#Info - Trump tarrifs and the reintroduction of the Bretton-woods agreement (part 2)

An excerpt from the "Crisis Finance Guide" authored by Jim Rickards as part of his - Strategic Alliance - research subscription service published by Paradigm Press

"Under U.S. Martial Law, the government can seize control of any asset they want from any American citizen.

Your land, your money, your bank account…

Everything you own could be taken at their discretion, leaving you with nothing to protect yourself and your family from the escalating chaos.

And why would the government do this? Why would they want to freeze and confiscate our money and assets?

By stripping you of your assets, your money, and your resources, they can force you into compliance. If Martial Law is enacted, they’ll have the power to do whatever they deem necessary to maintain control and prevent any uprising.

In early 2024, the FBI and Financial Crimes Enforcement Network (FinCEN) sent letters to U.S. banks asking them to identify and provide a list to the government of customers using Zelle, Venmo and similar payment channels who mentioned “MAGA,” or “Trump” in their message traffic.

They also asked for details on bookstore purchases of “religious” articles including Bibles. Finally, they asked for details on those shopping at Cabela’s, Dicks’s Sporting Goods or Bass Pro Shops, presumably on the view that those are places to buy guns and ammo.

This is a clear-cut violation of the First Amendment (free speech, freedom of religion), Second Amendment (right to bear arms), and Fourth Amendment (no unreasonable search and seizure).

It is not a crime to write MAGA, etc. and therefore there is no reasonable basis for suspecting a crime, and therefore no right to get the information without a warrant, which requires a judge. Any judge would likely reject the warrant request since there’s no probable cause.

This is an obvious case of profiling that may well involve AI. If you shoot some-one and you’re wearing a MAGA hat, you get arrested for the shooting, not the hat. In this case, the hat was enough to put you under surveillance because you have been profiled as “an enemy of the people” by the left’s definition.

They’re discriminating… using information directly from the banks. They can seize cash, they can freeze bank accounts, they can even confiscate Bitcoin…

But there is a strategy you can implement right now to safeguard your assets from government seizure. As I mentioned earlier, MONEY will be critical during this civil war.

Martial Law will be the government’s most powerful weapon in crushing any rebellion or preventing civil war from erupting.

That’s why it’s absolutely vital for every American citizen to understand how Martial Law operates and the rights they have to protect themselves from unlawful government seizures.

In this section, I cover everything you need to know to protect your wealth, your property, and your family from the devastating reach of Martial Law.

Let’s get started…

The “New Currency” That Will Dominate Post-War Transactions

Since 2010, the major global economies have been engaged in a currency war involving repeated competitive devaluations of currencies in order to export deflation, import inflation, promote exports and create export-related jobs.

This is a zero-to-negative sum game that leads inevitably to trade wars, which began in 2018, that also accomplish nothing unless accompanied by internal infrastructure investment and growth-oriented policies.

Now a new phase that could be called “money wars” has begun involving non-government cryptocurrencies competing with government money, and governments embracing new sovereign digital money called Central Bank Digital Currencies, CBDCs.

CBDCs are not really new currencies but are new payment channels for existing currencies. The development of CBDCs masks the true elite agenda of elimination of cash, confiscation of wealth through negative interest rates (difficult in a system that allows cash), and the perfection of the totalitarian surveillance state.

Cryptocurrencies, which are different than CBDCs, are also gaining wide acceptance. These cannot be analyzed generically but must be sorted based on criteria such as anonymity, issuance cap, governance, permissioned v. permis-sionless systems, transaction speed and liquidity.

Some cryptocurrencies have better use cases and are safer and more prag-matic than others. Bitcoin has no utility because it is deflationary by design and therefore unsuitable for use in bond markets, which is the key to reserve currency status. Bitcoin mining contributes materially to global CO2 emis-sions through electricity consumption. Bitcoin prices are also highly manipu-lated through the use of fraudulent stablecoins such as Tether.

The only serious rival to the U.S. dollar as a global reserve currency might be a permissioned blockchain maintained by the International Monetary Fund (IMF) using Special Drawing Rights, or SDRs, as a World CBDC.

This challenge to the dollar would be made more potent if the SDR-World CBDC were linked to gold.

Gold is the classic form of money having performed that role in various ways for over 3,000 years. The issue for gold is whether it can still perform these roles in an environment of digital money.

Gold’s future also points to the possibility of a new kind of monetary trilemma in which any form of money (gold, crypto-currencies, CBDCs or SDRs) can perhaps only perform two out of three of the classic three-part definition on money – unit of account, store of value and medium of exchange – but not all three because of the comparative advantage of rival forms of money in one or more of those functions.

Gold As A Form Of Money

Gold may seem like a strange choice for inclusion in an article on the future of money. Observers are well aware that gold has served as money – usually the best form of money – for over 3,000 years of civilization and perhaps longer.

As recently as the 1910s, a traveler departing London carried a purse of British gold sovereigns – a 7.98-gram 22-karat gold coin (about ¼ ounce) – on overseas trips.

On arrival in Bombay, Shanghai or Sydney, the traveler could be completely confident that the coin would be accepted at full face value. It was literally worth its weight in gold. It was world money.

Gold lost its role as money in slow stages over the following decades. In 1914, most gold coins were surrendered to banks in order to boost gold reserves needed to finance the First World War. Citizens accepted paper bank notes in exchange. In theory, the bank notes were redeemable for gold but were seldom redeemed. The physical gold was still around but it was melted and recast as 400-ounce bars held in bank vaults. Banks claimed the notes were still backed by gold, but the gold rarely saw the light of day. No one went shopping with 400-ounce bars (about 27 pounds) in her purse.

When the war was over, the gold heist accelerated. Between 1919 and 1933, central banks required commercial banks to surrender their gold bullion in exchange for credits in their reserve accounts. Then certain finance ministries required the central banks to surrender the gold to the national treasury in exchange for gold certificates.

Then countries themselves began to devalue their currencies when measured in weight of gold – France in 1925, the UK in 1931, the U.S. in 1933, and France and the UK again in 1936. During this period, the U.S. made it illegal for citizens to hold physical gold. Shipments of gold between nations were halted again in 1939 with the outbreak of the Second World War.

In 1944, the Bretton Woods agreements revived gold as money, but only for international transactions and balance of payments settlements among the major countries who signed the agreement. Currencies of the Bretton Woods signatories were pegged to the U.S. dollar and the dollar was pegged to gold at $35.00 per ounce.

In March 1965, the requirement that commercial bank deposits be linked to the level of gold reserves was eliminated. In March 1968, President Lyndon Johnson signed a law that eliminated the “gold cover”requirement that Federal Reserve notes be covered by at least 25 percent physical gold held by the Treasury.

In August 1971, President Richard Nixon suspended the redemption of dollars held by foreign trading partners for physical gold. By 1974, all major currency issuers had moved from fixed to floating exchange rates. In April 1978, the IMF ended the obligatory use of gold in transactions between the IMF and member nations.

The process took sixty-four-years (1914 – 1978), but when it was completed, governments and the IMF held all the official gold in the world and gold was no longer counted as money. Since the 1970s, two generations have been trained in economics with no reference to gold at all except for derogatory clichés such as “barbarous relic” and “shiny rock.” Gold has been practically forgotten as money – but not quite.

Today gold is still money, but it is dormant as a form of currency. It retains its role as a store of value and unit of account, but it is used as a medium of exchange by appointment only. The days of exchanging 8-gram gold coins for goods and services are over for the time being.

In its store of value role, gold is poised for major gains in response to the rise of inflation expected in 2022 and later. This inflation will not be caused by so-called money printing.

An expansion of the money supply without accompanying changes in saver psychology that affect velocity or other exogenous catalysts has little impact on consumer prices. The driver of inflation is velocity or the turnover of money caused by lending and spending.

Velocity has been plunging for over ten years.

Still, an exogenous catalyst of velocity will arrive soon and last for decades in the form of higher wages needed to offset declining working age populations in China, Japan, Europe, Russia and the U.S. This wage increase will be driven in part by the diversion of workers to healthcare for seniors, which is needed work but not amenable to productivity increases.

Once this demographic wave hits, saver psychology will shift quickly, and cost-push inflation will feed on itself. Inflation combined with decreased confidence in central bank command money will move gold to $10,000 per ounce or higher. That is the implied non-deflationary price of gold needed to act as a backstop for command money.

Beyond that, gold’s role as a medium of exchange will most likely be restored by combining physical bullion in secure storage with digital payments sys-tems backed with gold measured by weight. You might have a 100-troy ounce account worth $1,000,000 when gold is priced at $10,000 per troy ounce; (worth more or less if the per ounce price is higher or lower). Your ability to buy or sell goods or services would be conveyed through a digital token stored on a mobile phone or chip-card.

After each purchase, your gold account would be reduced by the amount spent based on the market price of gold at that time. Your account could be topped up with new purchases of gold from the account sponsor.

This kind of gold-backed currency account could be extended through link-age to new central bank digital currencies. A digital interface would replace the gold coin, while bullion in storage would reconstitute a gold standard for the twenty-first century. In the end, the dollar would be little more than a counting mechanism while the wealth preservation and purchasing power functions of money are slowly ceded to gold.