Thread by @IGWTreport

The Grand Chessboard. A Mega Thread🧵.

#Zoltan Pozsar's latest piece is titled "War and Currency Statecraft". In it, he lays out his geopolitical views in greater detail.

Zoltan iterates the transition from a unipolar to a multipolar economic world.
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silkroadbriefing.com/news/2022/11/0…

If accepted, the new proposed BRICS members would create an entity with a GDP 30% larger than the United States, over 50% of the global population and in control of 60% of global gas reserves.
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"China is proactively writing a new set of rules, creating a new type of globalization with new institutions like the
Belt and Road Initiative, BRICS+, and the SCO."
One World, Two Systems.
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Zoltan links to the BRICS expansion map above and compares it to the map below, mentioned in Zbigniew Brzezinski classic foreign policy booklet, The Grand Chessboard, published in 1998. Brzezinski notes the following:
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"How the U.S. manages Eurasia is critical. Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. A mere glance at the map also suggests...
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...that control over Eurasia would almost automatically entail Africa’s subordination, rendering the Western Hemisphere and Oceania geopolitically peripheral [to Eurasia]. Eurasia is thus the chessboard on which the struggle for global primacy continues to be played…”
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Zoltan paraphrases Sir Halford Mackinder:"Whoever encumbers commodities and controls the factories rules inflation, whoever rules inflation controls interest rates, and whoever controls interest rates controls the level of the stock market and financial wealth more generally."
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"The one thing that the BRICS are most aligned on is the de-dollarization of their fast-growing, bilateral trade flows, and so “BRICSpansion = more de-dollarization".

Current and aspiring BRICS members are putting the plumbing in place to speed up de-dollarization.
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They are doing this by means of CBDC's.

"The PBoC seems to be working hard on becoming an international lender of last resort that is geographically far more diverse than the Federal Reserve, and not only that, but an international lender of last resort that...
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...through renminbi swap lines, aims to foster trade and real economic activity, not “merely” portfolio hedges to “nurse” decades of accumulated trade surpluses."
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"CBDCs are interweaving BRICS central banks to replicate the global correspondent banking system that the US dollar system runs on, with potentially lethal consequences for the dollar’s supremacy."
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China and India's CBDCs are already in working, Brazil and Russia will launch theirs by 2024. South Africa is lagging behind but they "recognise the value of having a CBDC".
The aspiring BRICS members are also working on their respective CBDCs.
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"The UAE already has a CBDC, and under “Project Aber”, the UAE and Saudi Arabia are exploring a “single dual-issued digital currency "for domestic and cross-border settlement between their countries."
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These will all be linked via the "m-CBDC Bridge project" or "mBridge", which aims to recreate the correspondent banking system from scratch by interlinking central banks through CBDCs.
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Zoltan then warns that the US should not attempt to create a CBDC of their own or, "Don’t fix what’s not broken. The U.S. dollar system (among friends and allies) is fine as it is."
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"Project mBridge is just the beginning, but it tells us the shape of things to come. For the Fed, I’d just reiterate: don’t fix what’s not broken. CBDCs are an existential threat. Don’t hasten the downtrend of the use of the dollar by dismantling "the hierarchy.""
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The world is splitting in two. So is the monetary system. The dollar is at a crossroads.

"…you should stop pretending that this means nothing for the U.S. dollar or demand for Treasury securities."
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We look forward to monitoring these happenings in great detail in 2023, as this will certainly have a significant impact on your portifolio. Traditional 60/40 allocation should be considered a thing of the past. Ignore #gold at your own peril.
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