Nick Hubble – Exponential Investor (United Kingdom) –
Every few decades, the world’s financial system goes through a reset. Just before a complete collapse, the powers that be come together in an obscure place and hash out the terms of the new currency system.
That new system usually gets named after the random place they decided to meet.
After World War II it was Bretton Woods. Trade imbalances and the outflow of gold forced the Smithsonian Agreement and the Jamaica Accord in the 70s, which gave us floating currencies. The Treaty of Versailles was one they got wrong, with disastrous consequences.
These are just some examples from the 20th century. But the history of the financial system resets goes back much further.
Ever wondered what “wiping the slate clean” really meant? Ever bothered to find out what’s written on the Rosetta Stone – the key that allowed us to unlock the secrets of ancient languages?
These refer to ancient financial resets. The world used to know them as Debt Jubilees – when all the debt record slates were wiped clean and all debt slaves were released from their bondage.
These resets occurred for the same reason as those last century – to prevent a crisis and the uproar that goes with them. To create a new workable system.
At some point, a reset of the financial system is preferable to the status quo. It might be that the level of debt is just too high to service. Or perhaps a government printed too much money. In 1971 it was the American trade deficit that led to an outflow of gold. The Rosetta Stone and related records suggest that the amount of debt slaves were so high it risked a rebellion at the time.
Whatever the threat, a reset comes before anything really hits the fan.
But why is a reset coming?
Have you ever pondered how the world can continue to borrow more than it could ever repay? Do you think that countries like Greece and Japan will honour their debt mountain forever? What will happen to the student loans that cannot be repaid? Will younger generations always agree to be debt serfs to banks for decades just to own a house? How long will China agree to finance the American government which sends aircraft carriers to monitor its oceans?
If you’re wondering how it all will end, a global financial reset is your answer.
Before all hell breaks loose, governments will simply propose a new system entirely. We never get a total meltdown.
The thing to know about these momentous events, when the rules of the game of economics are rewritten, is that they cost some people their entire wealth. Others become extraordinarily rich by owning the right assets.
In other words…
You need to make sure you’re on the right side of the coming reset
There are two ways to do this.
The first is to own assets unaffected by monetary chaos and government decree. It’s unlikely the government will ever confiscate your home or ounces of gold you own in secret. The price of both might surge or tumble, but you’ll own a hard asset either way.
Assets held in the financial system are at risk. Your bank accounts could be converted into a new currency, devalued or become subject to a wealth tax. Just look at what happened to Brits in Cyprus.
Your retirement investments could be rationed – the Australian government is already proposing this for its prized superannuation system to prevent the withdrawal of lump sums.
Company pensions are dangerously unreliable in a financial reset because they’re a financial obligation – something that usually gets wiped clean in a reset. Besides, many companies just can’t afford them.
You need to think about owning things the government need not know about, and things that are unlikely to be taken from you.
Then there’s the second option
It’s brand new. In every country experiencing a reset it’s performed extraordinarily well, so it’s tried and tested. In effect, it’s an opt-out of the financial system entirely, but without the inconvenience of gold.
You need to find out how it works, how to get in on the action and how it will protect you from any government shenanigans, including during a global financial reset imposed by governments. you need to be ready
You’re running out of time
When the Western world’s leaders meet at Davos, the G20 in Riyadh, or at a Bilderberg conference, they’ll surprise you with the new system. The Davos Accord, Riyadh Treaty or Bilderberg Agreement will establish the new financial order overnight in the face of chaos.
It might be a global currency, like The Economist magazine predicted recently. Or the end of the fiat currency experiment and a return to gold, as commentator Jim Rickards predicts. Or perhaps the leaders might harness the power of the blockchain, as some countries are already exploring.
China’s secret gold purchases and Germany’s gold repatriation from the US suggest where they’re putting their money. Russia and Singapore are looking at blockchains and digital currencies. Governments are on the move, positioning themselves for the coming reset.
Whatever the new system they choose to create, you need to be ready. Because it will be swift and firm.
Editor, Capital & Conflict