Alasdair Macleod, Michael Oliver and Michael Wood return on this week’s program.
So far, sanctions have backfired on those described by Vladimir Putin as the unfriendly nations. It is setting in train a series of events likely to undermine the whole western financial system, as prices rise, driving interest rates higher and shrinking economic activity. These developments alone are leading to the contraction of bank credit, crashing stock markets and sharply higher bond yields.
Last week, I wrote about the impact on the banking system and the likely consequences. Russia, China, and associated nations who depend upon them for trade and economic development are now moving to protect themselves from what is emerging as a full-scale systemic and fiat currency crisis for the dollar and the entire western financial system. These developments are hastening the end of the petrodollar era and the dollar’s role as a reserve currency. A central Asian replacement of the petrodollar is planned to be a new super-currency used for cross-border payments, based on an index of a basket of commodities and currencies of the participating nations.
The creators of this new currency system are designed to replace a dying petrodollar by appealing to other important nations, such as Saudi Arabia, into using a commodity-linked currency for settling their trade payments. Its success could prove to be fatal for the fiat dollar and other Western currencies. With the demise of the dollar, the new super-currency can be expected to lead eventually to some national currencies adopting the gold standard. What impact might a successful replacement of the dollar have on U.S. dollar denominated investments? Alasdair shares his thoughts on those topics.
Michael Oliver updates us on what his MSA technicals are saying about key markets and Michael Wood updates us on Reyna Gold.
