Monetary System Change for Dummies
https://docs.google.com/document/d/1cAPMqCf10eVwUR3xP1sqqbW26mMKlVVlv-JtV7B2p0E/edit?pli=1
Very interesting.
https://docs.google.com/document/d/1cAPMqCf10eVwUR3xP1sqqbW26mMKlVVlv-JtV7B2p0E/edit?pli=1
Very interesting.
Sudden Global Financial Crisis Leading to Rapid System Change – This is basically the forecast of Jim Rickards. It says that we will experience another major crisis sometime soon (say in the next 2-3 years) because the present system is unstable. The US Fed will be unable to deal with this crisis because it will be too big and they have already used up their balance sheet. The IMF would intervene as global lender of last resort and also institute the SDR as a new form of global money. Jim Rickards explains this view in detail in his book “The Death of Money”.
Slow and Steady Change in a Controlled Manner – In this scenario, another major crisis is avoided or at least managed to prevent sudden systemic collapse. Over time the global financial institutions like the IMF become more involved and influential. We end up with a new more global system and perhaps a global currency. It may be an SDR based currency that ties to not just the US dollar but also the Euro, the Yen, the Yuan, and possibly the Ruble. It is also possible that this new currency might be able to be tied to a global digital currency that everyday citizens could use. The SDR is an “inside” currency unit used only by Central Banks and governments. It may be possible to tie that to an “outside” digital currency that would allow the average person to access money with the same level of system backing that the SDR has inside the system now. This is a concept I learned about from a high level reader of my blog, but this is not reported anywhere in the mainstream media yet. Time will tell if it comes to fruition.
A Global Split Between East and West Leading to Competitive Based Change - In this scenario, the BRICS nations are unable to get what they want within the existing global financial institutions led by the West (like the IMF and World Bank). They eventually become frustrated and exit those institutions completely and work on building up their new BRICS Bank and Reserve Fund to directly compete around the world with the Western led institutions. I think this scenario is unlikely, but is possible if political stalemate endures for a long time in the US.
Sudden Global Financial Crisis Leading to Chaos, Then Decentralization – In this scenario the system breaks down due to instability like Jim Rickards is forecasting. However, this breakdown causes the public to lose confidence in the existing financial institutions (Central Banks and the IMF etc). These institutions lose credibility because of failure to provide a stable monetary system. They are replaced by a more regional and decentralized structure of some kind. In this scenario , people might insist on a return to hard asset backed currency for example due to lost confidence in fiat currencies.
I think all of the above are realistic possible future outcomes. If there is another big global financial crisis, a lot of the outcome will depend on how people react to the existing institutions that run the monetary system now (the Central Banks, the IMF, the BIS, the World Bank, etc). If they continue to trust them, we would expect to see Scenarios 1 or 2 above come to pass. If they don’t, scenario #4 is more likely. Scenario #3 is kind of a middle ground between the others.
A key point to consider is that in ALL the above scenarios, the fiat US dollar loses it status as sole global reserve currency at some point in the future. This is where the rubber meets the road for we “dummies” in terms of the monetary system impacting our daily lives. If and when this happens, we are going to feel the impact of the change. That leads us to the Big Question: How to prepare?
How Do We Prepare for Future Monetary System Change?
This is the question that really matters for people who would read my blog. Learning about the monetary system can be interesting (at least for some), but most people want to get to the bottom line. How is this going to impact me or my family?
What Should I Do to Prepare?
Glad you asked. I think there is a reasonable way to deal with all these unknowns and potential major change coming in the future. Let’s list some bullet points and then some concluding thoughts.
Stay informed and alert. This is the first and most important thing to do.
Think about how you might deal with change that causes the US dollar to lose value
Build up a “rainy day” fund as best you can (this is just good common sense)
Allocate some part of your “rainy day” fund to hard assets like precious metals
Have a family emergency plan like you would use if a natural disaster happened in mind
Don’t allow events to cause fear or panic – be mentally prepared to deal with problems
Be ready to lend a helping hand to a neighbor if need be, be a solid citizen where you live
Having made reasonable preparations for change (not based on fear) – enjoy life
There is no reason to live life worrying about things we cannot control. We deal with this all the time and a major financial crisis should be handled the same way we handle things all the time. If we own a home, we buy insurance for it. We hope we don’t use it. We don’t worry every day that disaster will befall our home. But we are glad we have the insurance for peace of mind. If we are prudent we don’t just ignore the problem. We make a reasonable plan to deal with it. Then we move on with life. I think this same common sense approach should work in preparing for monetary system change as well. Each person can best assess what level of insurance fits their situation.
Short version:
Hope for the Best, but Have a plan for a worst case scenario in mind.
Having done that – Don’t waste time worrying about it all.
Best Wishes – Larry White
http://lonestarwhitehouse.blogspot.com/
