by Alasdair Macleod
Global policy planners intend to deliver replacements for both dollar hegemony and fossil fuels. Plans may appear uncoordinated and in their early stages, but these issues are becoming increasingly linked.
A monetary reset incorporating state-sponsored cryptocurrencies will enable exchange controls to be introduced between nations by separating cross-border trade payments from domestic money circulation. The purpose will be to gain greater control over money and to direct its investment into green projects.
The OECD will build on current tax disclosures to make everyone’s income and capital known to governments and therefore readily taxable, money destined to kick-start economic growth. Under the guidance of supranational organisations, governments will redirect investment into green technology. The objective, particularly for Europeans, is to neutralise Russia’s increasing dominance of the global energy market by becoming carbon neutral by 2030.
But perhaps as Robert Burns put it, “the best-laid schemes o’ mice an’ men gang aft agley”. They are based on Keynesian fallacies, but cannot be ignored.
There appear to be policy areas being driven by statist responses to events, encouraging global institutions to take on a coordinating role. It means deeper levels of centralised planning by unaccountable bureaucrats.
Assuming their plans continue to gain credence, we could end up with a dystopian world where supranational bodies direct individual governments to conform. We are already on this road to perdition. The OECD has coordinated attempts by governments to restrict the freedom of their citizens to avoid taxes by forcing over a hundred jurisdictions to automatically supply information on the financial affairs of every citizen, irrespective of nationality and where they reside.
There are two categories of folk who think everything to do with economics and money are not much to worry about; the disinterested public and the investment management community. Their livelihoods depend upon it. Another category, libertarians, Austrian economists, bitcoin fans, gold bugs and readers of and contributors to agglomerating sites such as ZeroHedge have views ranging from sceptical to downright catastrophic. Not known to many is another, the most important category, which is very worried indeed, and that is governments and their central banks.
These are the people quietly talking about a big-picture reset, those that know the post-Breton Woods fiat dollar system is no longer fit for purpose.
They see escalating debt, interest rates failing to stimulate, and economic stagnation. They see a mismatch between international trade and the use of the dollar as a global settlement medium. They don’t talk about it much, to do so would frighten us, the lowly ruminants.
Since then my thoughts have turned to the reset problem in a broader sense. The assumption must be that time is available for such an event to be planned, or at least pre-planned as an insurance policy against monetary failure. In either event, it is putting the cart before the horse, because when a credit crisis hits it invariably takes the authorities by surprise, and it looks increasingly close in time. The priority will not then be monetary evolution but economic and financial rescue.
That point having been made, from the central bankers’ point of view, what is to be done? The obvious answer is to rig the game by changing the rules. As Keynes said, when the facts change, he changed. That way, they think they might dispose of the failing system and replace it with an updated one that suits their policy purposes better. With a bit of luck, declining confidence in the old will be replaced by a new paradigm, something that will allow them all, politicians and central bankers, to claim success for saving the Western world from a potential monetary crisis.
The problem is they don’t know how to do it, and they don’t yet know what the new paradigm will be. There is no unity on the matter, because for the Fed and the US Government it involves an unacceptable loss of monetary and political power. The Chinese, in partnership with the Russians, want to do away with the dollar, while the Europeans are leading themselves to a socialist dystopia at odds with Trump’s America, while being frightened of the Russian bear in
the east.
the east.
The ambition is for a few supranational organisations, not accountable to anybody, to act as an informal world government. It also accords fully with how central banks are likely to restructure their currencies
Failing monetary policies and the accelerated disposal of carbon-based in favour of carbon-neutral energy provide the foundations for a dystopian future. Together, they are excuses for yet greater inflationism and the rapid socialisation of national economies and private capital.
Clearly, a number of supranational bodies expect to coordinate these policy areas above the heads of individual governments. A monetary reset will replace a failing dollar-based system, and failing economies will be boosted by state-directed green investment.
Given that a significant cyclical credit and systemic crisis is overdue, its occurrence will have a major effect on how matters actually proceed. People who value individual freedom and privacy, those horrified by Orwell’s Nineteen Eighty-Four and Hayek’s The Road to Serfdom, could find themselves wishing for an even more radical outcome: the complete destruction of the fiat currency system and of the whole statist command-and-control apparatus.
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