ABC Comment, Following COVID-19 The Great Reset is Coming

PERSONAL VIEWPOINT - I woke up at two in the morning and wrote a letter to a newspaper. I have been baffled by what is happening at the moment. Locally the COVID numbers are small and as we know lots of people have no ill effects. Shutting down the economy to such an extent has been a controversial decision.

 Is more going on than controlling COVID-19?

The American War of Independence came about because all money is borrowed into existence and the settlers in America did not want to borrow their money from the Bank of England and pay interest and be debt slaves to the English. President Lincoln was shot because he was proposing a currency called the ‘Greenback’ which was outside the banking system. The Federal Reserve in America is a private company. A central bank was proposed and set up in 1913 by the banks. The role of a central bank is to stabilise the currency.

Late in the Second World War, the Germans tried to drive a wedge through the advancing Allies called the Battle of the Bulge. Montgomery was wounded in the First World War and was careful with the lives of his men The yanks top brass were gung ho and they were getting annoyed with his leadership and the slow progress after D Day. The Germans drove their tanks through the Ardennes Forest and were stopped at the Battle of the Bulge. They committed the Malmedy massacre as they could not stop and round up prisoners. The captured general that ordered that action was executed by firing squad a few days later. What went wrong was that the gas-guzzling Tiger Tanks at the head of the columns down these narrow roads ran out of fuel and when the weather cleared the columns of military vehicles were decimated by US Mustang planes.

 So even before the end of WW2, the US realized the strategic importance of oil as of course Hitler had been trying to get to the Caucuses to secure his supplies. Stalingrad could cut his lines of supply and thus the defeat at Stalingrad turned the tide of the war.

After WW2 the US was victorious and at Bretton Woods, the Americans secured an agreement that all the world international trade for commodities would be denominated in dollars. Later the American got the Saudis on board. Saudi Arabia had been conquered by force and the US agreed to guarantee the nation's security in exchange for oil. They Americans promised to make the Saudis rich….. Much of the UK's oil came from Iran. Churchill had overseen with great foresight the advantages of oil over coal that needed coaling stations all over the world. 

In return, the Americas financed the re-building of Europe and Japan called the Marshall Plan in Europe from the profits they made from the war.

The Petro-dollar system works like this. Countries like Japan (later China) that sold cheap electronics to the US market roughly 2/3 of the global market in total for consumer goods get paid in dollars. If they repatriate this money to Japan or China they have to sell dollars and buy Yen or Yuan. This bids up the price of their native currency but depreciates the dollar. That would slow exports. So international companies and governments started holding dollar deposits in US banks and using these savings to buy oil and raw materials. This created a huge demand for dollars. So the Americans could expand the numbers of dollars available without it causing too much inflation. Because all the worlds currencies are pegged to the dollar - what happens to the dollar affects everyone.

Goods and Services Sold = Currency.

 The latter can be electronic digits, not just paper money of course. This also created the Eurodollar currency market were dollars were traded in FX marketing in Europe held in the City and places like Frankfurt without being repatriated.

In the 1970s there was high inflation. Young people wages had gone up four times in the ‘swinging sixties’ in the UK, but inflation took off in the ’70s and unions became very powerful bidding up wages. In the UK the miners were the aristocrats of the workers. If other unions forced up their member's wages the miners needed their wages increased.

 In the ’80s monetarism came in and Lady Thatcher’s goal was to break the power of the unions and restore the value of money by stopping inflation with policies that led to severe austerity.  

In the 60’s President, Nixon wanted to fight the Vietnam War and stop communism. The domino theory was that if one country fell so would others. In Angola, there was a proxy war and Cuban mercenaries became involved. After WW2 many counties saw the opportunity to break away from their colonial masters. To get the help they turned to the Soviet Union. Nixon took the currency off the Gold Standard around 1971. This caused food price inflation and the Head of the Department of Agriculture suggested replacing sugar with corn syrup. If sugar has a sweetness of 100 corn-syrup under it various brand names have more the sweetness of 130 on the sweetness index. People, as a result, became fatter. 

 The Soviet Union could not keep the pace of American military spending and eventually collapsed.

 In the ’90s and noughties, America and her Allies were drawn into wars in Iraq, Afghanistan and Libya. To check the ambitions of Russia and secure pipeline routes from terrorists as some planned outcomes.

 Saddam Hussain following US sanctions planned to snub the former allies that brought him to power and planned to sell oil in Euros. In Libya, Colonel Gaddafi held two conferences about creating a pan-African currency backed by Gold. Both initiatives could have weakened the dollar.  

The Arab Spring was a populist revolt that spread from Tunisia into Egypt. It was driven by high graduate unemployment. There was no Rothchild controlled central bank in Syria. The overthrow of the government was not as easy as people had expected and the power vacuum in Iraq after the Americans won that led to the growth of ISIS and international terrorism.

Wars are expensive and the banking market that had lobbied for deregulation brought about the collapse of the banking sector in 2008 via reckless lending in the housing market. All the banks are connected via a ring main (in essence) and nightly they settle accounts with each other, however very little of this money is cash, gold or silver it is mainly digits on a computer screen. So the government had to print money and pump masses of liquidity into the system to give the banks the confidence to trade with each other.

When banks want people to borrow money they lower the time cost of money (interest) but when there is so little demand and so much money available because of quantitative easing this creates near-zero interest. Indeed, the EU experimented with below-zero interest rates where the customer pays the bank to hold their money.

Large companies have borrowed money to do large share buy-backs. Reducing the number of shares in circulation drives up the value of the remaining shares. It rewards executives with share options and those who sell their shares but it leaves companies exposed to huge debts, which are manageable with low-interest rates. However, if all this printing of money waters down the value of money then interest rates need to go up to encourage investors to hold a currency declining in real value.

When you borrow money from a bank you get a letter to take to the teller who creates an account. Customers deposits do not fall, the bank has not lent its money however they must keep around 9% as their reserves, so thus, as this money is spent with a trader he banks it and the bank must hold 9% as reserves. This can happen around nine times. This is called the Fractional Reserve System. 95% of all credit is created by banks. Credit = Money. The problem is that banks like to lend an umbrella when it is sunny - they don’t like to lend when it is raining. So this exacerbates instability in the economy. People borrow money, work and buy assets, but every so often the financial system crashes the economy and thus the rich buy-up assets for a few cents on the dollar.

 Since 2008 the world economy has spluttered along. If it costs the cost of a barrel of oil (only as an example) to produce a barrel of oil you can see the issues. As we go into a future where finite resources are being used up, the cost of producing those resources increases. As costs go up, demand falls and more people become out of work.

Since the 70’s the value of money has been falling. Once a mans wages could provide for a family. Now both partners are working and they need second jobs. Around the world is high unemployment. One in six people in America is on food stamps. If the world seems prosperous cheap goods produced by globalization have created a feeling we are moving forward, but in developed countries, high unemployment is the norm.

 So what is happening now?

We were on the brink of a major economic collapse then along comes COVID-19. Was it deliberately caused or a function of the Chinese who during the Chairman Mao’s great famine were encouraged to eat anything going? Or, is it a result of us encroaching on the habitats of animals and birds that have illnesses that can cross over into the human population? 

We have seen the rise of Bitcoin. The advantages of electronic currency are that the amount of currency circulating is fixed. Fiat currency like the pound or the dollar can be added to...devaluing their value over time. 650 of the worlds paper currencies all failed eventually.

 High unemployment globally is a growing problem and it is a factor in social unrest in America and of the rise of extreme Islam.

 Far bigger than the threat of COVID-19 is the environmental threat. This has to be tackled or we will all perish it is argued. Just like the Wild West with its range of wars over water society could plunge into chaos.  

 Governments are becoming increasingly authoritarian and the populations polarized.

 In January 2021 the World Economic Forum meets in Davos. I think they plan to completely reset the world economy.

 We will see the rise of more authoritarian forms of government and unlike the theory of free markets with market forces set the agenda, we will see the rise of socialism. I can see a global currency coming in the form of electronic currency and that we are going into a much more controlling form of government.

 We may even see population control brought in as it had been in China with the one baby policy. Environmentalism will be top of the agenda. 

 The world is not going to go back to the way that things were before. The response to COVID-19 is getting the citizens used to a government that is far more controlling of the population. The public is potentially being conditioned using the COVID-19 crisis. 

ABC Note: We shall see, but here at the ABC get ready we say for the BIG RESET in 2021 as the whole global economy changes.

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