The international monetary system has faced monumental collapses in 1914, 1939, and 1971. Each of these moments marked the end of an era, but also heralded the dawn of a new financial order. The 2008 crisis was a near-miss, a tremor that shook the foundations but didn’t bring the house down. Central banks, with their quantitative easing (QE) policies, managed to stave off the collapse—temporarily.
Today, the signs of impending change are all around us. Central banks are now eating the losses from their QE policies, and the system appears more fragile than ever. A collapse, while daunting, often signifies the rebirth of a new system. The signals are unmistakable, and they are getting stronger.
Trade is increasingly being conducted in local currencies, bypassing the traditional dominance of the US dollar. Nations are stockpiling gold, a move reminiscent of the pre-Bretton Woods era, signaling a return to tangible assets. Central Bank Digital Currencies (CBDCs) are on the rise, promising a new form of money that could revolutionize financial transactions.
Hot conflicts around the world are further destabilizing the current system, with geopolitical tensions acting as a catalyst for change. The BRICS nations are expanding their influence, challenging the hegemony of Western financial institutions. Meanwhile, the Western financial system is being weaponized, used as a tool in political conflicts, which only adds to the instability.
It would be easy to continue enumerating the signs. The foundation of our current monetary system is undeniably shaking. We are on the cusp of a significant transformation. As history has shown, the collapse of an old system paves the way for the emergence of a new one. The future may be uncertain, but one thing is clear: change is on the horizon, and it is coming faster than we might expect.
1971.
— Gold Telegraph ⚡ (@GoldTelegraph_) June 17, 2024