetary Order

March 11, 2022 9:00 pm

Zoltan Pozsar, a strategist for Credit Suisse and a former Federal Reserve official, has announced that we are likely in the middle of seeing the birth of a new world monetary order.

The strategist says that what we are seeing now is higher rates of inflation and a commodity crisis that would ultimately weaken the dollar.

Pozsar breaks down the different monetary eras into Bretton Woods I, Bretton Woods, and Bretton Woods III.

The initial Bretton Woods era was essentially backed by gold until the start of the Bretton Woods II era where it was backed by paper fiat dollars.

With the current Ukraine-Russian conflict, Pozsar writes that this could be the end of the second Bretton Woods era when Russia’s foreign exchange reserves were seized.

Instead, the new era would likely be backed by gold again along with other commodities with crypto being a very possible alternative to preserve and grow assets.

CoinDesk shares:

As the initial Bretton Woods era (1944-1971) was backed by gold, and Bretton Woods II (1971-present) backed by “inside money” (essentially U.S. government paper), said Pozsar, Bretton Woods III will be backed by “outside money” (gold and other commodities).

Pozsar marks the end of the current monetary regime as the day the G7 nations seized Russia’s foreign exchange reserves following the latter’s invasion of Ukraine.

What had previously been thought of as risk-free became risk-free no more as non-existent credit risk was instantly substituted for very real confiscation risk.

Pozsar concluded his note with a comment about bitcoin (BTC). He expects it to benefit, but only “if it still exists.”

The report concludes that money may never be the same again once the conflict finally ends which leads many to believe what role will Bitcoin and other prominent cryptocurrencies will play in this new monetary order.

By nature, the value of an asset like Bitcoin is not controlled by any organization or company  and can be transferred globally which has given it a reputation as a safe haven during times of crisis.

Many already consider it to be “digital gold” and public figures like Jack Dorsey have even gone as far as claiming that it might replace the dollar one day.

As the financial landscape is constantly changing, it is important to understand the details of the current commodity crisis and its impacts on the world.

CryptoPotato reports:

Pozsar explains that non-Russian commodities are growing far more expensive due to Russia – the world’s largest commodity producer – having been sanctioned by the West in recent weeks.

Furthermore, the commodities market is “far more leveraged” now than it was during the 1973 OPEC supply crisis. Thus, traders that are long on non-Russian commodities and shorting their related futures are likely receiving margin calls right now.

The reverse can be said for Russian commodities which, like Russia’s currency, are collapsing from lack of demand. Therefore, those that are short Russian commodities and long on their futures are also receiving margin calls.

The bank’s primary concern is that worldwide commodities are no longer trading at par – similar to how mortgages stopped trading at par leading up to the 2008 global financial crisis.

This recent report can be considered quite interesting given that Credit Suisse has previously been a critic of Bitcoin due to its anonymity and the crypto industry in general.

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